Strikes continue

Colombian strikes compound economic woes and hinder recovery.

As Colombia heads into its fourth week of protests with large demonstrations demanding government action and change in education, health and social policies, the country’s political and social crisis has been exacerbated by more than 20 days of strikes (“Paro”), which are taking their toll on the national economy. The Chamber of Commerce of Barranquilla, the largest port city in Colombia, said that the strikes had impacted 86% of the businesses in the city.

Munir Jalil, Andean region head of BTG Pactual affirmed that the strikes will impact Colombia’s expected economic recovery from the COVID-19 pandemic. Jalil argued that the effects will be mostly visible in a slower GDP growth and higher inflation rates. In the short term, stores face supply shortages and the most affected sectors have been retail, agribusiness and logistics. Losses amount to COP 10.3 billion after more than three weeks of interrupted economic activity.

The general manager of a large textile manufacturer has seen huge disruptions, “The first three months of the year were very good, but sales in April and May have dropped considerably for two reasons: firstly, the strict lockdown forced retailers to close and the recent strikes had forced several production plants to close. In Cali and Barranquilla, we have seen some looting and the roadblocks have caused logistics problems and reduced employee mobility.”

“In Cali and Barranquilla, we have seen some looting and the roadblocks have caused logistics problems and reduced employee mobility.”

General manager, textile manufacturer, Colombia

A commercial manager at an automotive distributor had similar experiences although was more concerned about the fiscal environment, “We have seen some short-term disruption to sales and staff mobility but the Tax Reform would have affected the purchasing power of the people which would have affected us more on the medium and longer term.”

A managing director of a construction firm has a slightly different perspective, “We have seen some disruption due to mobility but other factors related to the strikes have been more damaging such as the price of the dollar. We won’t find out until the middle of the year, when we start negotiations, if the strike will have negative consequences.”

“We have seen some disruption due to mobility but other factors related to the strikes have been more damaging such as the price of the dollar.”

Managing director, construction firm, Colombia

Despite these pressing problems, government and social agents are still far from starting formal conversations to unblock the situation. While the government called on protesters, labour and student union leaders to end blockades, activists responded that they will not start negotiations until the government acknowledges their demands are legitimate, admits police brutality and guarantees the physical safety of protesters.

Further demonstrations have been called for the 26th and 28th of May. María Claudia Lacoutoure, president of AmCham Colombia expressed her mixed feelings about the current situation, criticising blockades but requesting that the government implements reforms to promote labour market inclusion and reactivate consumption.

 

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