- Aruba Minimum Wage Increase and Pension Reform

The Aruba minimum wage increase is once again at the center of national discussion as the Government of Aruba has invited key stakeholders to participate in a new Social Dialogue. The talks focus on labor reforms, pension updates, and legislative proposals that could significantly affect the cost of doing business on the island.

Prime Minister’s office invitations were extended to employers’ organizations, labor unions, insurance companies, and other economic stakeholders. Although AHATA declined attendance due to prior commitments and short notice, the issues remain highly relevant to Aruba’s business community.

These discussions follow similar consultations held last August regarding reforms to Aruba’s pension legislation, specifically the LAP reform. The repeated engagement confirms that the Aruba minimum wage increase and pension reform remain top government priorities.

Aruba Minimum Wage Increase Toward a Living Wage

A key proposal under review is the phased Aruba minimum wage increase toward a living wage over three years. This approach follows recommendations from the Social-Economic Council (SER) outlined in its January 2026 report titled:

“Adjustment of the Minimum Wage in Three Phases Toward the Subsistence Minimum.”

According to the SER, Aruba’s current statutory minimum wage remains significantly below the subsistence minimum. The income gap is estimated at approximately 25%. Rather than implementing an immediate increase, the Council advises a structured three-phase adjustment to minimize economic shock.

While employees would benefit from higher wages, employers may face rising labor costs and operational pressures.

Economic Impact of the Aruba Minimum Wage Increase

The SER report outlines several potential financial implications of the Aruba minimum wage increase, including:

Higher payroll expenses
Spill-over wage adjustments across salary brackets
Increased operational costs in service industries
Possible inflationary pressure

When minimum wages rise, other wage categories often increase proportionally. As a result, total labor expenses may expand beyond entry-level salaries.

International organizations such as the International Labour Organization (ILO) recognize the importance of living wages for social stability, but they also emphasize the need for economic balance and sustainability.

Pension Reform and LAP Update

Another major agenda item involves updates to the pension law (LAP). Current proposals require employers to:

Offer private pension insurance
Match 3% of employee salary in premium contributions

Government and unions are reportedly seeking further improvements to retiree benefits. However, mandatory employer contributions increase fixed labor costs, potentially affecting small and medium-sized enterprises.

Over time, pension reform measures could: