On the evening of Sunday, December 22, 2024, President Bernardo Arévalo announced, through a national broadcast, an increase in the minimum wage for 2025. This increase is formalized in a governmental agreement signed by the President and Minister of Labor, Miriam Roquel, which is expected to be published in the Official Gazette in the coming days. However, due to the absence of an agreement within the National Wage Commission (composed of representatives from the government, employers, and workers), the decision, by law, falls under a presidential decree. Nonetheless, the Bank of Guatemala and the Guatemalan Social Security Institute provided analyses and reports that supported the Executive Branch’s decision to raise the minimum wage for the coming year.
The President justified the increase under the premise that similar measures implemented internationally have led to improvements in productivity, consumer spending on goods and services, and, consequently, economic growth. Furthermore, he emphasized that this decision aims to reward the hard work and sacrifices of Guatemalans while creating greater opportunities for them. As a result, starting January 1, 2025, the minimum wage will increase by 10% for agricultural and non-agricultural activities and by 6% for the export and maquila sectors.
While the wage increase is seen as reasonable and beneficial to Guatemalan workers, its significant magnitude may pose challenges, particularly for small or informal businesses that may struggle to meet the new requirements. Higher labor costs could become burdensome for entrepreneurs, and there are concerns that some companies might resort to layoffs to reduce expenses, potentially reducing formal employment and increasing informal work.
This raises a critical question: How beneficial will the minimum wage increase for 2025 truly be?
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Juan Manuel Díaz Durán
Partner
Guatemala
