In a classic populist move, Colombian President Gustavo Petro declared March 18 a civic holiday and mobilized his supporters as the Senate was discussing his labor reform bill. That same day, the Senate committee rejected the bill, since it did not promote job creation and privileged the minority of workers with formal employment. Unwilling to accept the will of the elected senators, Petro announced a referendum to push the labor reform.
With just over a year to go before the presidential election in Colombia, Petro is determined to impose a labor law that would jeopardize the country’s competitiveness and the jobs of thousands of Colombians. Instead of easing formalization of contracts and adapting to current labor dynamics, his proposal imposes a rigid system that could discourage hiring.
Un verdadero representante del pueblo debe saber escuchar el mensaje del pueblo.
— Gustavo Petro (@petrogustavo) March 18, 2025
Son representantes del pueblo y no hay dinero que valga que haga contradecir el mandato del pueblo. pic.twitter.com/g3KdXRmxNo
Currently, 56 percent of the workforce operates informally, and 3 million Colombians are unemployed. Petro’s labor reform portends the loss of jobs and would hinder the creation of new positions by deteriorating the regulatory environment for businesses. The private sector is responsible for creating nine out of 10 jobs in Colombia.
What Is Wrong with the Reform?
The labor reform presented by Petro’s administration promises to “recover the labor rights of all Colombians working every day for a better country.” Under this hollow narrative, the reform includes provisions such as:
- eliminating contracts for services;
- recognizing full-day pay for Sundays and holidays;
- extending paternity leave and allowing women to take leave for menstrual health;
- banning labor outsourcing;
- extending labor rights to digital-platform (gig economy) contractors.
These would constitute some of the referendum questions. The final wording is not yet available.
Imposing these labor privileges through state intervention would lead to higher costs and create a rigid system that corners employers. As noted by the Hernán Echavarría Political Science Institute (ICP), Petro’s labor reform burdens employers and could reduce the ability to create new jobs. The irony is that the reforms meant to help workers would push more of them into informality that bypasses the requirements.
The National Federation of Businesses (Fenalco) warns that micro, small, and medium-sized enterprises—which account for 97 percent of Colombian businesses—would suffer the most. Moreover, the commercial, tourism, agroindustry, and digital-platform sectors would be most harmed by the elimination of flexible hiring options.
Petro’s socialist policies, based on wealth redistribution—including his tax and pension reforms—have already undermined Colombia’s business environment and competitiveness. According to the Commerce Ministry, from 2022 to 2024, business creation fell by 8.4 percent, and business closures increased by 23.2 percent. In fact, 2024 marked the highest number of business closures in the last eight years.
Gig Petro’s Authoritarianism
Petro’s approach to pushing through his labor reform—now through a referendum that the Ministry of the Interior will present to the Senate in mid-April—violates due process and threatens the separation of powers. Colombian legislation does not allow the executive branch to call a referendum on matters outside its constitutional authority. If carried out, this would undermine legal certainty in the country.
El pueblo colombiano votó por el cambio y haciendo respetar el mandato popular, este 18 de marzo sale a las calles.
— Presidencia Colombia 🇨🇴 (@infopresidencia) March 15, 2025
Acompañaremos y garantizaremos el derecho legítimo de los ciudadanos a movilizarse. El cambio se defiende en las calles. #SíALasReformasSociales pic.twitter.com/B7RtRFTAif
According to the law, to call a referendum, the president can submit constitutionally authorized questions and their justifications to the Senate. The Senate then has one month to determine whether the referendum is necessary. If approved, the referendum must take place within the next three months, with a simple majority required. Given that voting in Colombia is optional, for the referendum to be valid, at least one-third of the electorate must participate.
After the referendum announcement, pollster Invamer surveyed 1,200 people in 56 locations across Colombia. Of them 29.2 percent stated they would participate, and 29.9 percent would not—so getting to one-third will likely not be a problem. Further, 50 percent of the respondents said they agreed with the proposals, while 43 percent rejected them.
Julián Quintana, a lawyer and former director of the Technical Investigation Body of the Attorney General’s Office, has raised concerns about circumventing the legislative branch. He told Infobae: “Law 134 of 1994 bans the call for a popular referendum on legislative projects … Petro seems to be trying to pressure lawmakers into approving reforms by force, which makes him appear like a dictator.”
Reforms That Colombia Needs
Learning from neighboring countries’ experiences provides a clear picture of how Petro’s proposed reforms could harm Colombia’s economy. In Ecuador, similar labor reforms carried out during Rafael Correa’s administration (2006–2017), an ally of Petro’s government, failed to improve stability for workers. As a result, employment has stagnated in Ecuador for 14 years. From 2010 to 2014, the economically active population grew by 31 percent, but the number of people in formal employment has remained steady at 2.8 million. That means a heck of a lot of employment is going on under the table.
Instead of imposing socialist policies that seek redistribution at the expense of economic growth and prosperity, Colombia could be a model of competitiveness in the region. By focusing on entrepreneurship and investment, Colombia could foster the creation of new businesses and the expansion of existing ones. Business incentives are the only effective measure the government can take to promote job creation without falling into interventionism that ultimately leads to adverse effects.
For example, instead of imposing paid paternity or menstrual health leave and a rigid system for digital, gig-economy jobs, the government could support hybrid employment models. Time and location flexibility are particularly beneficial for parents, and formality would bring transparency to their work relationships.
Allowing part-time service contracts and hourly employment would enable Colombians to access multiple sources of income and start businesses with lower hiring costs. By including gig-economy jobs in the equation, Colombia could expand formal employment opportunities. Forcing all such work into a narrow conception of employment will simply limit incomes.
Formality does not mean a rigid nine-to-five job; dignity does not require more legal benefits. The way to improve workers’ conditions is by fostering opportunities that allow Colombians the freedom to be more productive and choose employment modalities that fit their needs.
