Nearshore Americas

Colombia’s IT Sector Warns of Red Flags in Petro’s Labor Reform

Colombia’s tech sector is sounding the alarm over President Gusvato Petro’s latest attempt at a labor reform.

Industry leaders warned that the changes proposed in Petro’s reform could cripple the sector’s growth and hinder its ability to fill a significant job gap.

Ximena Duque, president of Colombia’s tech industry chamber (Fedesoft), told news outlet BNAmericas that the new regulations would make hiring even more difficult.

Duque and the rest of tech sector in Colombia are concerned mostly by the proposed limitations to freelance and outsourced independent work, both common practices in the industry.

Petro’s reform would not ban such practices outright, but it aims to give priority to more traditional, long-term contracts in which a worker is formally employed for an undetermined period of time instead of cycling through short-term contracts with little to no benefits. These new regulations might force companies into hiring more trainees and potentially convert them to full-time employees.

The reform also aims to reduce the standard workweek to 42 hours while maintaining current salary levels. This is a trend which has been expanding through several countries in Europe and some in Latin America. Although it has much support from workers and some employers, analysts warn that shorter workweeks could increase business costs due to the need for additional staff to cover overtime, weekends, and holidays.

Another point of contention around the reform is the redefinition of the night shift. Currently, Colombian regulations determine that the night shift begins at 9:00 pm and ends at 6:00 am, and that payment for every hour of work done during that time frame should include a 35% bonus. The labor reform proposes that the night shift should start at 6:00 pm and end at 6:00 am.

 

A darkened horizon

Colombia’s tech industry is going through a rough patch already. From troubles to fill up job positions, to a decreased profile in the international stage, the country’s IT sector has slowly lost some of its luster.

A recent survey by ManpowerGroup shows that 76% of Colombian companies surveyed had trouble finding the right talent to fill tech job positions.

The tech talent gap pervails even when there are more than 2.5 million unemployed Colombians. According to industry data, the local tech sector has been struggling to fill nearly 900 vacancies.

Although still considered one of South America’s true tech hubs thanks to a busy startup ecosystem, some of that reputation has been diminished over the past five years. Colombia ranked 66th in the two most recent editions of the Global Innovation Index, with mediocre scores in tech, education and research. In 2020, the country ranked 20th.

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Some of the country’s setbacks in tech have been linked to President Petro’s overall policies in regards to private businesses. The president has promoted policies that have a more populist bend and are regarded by some investors and analysts as “anti-business”.

Colombia’s economy barely grew in 2023. GDP closed the year with a 0.6% annual growth. Investment fell sharply during that same year, falling 24% compared to the 2022.

 

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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