The World Economic Forum (WEF) published the Global Competitiveness Report 2018 last week and Peru occupies the 72nd place in the labor market pillar.
“The Peruvian middle table position (63 of 140 countries) reflects, on the one hand, its macroeconomic strength and, on the other, weaknesses in the pillars of the labor market, institutions, infrastructure and innovation”, said El Comercio.
According to the WEF, competitiveness is defined as “the set of institutions, policies and factors that determine the level of productivity of a country”. Therefore, the results of the report also explain, in part, the deterioration of productivity in Peru.
“The potential GDP (Gross Domestic Product) of an economy represents the product that could be generated by employment and installed capital. Thus, potential growth consists of the contribution of the two factors of production, capital and labor, and the advance of productivity in the use of these factors, known as total factor productivity (TFP). The behavior of the TFP has responded to the economic policies of the country in different periods”, El Comercio explained.
During the 1950s and 1960s, TFP grew significantly due to favorable internal and external conditions, while, during the 1970s and 1980s, protectionist policies and the centralized economy negatively impacted productivity, according to information cited by the aforementioned media.
Peru occupies the 72nd position in the labor market pillar. Among the most lagging indicators of this pillar are hiring and firing practices: Peru is ranked 128 out of 140 countries.