While the Executive is in a hurry to increase the Minimum Living Wage (RMV), which is currently at S/1,025, to win some applause, the informality labor force remains above pre-pandemic levels.
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According to data from the Central Reserve Bank (BCR), the informal employment rate in February 2020, that is, before the health crisis began, was 66%. However, labor lawyer Jorge Toyama said that today the percentage is at 71%, and it would take about four years to reach the levels before.
However, informality is not the only problem in terms of employment. Cost overruns and overregulation are also factors that prevent the creation of adequate employment.
Added to this are measures such as those proposed by Congress, which propose eliminating labor outsourcing, which has already been declared a bureaucratic barrier by Indecopi.
PENDING TASK
The Peruvian labor market requires several changes, which, for now, do not seem to be on the agenda of the Executive and even less so of Congress. Labor experts consulted by this newspaper, including Jorge Toyama, Germán Lora and Ricardo Herrera, detail the most urgent modifications that are needed and that the Ministry of Labor and Employment Promotion (MTPE) should promote.
Lora, for example, pointed out that the first thing that needs to be done is to change the attitude of the MTPE officials so that they understand that “if there is no employer, there is no worker.”
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The next step, he said, is a comprehensive review of Peruvian national legislation, from hiring, labor benefits, to the worker’s departure. In this regard, he said that, when someone is hired, in principle the cost paid for this person is approximately 40% of what he or she earns.
However, he pointed out that the problem now is that populist measures are being adopted which only generate applause, but do not solve the real problem because the technical part is not being implemented.
For Ricardo Herrera, one point that must be considered for employment to grow is that the economy advances more than 4% and that private investment is promoted.
He also stressed the need to provide greater labour flexibility and to remove the “excessive obligations” imposed on companies, which only lead to fines being imposed when they are not met.
“What needs to be done is to promote a campaign with tax incentives, for example, for the hiring of young people, which will open up space for these people to enter the market,” he said.
Jorge Toyama also highlighted the importance of promoting campaigns, but related to the generation of artificial intelligence scholarships, support and data. And leaving aside workshops for trades considered traditional.
“Furthermore, we need to change our focus towards social protection because Peruvians do not see the importance of having insurance and pensions. We need to persuade Peruvians that, before worrying about the CTS, they should have unemployment insurance,” he added.
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