Living in Peru : your everyday companion

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

Usually I dedicate this space to talk about the countless business opportunities and successful stories that motivate us to wager the investment and allow us to dream with starting an entrepreneurial venture of our own. But faced with certain legal initiatives that are threatening with making the work force even less flexible than it is, it is absolutely necessary to ponder upon the messages that our country is sending to the world market as an old and inflexible piece of legislation, can tear down the optimism of potential local and foreign investors – as well as significantly reduce the competitive edge of any industry.

In a country like Peru, where 62% of the GDP is represented by informal labor - the fifth highest number worldwide - it is imperative to promote policies that will formalize the economy and create more formal employment. But in order to do that, it is necessary to understand what is it that motivates entrepreneurs to do business outside of the law.

According to a study launched by the International Monetary Fund, named “Measuring the Informal Economy in Latin America and the Caribbean”, what creates the informality, in the specific case of Peru, is the lack of flexibility in the workforce. Therefore, it really comes as no surprise that the World Bank, placed Peru in its Doing Business 2008 Report, in the 159 position out of 178 countries ranked. On the other hand, The World Economic Forum, in its Global Competitiveness Report 2007- 2008, confirms that the Peruvian working market is located amongst the most inefficient ones in the world, ranking us in position number 87 out of 131 nations analyzed. As opposed to Chile and Costa Rica who occupy the 14th and 18th positions respectively.

Hence, it is quite evident that if legislation is not released and worked towards a less rigid labor status, formality in the system will not be instilled, and if this occurs those who are deprived from basic benefits like health insurance and a social security pensions will never be able to take advantage of the economic growth.

Under these circumstances, the recent law of SMEs is appropriate because it contributes to the formalization of more than 3 million productive units that are, to this day, operating outside of the law.

Nevertheless, this clear notion is not present in certain sectors of Congress, who is still pushing to make the labor legislation more and more rigid in order to protect just a few, forgetting that in this manner they create havoc to the private sector who wants to create formal jobs.

Therefore, dear reader, you may coincide with me in the urgency of making this framework more flexible in order to ensure quality employment now that several free trade agreements are about to begin, in order to increase the minimal percentage of Peruvians who have access to basic labor benefits without that threatening the viable economic growth and finally attacking the historic problem of poverty in our country.



*Translated by Joceline Frank

Frankly Speaking Inc.

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As usual it is the voice of the organized union and vocal representatives in congress that is heard the loudest.
In a country where maybe 50 % of the economy is informal.
The people against flexible working conditions labour hard in securing the best working conditions for a few (maintain the system, the status quo).
At this the great mayority without voice misses out, and these people feeds onto the bitterness of those missing out on progress.
Those against free market and competiveness, in Peru, they win both ways!! Wake up preuvians.
Humble worker, dont forget first somebedy have to invest, then jobs can be created. Dont make it harder for anybody to invest.
Investor, dont forget for you to have cooperative labour force, pay them right, do not abuse of them with sweat shop salaries, that feeds into the propaganda of those agaisnt open markets.
Should be win-win situation.

     Is sad to know how the Peruvian congressman are putting more stones on the way, against the investments in our country. That way make more difficult to create new jobs.
    Wake up Peruvians!! and look at other countries like Chile, Costa Rica and other Asian countries, and how are changing its economics.

Hi, I read this article with great interest. As I am not an Economist, but would really like to understand the issue better, can you/anyone, please refer me to where I may find concrete examples of "Nevertheless, this clear notion is not present in certain sectors of Congress, who is still pushing to make the labor legislation more and more rigid in order to protect just a few, forgetting that in this manner they create havoc to the private sector who wants to create formal jobs"
Thank You.
Richard Coates
richard-1948@hotmail.com

People who judge with the use of statistics
wil be judged by the readers the same way if not totally ignored!

Let the peruvians solve their problems without looking at illed and failed models such as the USA housing market and world policing, etc.

Better yet, let's learn from others mistakes

Calos

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Poor seen as victims of failed trade talks
http://www.thestar.com/Business/article/469492

  As an American, I have visited Peru 3 times in the past 2.5 years.  Each time I visit I see more and more retail growth.  I have yet to visit M/P.  I have been to Lima and the outer cities Such as Burannco, Los Olivos etc.  Growth here in this Province is rapid.  This is very good! 
  I have recently been north to Mancora and Punta Sal.  This was the first time I was there.  I will tell you this, the beaches and the array of "shops" are excellent in Mancora and Punta Sal.  The problem I see is the travel time and "nothingness" between the airport and the cities on the coast.  There is so much potentional in this area (Interior). 
But in reality, the only reason someone would be in this area (interior) would be to travel to the coastline.
  It is my opinion, tourism should be high on the Governments list of economic growth plans.  Here is a simple rule: "People with money need a reason to spend it!"  In order to attract those people, you need to have a reason for them being there.  Your coastline is where you need to start and then work inland.  It would take me a while to write down some if not all the ideas to get Peru on the fast track to growth.  The bottom line is, Peru needs to have a reason for people to spend their money in Peru.
  Your country is beautiful!  The people are friendly! Its history is excellent!  The coastline are great!
  For the record I went to Peru in September.  I married Rosa.  I met her here in the US.  We wed in her home town of Los Olivos. 
Te quiero Rosa Weber!