Differentiated Wages: Reviving Discussion

After the Guatemalan Constitutional Court suspended the implementation of differentiated salaries in 2015, the Giammattei administration plans to discuss the application of regional minimum salaries during 2021 and the plan is for them to enter into force in 2022.

Thursday, September 3, 2020

In 2015 the Guatemalan government established differentiated salaries for the municipalities of Masagua in Escuintla, Guastatoya and San Agustín Acasaguastlán in El Progreso and Estanzuelas in Zacapa.

Also see "It's Easy to Talk About Differentiated Minimum Wages"

This policy has caused controversy in the country, and the case was even heard by the Constitutional Court.

In September 2015, the country's highest court declared unconstitutional the initiative that sought to attract investment in four municipalities in the country by means of minimum wages that were lower than those set at the national level.

Another setback to the proposal became known in early 2016, when the Constitutional Court also decided to suspend the authorization for the Executive to grant differentiated minimum wages in the four municipalities concerned.

Currently, the Ministry of Labor and Social Welfare (Mintrab) aims to implement regional minimum wages, since according to the authorities this is a legal figure allowed by the Labor Code.

Check out the "System for monitoring markets and the economic situation in Central American countries", developed by CentralAmericaData.

Rafael Rodríguez, Minister of Labor, told Prensalibre.com that "... there are still details to be discussed, but they plan to start preparing in January next year to carry out the discussion of the regional minimum wage and that it will come into effect in 2022."

Rodriguez explained that "... The way to implement it will be by installing regional or departmental joint commissions to study each region or department and make their proposal. One of the requirements is the organization of the workers because in these commissions the employer sector and the worker sector must be represented. This representation of the workers should be through unions."

For José Chavez, an economist with the Coordinating Committee of Agricultural, Commercial, Industrial and Financial Associations (Cacif), "... today in Guatemala there are many regions where proper wages are not paid. Wages should be adjusted to technical factors such as economic activity, local productivity, there is even a local competitiveness index that determines all these things."

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Arguing to defend "the interests of the workers", labor union groups in Guatemala filed an appeal against the recently approved agreement regulating part-time employment in the country, and in response, the Constitutional Court decided to temporarily suspend it.

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Changes the Labor Market Needs

March 2019

In Guatemala, the debate on the legalization of part-time employment was reactivated, but the regulation, which for years has been promised to be approved, is still not a reality.

The inflexibility of the Guatemalan labor market is an issue of concern to investors, since for years the authorities have been promising to support the necessary changes so that companies can hire staff for the periods they require and not always based on the standard schedule of eight or twelve hours.

Guatemala: Differentiated Salaries Suspended

January 2016

The Constitutional Court has temporarily suspended the authorization given by the Executive Branch to award differential minimum wages in four municipalities.

Despite being a measure requested by the local authorities themselves in order to attract investment and create jobs, the Constitutional Court has decided to temporarily suspend the authorization that was granted by President Maldonado.

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