Labor reform: the fears of small companies – Sectors – Economy

Fernando, Valeria and Jorge do not know each other. However, they are united by the concern to save their Small business. They survived the blow caused by the pandemic, resist as best they can the biggest price increase in the last 23 years and now fear that the changes posed by the labor reformsespecially in night and Sunday surcharges, they force them to have to opt for the closure of their establishments.

The accounts hardly give them. It’s been one crash after another in just 3 years. After the confinements came the reopening with the scarcity of raw materials, an expensive dollar, the increase in the price of food and services and the skyrocketing of rents.

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To this is added the already confirmed slowdown of the Colombian economythat it could expand just 1 percent in 2023, and the changes that the Government wants to implement so that workers have greater job stability.

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The challenge for congressmen will be to protect employees without companies being so affected that they end up having an impact on employment, as has already been announced by studies such as that of the Labor Market Analysis Group of the Bank of the Republic. This calculates that in an average scenario some 450,000 jobs could be lost between 3 and 4 years.

Entrepreneurs plan to lay off, even close their businesses

The concern of the companies is high, above all, of the more than 1.7 million micro, small and medium-sized businesses in the country and that they are the ones with the least financial muscle to face unforeseen events. Entrepreneurs are calculating that their costs could skyrocket by as much as 20 percent in some cases. And given these increases, he already considers that they could be forced to make adjustments to their payroll, that they would not hire new employees and, even in the most extreme situations, they would have to lay off and close their business.

“The high costs of the reform will especially affect micro, small and medium-sized companies, which constituting 97 percent of the business fabric. You have to think about their future. In order to stabilize afloat, they must choose to reduce their payrolls or increase the prices of the goods and services they offer to consumers”, said the president of Fenalco, Jaime Alberto Cabal.

Bar and restaurant sector, one of the most affected

Those most affected by measures that will have to be debated in the coming weeks in Congress, such as that the night shift start at 7 and not at 9 at night or that the Sunday recharge Be it 100 percent gradual instead of the 75 percent that exists today, it will be food businesses, bars, lodging, entertainment, and private surveillance and security companies.

Bars and restaurants are the ones that are most concerned about these changes, since their busiest days are at night and on Sundays. Camilo Ospina, president of asóbaresHe says that businessmen in the sector have already reached a spending ceiling and that they can’t take it anymore.

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Likewise, Guillermo Gómez, executive president of codres, points out that restaurants have been continuously increasing prices for 30 months, added to the rise in rents and public services, which has forced them to raise their menus and that their sales have fallen. «Making operating costs more expensive will lead to greater informality and a contraction of gastronomy,» he says.

‘The little margin that the tax left me will be finished off by labor, Raad Arabian Food

The owner of raad arabic food He confesses that if the reform is approved, he would be forced to fire 50 percent of his employees or even close one of the two restaurants he has in Bogotá, one in La Macarena and the other in Usaquén. «The little margin that the tax left me will be finished off by the labor», Fernando sentence.

In total, he says that in the last year there has been an increase of 37.5 percent due to the higher prices of raw materials, mostly of the Arab products that it imports. In addition to this, there is 8 percent of the consumption taxthat the sector was charged again in 2023, and that has forced them to raise prices.

Likewise, the two more hours of surcharges that you would have to pay to your employees if the night shift starts counting from 7 p.m. and 100 percent of the payment of the Sundays and holidays. “Our biggest sales are made on Sundays and holidays. By increasing costs, we would work only to pay workers. Consequently, it would be very difficult to operate ”, he acknowledges.

‘Inflation, slowdown and reform joined us’, businesswoman from Bogotá de la noche

Another businesswoman in the nightlife sector with several venues in Bogotá is concerned about how her business will hold up in the future with the effects of inflation, the economic slowdown and the new job changes that would come. “My great concern is that the companies that have been surviving these problems can now overcome the increases in labor costs that are proposed in the labor law,” says Valeria (not her real name), who prefers to remain anonymous.

«We’ll see how far we can go,» says a businessman from Medellín

Traders are not far behind. Jorge knows well what resilience is. More than 50 years ago, his family had to open a supermarket in the city of Medellín, which today has two locations and generates more than 100 jobs. Throughout these years he has had several crises, but he believes that with this he will not be able to take it anymore, since it would make it difficult for his business to continue operating.

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His problem is that 54 percent of the company’s sales are made after 6 p.m. and on Sundays. «The increase in night recharges it would represent an increase of 38 percent of our labor costs, which would make the operation unfeasible. The only option would be to adjust the schedules. In that case, all the staff we currently have would not be necessary and there would be layoffs, ”he confesses.

In addition, he says that with these changes he would not be able to cover the costs of renting one of his points of sale, since this has increased by 13.2 percent in the last year, and that, in the long run, he would seek to include self-service modules. payment to not depend so much on human resources. “We had been badly hit by the impact on the logistics chain and when it was already half stabilized, the tax and other new obligations occurred. With all these changes, there is no legal stability. We will see how far we can last ”, she acknowledges.

‘Our costs would increase by 17%’, engineering company

The impact would not occur only in those sectors. Luis Fernando says that in his engineering company he would also feel the effect of the changes proposed by the reform. He says that his 4 employees usually work quite a lot in non-conventional hours since they have to attend to tasks of adaptation, maintenance and rehabilitation of buildings.

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“In general, they start after 6 pm, the time when the officials leave the facilities, or the Sundays and holidays. Making quick calculations, for us the costs would be increasing by around 17 percent”, she says.

And since his income depends on the work contracts that come out through public tenders, says that in some cycles he does not have works in progress and, therefore, he has to do without staff. «This would be complicated by the issue of severance pay, which with the reform would be tougher, which means that we have to think carefully when hiring a person,» he admits.

NOELIA CIGÜENZA RIAÑO
Economics and Business Deputy Editor
On Twitter: @noe_cig