Growth has become more inclusive in recent years in Colombia. Strong growth and targeted social policies have reduced absolute poverty. Conditional cash transfers and education policies have increased attendance in schools. Universal health care is improving wellbeing of many Colombians. Reductions in non-wage labour costs have increased formal employment and access to social benefits. However, income inequality remains high with large disparities across regions. The causes are many. High informality keeps many workers in low quality jobs without social benefits or access to finance. Inequality is a gender issue as labour force participation rates and wages are lower for women than for men. Inequalities also reflect low social mobility as opportunities for education and jobs are influenced by socio-economic backgrounds. More targeted programmes are necessary to increase education enrolment rates of disadvantaged children in less developed regions. Further reductions in non-wage labour costs can raise formal employment. Better access to labour market programmes, early childhood education and elderly and disability care can boost female labour market participation. More resources are needed for targeted social programmes to achieve stronger outcomes. A comprehensive pension system reform is needed to extend coverage and alleviate old-age poverty.

This Working Paper relates to the 2017 OECD Economic Survey of Colombia (www.oecd.org/eco/surveys/economic-survey-colombia.htm)