working-in-colombia

Working in Colombia

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Find out how to get a job and work in Colombia

Many might not have realized the impressive economic progress Colombia has made over the past few decades. After a brief but harsh recession, the nation has been able to grow year after year, and make the transition away from its former agricultural roots.

Employment 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.
  • The industrial staples of coal, gold, emeralds, and oil are among the most significant sectors of the Colombian economy.
  • 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.
  • Expats enjoy relatively low social security contributions.
  • In the workplace, employers expect smart clothing, punctuality, and those in senior positions should be addressed formally.

Economic Profile

Colombia is the fourth largest economy in Latin America. Despite a slowdown in economic growth in the past few years due to the decline in global oil prices, Colombia is now on track for a full recovery, with a GDP growth of 2.5% forecast by the World Bank for 2017, which is above the regional average. Though unemployment remains problematic, it has decreased significantly in the past few years to 8.7% in 2016.

Colombia’s peace agreement with the FARC at the end of 2016 is also expected to have an, if temporary, economic impact due to the cost of implementing the treaty.

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 34% 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 — fifth largest exporter globally
  • oil — accounts for almost half of the country’s exports
  • gold
  • emeralds
  • ferroalloys

Historically an agricultural country, the primary sector is still important to the Colombian economy and contributes around 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 are important, with Colombia having the fastest growing information technology industry in the world. However, the country’s improved reputation has also led to a rise in tourism, with the number of visitors growing by more than 12% annually. This industry contributed 5.8% of the country’s total GDP in 2016. 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.

Economic Obstacles

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 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 International Trade Union Confederation 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 nearly 30% of the population live below the poverty line.

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Working in Colombia

Taxes for Expats

Taxation in Colombia is, luckily, a relatively straightforward affair for both citizens and expatriates. You are considered a Colombian resident (not citizen) for tax purposes if you have stayed in Colombia for more than 183 days a year, regardless of whether or not the stay was continuous.

The tax year follows the calendar year. Income tax rates for fiscal residents progress in three steps from 19% to 28%, to 33%. A perk of living in Colombia is that there is no inheritance tax. Keep in mind that your tax rate applies to your worldwide income as soon as you become a tax resident in Colombia. Expats who are not considered residents for fiscal matters will be taxed 35% on their Colombian income.

Colombia also has several double taxation treaties, meaning that nationals of these countries can claim tax relief if they have been Colombian tax residents for at least one year.

Social Security Contributions

You might be happy to learn that social security contributions for expats are relatively low — foreigners are not expected to pay into the pension fund, but can if they choose to. Up to 9% of your salary is payable to the social security system and this breaks down as follows:

  • 4% contribution to the healthcare scheme (mandatory, see our guide on living in Colombia for details on the system)
  • 4% contribution to the pension system (voluntary for expat employees)
  • 1–2% additional payment to the solidarity pension fund, depending on income (also voluntary for expats): employees who are earning more than four times the legal minimum wage (as of 2017, the minimum wage is 737,717 COP per month) must contribute an extra 1%.

Social security contributions are calculated on any income up to 25 times the legal minimum wage in Colombia, 737,717 COP per month, or roughly 246 USD per month at the time of writing in 2017.

Office Etiquette

To prepare for your interview with a potential Colombian employer or your first day at work, you should familiarize yourself with Colombian business etiquette. While there are some differences between the highlands and the lowlands, the following advice applies for most workplaces expatriates might find themselves in.

  • Unlike at home, punctuality is highly valued in the office. Try not to keep your colleagues waiting for you.
  • The dress code tends to be smart. This may vary from office to office, but when in doubt, go for a more conservative look. A formal greeting, such as a handshake, will be well received.
  • Hierarchy is important; address people in senior positions formally and by their title and last name.
  • Building positive business relationships always comes with a fair degree of small talk and questions about your background and family. If things go well, you might be invited to dinner; declining would be perceived as very rude, as would turning down any food when there.
  • Try to stay away from hot topics such as politics, and from stereotypes around violence and narcotrafficking that have influenced the way Colombia was perceived around the world for years.
  • Don’t worry too much! Colombians are, generally speaking, warm and open, and you will get the hang of things very quickly.
  • As a country where women only gained the right to vote 60 years ago, Colombia still has a reputation for having a male-dominated political system and society. However, improvements are slowly being made, with Colombia’s Law on Quotas demanding that at least 30% of candidates in elections and 30% of highest government positions are filled by women. That said, it’s reported that some areas don’t fulfil this quota.
  • 2011 saw the introduction of a law guaranteeing equal pay for men and women, however, once again this has not proved entirely successful in practice. One study showed that only 34% of women occupy senior level management positions and the National Statistics Office (DANE) reported that the gender wage gap in most sectors hovered at around 20%. Many women also do not enjoy equal pay due to the informal sector remaining unmonitored.
  • In Colombia, women are entitled to up to 14 weeks of paid maternity leave and cannot be dismissed from a job during this time, or throughout the pregnancy. Men are allowed up to 4 days paternity leave, provided they are contributing to the social health system. If both parents contribute to the system, the father is entitled to 8 days.

Women in the Workplace

  • As a country where women only gained the right to vote 60 years ago, Colombia still has a reputation for having a male-dominated political system and society. However, improvements are slowly being made, with Colombia’s Law on Quotas demanding that at least 30% of candidates in elections and 30% of highest government positions are filled by women. That said, it’s reported that some areas don’t fulfil this quota.
  • 2011 saw the introduction of a law guaranteeing equal pay for men and women, however, once again this has not proved entirely successful in practice. One study showed that only 34% of women occupy senior level management positions and the National Statistics Office (DANE) reported that the gender wage gap in most sectors hovered at around 20%. Many women also do not enjoy equal pay due to the informal sector remaining unmonitored.
  • In Colombia, women are entitled to up to 14 weeks of paid maternity leave and cannot be dismissed from a job during this time, or throughout the pregnancy. Men are allowed up to 4 days paternity leave, provided they are contributing to the social health system. If both parents contribute to the system, the father is entitled to 8 days.
InterNations GO!
by InterNations GO!
08 January 2019
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