By Taxpayers Association
In Peru the alarms went off because the government approved a decree that prohibits the labor outsourcing in activities that it defines as the ‘core of the business’, despite warnings and opposition from various sectors, such as the MEF itself and the BCR, not only because this measure will affect formal employment and productivity in the midst of a serious crisis, but because it has overtones of illegality, by creating a concept (‘core of the business’) that does not exist in the current law and to include it a rule of equal or greater rank would be required.
In the country’s mining sector alone there are 70,000 jobs in irrigation, according to the Association of Mining Contractors of Peru (Acomipe). This is seen in a context of very precarious recovery of the peruvian labor market, where wages are low and there is a strong increase in informality. Today, in Lima alone, there are the same number of unemployed as there was in all of Peru five years ago.
But how has this contracting mechanism impacted the region? An analysis of the Peruvian Taxpayers Association reveals that, in the countries where it is applied, the results are positive because it allows companies greater flexibility and improves their productivity and competitiveness.
This is the case of Colombia, where between 2010 and 2016, exports of outsourced services grew 3% and employment increased 13.8%. Another very positive aspect is reflected in the fact that 60% of workers under this modality do not have a bachelor’s degree or specialization; that is, it generates employment in social segments where the workforce is not highly qualifiedwhich also helped to reduce informality.
To this we must add that, in just four years, more than 497,000 Simplified Stock Corporation (SAS) companies were created in Colombia, a type of company that is used in outsourcing activities. On average, there were 5,700 new companies per month, most of them foreign capital.
The opposite happened in Ecuador, where in 2008 outsourcing was prohibited, which led to 80% of the more than one million workers under this modality losing their formal employment.
The same thing happened in Bolivia, where in 2010 all forms of subcontracting or outsourcing were annulled, which also triggered informality in mining.
In 2021, Mexico also restricted outsourcing and caused that, of the more than 5 million workers hired by third parties, only 2.7 million went to the payroll of client companies. Nearly half lost their jobs. Is that the path we want to follow?
Labor intermediation and outsourcing, are they the same?
It is common for the political narrative to restrict flexibility in the labor market, as the government intends through the Ministry of Labor and Employment Promotion (MTPE), to have its origin in the erroneous confusion of the concepts of intermediation and outsourcing, which are not the same.
For example, in labor intermediation work or labor is provided, while in outsourcing goods and services are provided, but the differentiating element that puts outsourcing above intermediation is the temporary nature of work that allows predictability, generating effects positive about the level of employment, formality and economic activity. Being companies that cooperate with each other for the productive system under the same objective, each part is autonomous, creating units that allow them to compete under market mechanisms, which generates greater efficiency in the production of goods and services given the inherent risks; This increases the capacity for entrepreneurship.