Living in Peru : your everyday companion

Info provided and translated by the
American Chamber of Commerce of Peru (AmCham Peru)

Before the current discussion about labor issues, the potential of Peru as an exporting country is at jeopardy.

While U.S. congressmen demand that the U.S. Administration negotiates with their Peruvian counterparts a side letter that satisfies US democrat’s labor concerns in the U.S.-ATPA, in order to consider a favorable vote on the agreement, the Peruvian congress just passed and scheduled a bill for plenary vote regarding the “General Labor Law”.

In the case of the U.S. Congress, it is quite worrisome that the approval of the ATPA fails to come out of a political trap.

The fear –or in some cases demagogy of some- about losing American jobs facing the chance of an eventual flee of investors towards Peruvian territories, is wrongly supported in the mistaken argument that states that our labor regulations are less protective than the American ones.

Nothing could be further from the truth. Formal workers are way more protected than Americans. Moreover, the ATPA is what will contribute to the generation of more formal jobs in Peru, thus reducing the hiring rate of workers to whom their rights are not respected.

On the other hand, more jobs will also be created in the U.S. This is mainly fostered by greater export levels of American capital goods, supplies and technological products to Peru.

Also, the strategic alliances as a result of the ATPA will be the reason by which companies of both nations will turn to be more competitive. Thus, it is clear that while one wins, the other does not necessarily lose. On the contrary, both win.

In the case of Peru, it is difficult to understand why current congressmen approved a bill such as the General Labor Law, having in mind that it makes it more expensive to hire a formal worker and thus, it promotes the hiring of informal ones.

We shouldn’t forget that big companies don’t hire informal workers, not only because the protection of worker rights are the main standards of those companies, but also because the consumers are their best “enforcers.”

Thus, instead of promoting the capacitating of workers in order to achieve an increase of their productivity, the General Labor Law would reduce the competitivity of companies and workers, perpetuating poverty rates in Peru. Maybe it is simply that the notion of labor rights has turned 180°?