Chile: President promulgates legislation instigating a minimum income guarantee

From May, state aid (IMG, Ingreso Mínimo Garantizado, Minimum Income Guarantee) will be paid to employees earning the minimum salary in order to guarantee a net monthly income of CLP300,000 (€323). Tax-free, this additional sum paid to more than 670,000 Chilean workers, will cost around $200 million (€184 million) for the year 2020. The amount of this aid is calculated on the basis of the minimum wage earned 3 months prior. Thus, for workers earning CLP301,000 (€325) gross (equivalent of the minimum wage for February 2020), the first IMG payment will be CLP61,200 (€66.10) in order to obtain a gross income of CLP362,200 (€391). In March the minimum salary was raised to CLP320,500 (€345) and as such the IMG amounts to CLP45,353 (€49) from June onwards. “This represents a significant contribution for several Chileans,” said the liberal right-wing President Sebastián Piñera, “and we know that the coronavirus crisis will affect not only our health, but also the most vulnerable cohorts, and our economy as a whole.” The Chilean government, under pressure amid a full-blown social crisis, created this financial cushion for minimum salary earning workers in an attempt to appease those who have been demonstrating since October 2019.