Rural Wages

Rural Wages

Agricultural wages remained stagnant in real terms during the 1935-64 period, and in 1964 they were only 90 percent of the wages of unskilled construction workers and about 33 percent of those of blue-collar industrial workers. Except for a small increase in the early 1960s, real wages in agriculture changed little until the mid-1970s, when they increased substantially until 1980.

In contrast to the dampening effect of a labor surplus in the 1960s, the employment boom of the 1970s began to raise agricultural wages. The introduction of the caturra variety of coffee during the 1970s led to large-scale replanting and land preparation for new plantations, which, combined with the boom in marijuana production and cocaine processing, greatly increased labor demand in rural areas. Rapidly growing urban employment in this period also pulled agricultural workers into the urban economy, thus creating increasing labor scarcity in rural areas. Agricultural labor productivity over the 1974-79 period was estimated to have grown at roughly 3.7 percent per year, providing much of the basis for rising real wages. The booming terms of trade for coffee producers were also captured to some extent by workers in agriculture. In addition, the rise in the real minimum wage beginning in 1973 may also have been a contributing factor. The stagnation in the agricultural real wage after 1978 reflected the substantially slower growth in the sector and the economy during this period.

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