SANTIAGO, (Reuters) – The Chilean government has announced that they have reached an agreement to increase the minimum wage by two steps in the coming year with Workers’ United Centre of Chile (CUT).

The minimum monthly wage is currently 350,000 pesos (413) and will be increased to 380,000 pesos (4488) starting May 1 and 400,000 pesos (472) beginning Aug. 1.

A clause in the agreement provides for the raising of the minimum wage to 410,000 pesos by January 2023 in the event that December’s inflation rate is higher than 7%.

Chile is like other countries throughout the region. It posted in March the highest monthly inflation since 1993.

The government released a statement saying that the increase of 14.3% in the minimum wage was the biggest in over 25 years. In addition to subsidies, the plan provides benefits for basic food items and benefits that will help alleviate inflation effects on families with less income.

Jeannette Jara from Labor Ministry said that “We are grateful to the leaders of CUT for their willingness and ability to reach a good point in agreement”. She added that this agreement will not only benefit the 800,000 workers earning minimum wages but also the basic basket subsidy recipients.

This proposal will be presented to Congress later this week. Two competing proposals for pension withdrawals early were rejected by legislators, one of which was from President Gabriel Boric’s Government. This is to assist workers in fighting inflation and the economic fallout from COVID-19.

It was also stated that the agreement would establish an office group for negotiating and designing ways to cut Chile’s working hours from 48 to 40 hours.

David Acuna (CUT President) stated that while we have made significant progress in the protection and promotion of rights today, it is also the beginning of a dialogue.