Colombia at a Glance
Working in Colombia
- Colombia’s consistently sound economic policies combined with its promotion of free trade agreements have helped the country to survive external shocks, such as the recent global slump in oil prices.
- Expats enjoy relatively low social security contributions.
- The industrial staples of coal, gold, emeralds, and oil are among the most significant sectors of the Colombian economy.
- In the workplace, employers expect smart clothing, punctuality, and those in senior positions should be addressed formally.
- The tax system in Colombia is relatively straightforward: expats are considered to be tax residents following a stay of more than 183 days per year.
Colombia is the fourth largest economy in South America. Despite the global economic downturns at the end of the past decade, the country has continued to grow even beyond the regional average by diversifying its investments and establishing free trade agreements. Though unemployment remains problematic, it is decreasing and hit a record low of 8.9% in 2015.
Colombia was also South America’s best performer in terms of its GDP growth rate in 2015 (2.5% year-on-year), however this is slowing down due to the global drop in commodity prices. Colombia’s divisive “No” vote on the peace agreement between the government and the FARC in October 2016 could also affect the economy due to political and economic uncertainty.
The Powerhouse of the Economy
Like most developed countries Colombia has a dominant tertiary sector, however, industry still plays a major part in the national economy, generating around 37% of the total economic output. The main pillars of the Colombian industrial sector include a very strong textile and fashion industry (particularly in Medellín), and a highly developed chemical and pharmaceutical sector.
In the secondary sector, the mining industry is still one of the main driving forces. An abundance of natural resources is one of the nation’s strengths, and it boasts a wide range of exports:
- Coal — fourth largest exporter globally
- Oil —accounts for almost half of the country’s exports
Historically an agricultural country, the primary sector remains one of the main pillars of the Colombian economy, contributing just below 7% to the GDP. The country is among the top producers of coffee, flowers (second only to the Netherlands’ exports), cocoa, oilseed, bananas, and sugar cane, among others.
In the service sector, IT and finance dominate. However, the country’s improved reputation has also led to a rise in tourism which contributed 5.9% of the country’s total GDP in 2014. Bogotá and Medellín are the two cities leading the way both in the tertiary sector and the economy as a whole. We have taken a closer look at the two metropolises in our article on moving to Colombia.
Despite positive developments, many issues remain to be tackled in order to maintain positive economic performance:
- Colombia’s dependence on energy and commodity exports leave it susceptible to global price fluctuations, such as the recent fall in oil prices in 2015. The dip, however, spurred Colombia to diversify its industrial and financial base.
- In many sectors and areas, working conditions and the influence of labor organizations leave much to be desired causing the ITUC to name it one of the “worst countries in the world to work in”.
- Colombia has a large informal sector: many choose to work for themselves or work cash-in-hand for companies to avoid taxes, the violent repression of unions, and the low minimum wage. This informal sector provides employment for a good portion of the population, as much as 60% in 2014. Such workers struggle to stay afloat financially, and the sector does little in terms of income security or economic productivity.
- As a result of the informal sector and unemployment, income inequality is stark; it is estimated that a staggering third of the population lives below the poverty line.
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