PRACTICAL GUIDE · EMPLOYMENT AND SOCIAL SECURITY
Cochabamba, 26 October 2026 · Benjamín Reinicke
A higher national minimum wage may also increase the cost of employees who earn above that amount. The seniority bonus accounts for much of this effect. When budgeting for 2027, employers should assess it alongside employer contributions and statutory employment benefits.
I. The starting point
In January 2026, Bolivia’s national minimum wage was set at Bs 3,300, a 20% increase from Bs 2,750 in 2025, effective retroactively from 1 January. The wage negotiation framework requires written agreements, compliance with the national minimum and preservation of acquired employment rights. Negotiation cannot reduce or disregard non-waivable rights.
A company’s payroll budget should distinguish an adjustment to the national minimum wage from any increase in basic pay. Their effects differ and should be calculated separately.
II. What has been decided for 2027
The authorities have announced that they are considering a possible wage increase for 2027. As of 26 October 2026, no legal provision has been identified establishing the percentage, scope or effective date of such an increase. Public statements and proposals from stakeholders do not amount to an approved wage obligation.
Retroactive application should not be treated as confirmed either. For cash planning, it is prudent to model a scenario effective from January, subject to the eventual legislation and implementing rules.
III. How the minimum wage affects the seniority bonus
The fact that no employee earns the minimum wage does not mean an increase is irrelevant to the company. Under the general framework, the seniority bonus is linked to the national minimum wage and recognised years of service, rather than the employee’s individual salary. The scale starts at two years.
For productive enterprises, the statutory calculation base is three national minimum wages. Case law has also applied this approach to certain profit-generating commercial and service activities. However, this base should not be assumed without reviewing the employer’s activity, the applicable framework, agreements and any more favourable recognised conditions. A base of one minimum wage applies in some circumstances.
An increase in the minimum wage can therefore raise the bonus payable to professionals and managers covered by employment legislation even if their basic pay remains unchanged. Moving into the next seniority band produces a further adjustment that should also be budgeted.
Example using a base of three minimum wages
The following table compares the current minimum of Bs 3,300 with an entirely illustrative 10% increase, bringing it to Bs 3,630. This is neither an approved percentage nor an official forecast for 2027.
| Years of service | Rate | Bonus at Bs 3,300 minimum | Bonus at Bs 3,630 minimum | Monthly difference |
|---|---|---|---|---|
| 2–4 years | 5% | Bs 495.00 | Bs 544.50 | Bs 49.50 |
| 5–7 years | 11% | Bs 1,089.00 | Bs 1,197.90 | Bs 108.90 |
| 8–10 years | 18% | Bs 1,782.00 | Bs 1,960.20 | Bs 178.20 |
| 11–14 years | 26% | Bs 2,574.00 | Bs 2,831.40 | Bs 257.40 |
| 15–19 years | 34% | Bs 3,366.00 | Bs 3,702.60 | Bs 336.60 |
| 20–24 years | 42% | Bs 4,158.00 | Bs 4,573.80 | Bs 415.80 |
| 25 years or more | 50% | Bs 4,950.00 | Bs 5,445.00 | Bs 495.00 |
Calculation: three minimum wages × the applicable seniority rate. Amounts are individual monthly bonuses, excluding employer contributions and statutory benefits. The table assumes no change in seniority band.
A company with 40 employees in the 5–7 year band and subject to this base would pay an additional Bs 4,356 per month in seniority bonuses alone: Bs 108.90 × 40. If the adjustment applied for twelve months and those conditions remained unchanged, the additional annual cost would be Bs 52,272 before contributions and statutory benefits, even without changing basic pay.
IV. Other costs to review
- Employer contributions. Increases in remuneration subject to contributions raise the contributions calculated on those amounts. Apply the bases and rates of each relevant scheme; do not indiscriminately include every payment or confuse employer contributions with employee deductions.
- Annual statutory bonus (aguinaldo). The seniority bonus forms part of the relevant remuneration. Under the general framework, the reference is average total earnings over the last three months for employees classified as empleados and the last month for workers classified as obreros, subject to applicable pro-rata rules. The instructions for the relevant year must also be reviewed.
- Severance compensation and payment in lieu of notice (desahucio). Higher qualifying remuneration affects the average earnings used for severance calculations, normally based on the last three months. Desahucio should be included only where legally due; it is not automatically payable on every termination.
- Other benefits and premiums. Review items linked by law, contract or collective agreement to the minimum wage or remuneration. Not all bonuses, allowances or overtime payments follow the same formula or depend directly on the minimum wage.
- Retroactive differences. If future legislation requires retroactive application, differences will need to be calculated for each employee and period, including their effect on contributions and other applicable items. This can concentrate a substantial cash outflow in a single month.
V. Preparing the budget
- Model independent scenarios. Compare minimum wage increases of 5%, 10% and 15%, combined with basic pay adjustments of 0%, 5% and 10%. These are planning assumptions, not announced percentages. Once legislation is approved, review its beneficiaries, exclusions and application rules.
- Update seniority month by month. Identify employees who will reach two years of service or move into another band during 2027. Confirm the applicable calculation base before projecting the bonus.
- Calculate the full cost. Include wage differences, employer contributions and the impact on the aguinaldo and statutory employment benefits. Distinguish annual cost from the cash outflow potentially required for retroactive payments.
- Review contracts and agreements. Identify obligations linked to the minimum wage, basic pay or official increases, together with any more favourable benefits already recognised.
- Document voluntary increases. Specify the amount, date and payment item. If the parties agree that an increase may be credited against a future mandatory adjustment, do not assume the clause alone will suffice: its validity will depend on the legislation and implementing rules eventually adopted and respect for acquired rights.
- Plan liquidity and update estimates. Consider setting aside cash from January for a retroactivity scenario and review the appropriate accounting treatment with the accounting team. Update the budget when official provisions become available.
VI. How we can help
At Reinicke Ostria, we help you review the calculation base for seniority bonuses, quantify different payroll scenarios and assess contracts, agreements and voluntary increases. Contact us to prepare an employment cost budget tailored to your company.
This article is for information only and does not constitute legal advice. Each case requires an individual assessment.
Vision without limits. Precision always.