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Paraguay's Minimum Wage Adjustment Sparks Controversy
🇵🇾 Paraguay /Economy & Trade

Paraguay's Minimum Wage Adjustment Sparks Controversy

From ABC Color · () Spanish

Translated from Spanish, summarized and contextualized by DistantNews.

At a glance

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  • Paraguay's minimum wage has been adjusted by 5%, effective July 1, 2026, raising the monthly minimum to G. 3,044,000.
  • The decision by the Executive Branch has sparked debate, as the increase exceeds the last year's inflation rate.
  • Economists suggest the focus should be on labor formalization and productivity rather than solely on minimum wage adjustments, as it affects only a small portion of the workforce.

Paraguay's minimum wage saw a 5% adjustment on July 1, 2026, a decision by the Executive Branch that has ignited controversy. The new monthly minimum wage for unspecified diverse activities now stands at G. 3,044,000, with the daily minimum set at G. 117,077. This increase, established by Decree Nº 6.225, has drawn criticism because it surpasses the accumulated inflation rate of the past year.

The decision has created divergent opinions among worker unions, business associations, and government officials. Economist Jorge Garicoche argues that the national conversation surrounding minimum wage adjustments should pivot towards two critical areas: formalizing employment and boosting corporate productivity. He points out that the current debate centers on a policy affecting only about 10% of the labor force, diverting attention from more pressing issues.

We cannot talk about the minimum wage without talking about formalization.

— Jorge GaricocheThe economist stressed the need to prioritize integrating more Paraguayans into the formal labor market.

Garicoche emphasized that the urgent priority should be integrating more Paraguayans into the formal labor market, stating, "We cannot talk about the minimum wage without talking about formalization." He highlighted the existence of undeclared workers earning below the legal minimum. While acknowledging the importance of reviewing the minimum wage adjustment mechanism, he stressed that it is not the primary challenge facing the country's economy.

Producers and importers have questioned the 5% increase, advocating for a smaller adjustment of 2.4%, aligned with the Central Bank of Paraguay's Consumer Price Index. Garicoche suggested that improving oversight of companies that violate labor laws, simplifying formalization processes, and revising certain labor regulations that create market distortions are key strategies. He specifically mentioned the labor stability regime after ten years of service, suggesting it might encourage premature dismissals.

The stability in the world begins when one signs the contract, not after ten years.

— Jorge GaricocheThe economist commented on the labor stability regime, suggesting it could be a source of market distortion.
DistantNews Editorial

Originally published by ABC Color in Spanish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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