Chile’s new minimum wage ranks among Latin America’s highest
Chile has announced a minimum wage rise to CLP 529,000 in May 2025, followed by a second raise to CLP 539,000 in January 2026, as reported by Bloomberg Tax on May 12, 2025.
These raises will make Chile’s minimum wage one of the highest in Latin America after adjustment for the cost of living. This decision follows a formal agreement between the Chilean government and the Central Unitary Workers’ Union (CUT), and was highlighted by President Gabriel Boric during his State of the Union address.
The wage hike equates to approximately US$1,138 per month when adjusted for purchasing power parity (PPP), according to the Economic Context Observatory of Diego Portales University (OCEC-UDP). Only Costa Rica has a higher PPP-adjusted minimum wage in Latin America.
How is purchasing power parity (PPP) calculated?
Purchasing power parity is calculated by comparing the cost of a standard basket of goods in different countries, and adjusting exchange rates so that the same goods cost the same amount in each country.
What are the Wider Impacts for Chile?
This move positions Chile as a regional leader in minimum wage rates. For workers, the raise offers relief from rising costs. However, business groups have voiced concerns about potentially driving inflation and the absence of a corresponding rise in productivity.
The Confederation of Production and Commerce warned that wage hikes without productivity growth could lead to job cuts or price hikes. Conversely, labor unions argue that the adjustment still lags behind the real cost of living in metropolitan areas.
President Boric emphasized that Chile’s progressive stance on minimum wage is a milestone. The Ministry of Finance estimates the raise represents a 3.6% increase in May and 1.9% in January. The move also builds on a 48.4% cumulative rise in minimum wage since December 2021, far outpacing the 22.5% rise in consumer prices over the same period.
Despite Chile’s regional lead, it still ranks low within the Organisation for Economic Co-operation and Development (OECD) countries. The highest PPP-adjusted minimum wages are found in the UK (US$3,793), Germany (US$3,727), and Ireland (US$3,716).
Labor productivity, however, has been largely stagnant. Economists warn that the wage increases could squeeze businesses if not matched with investments in technology, training, and infrastructure.
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