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Peru: More suffering for informal economy

Latin America Press | March 1, 2007

PERU: More suffering for informal economy

Noticias Aliadas. Mar 1, 2007

Labor Ministry’s meager efforts to protect workers keep informal laborers on the edge.

Peru’s Labor Ministry is optimistic about the country’s ability to promote employment while defending workers’ rights.

But lacking a strong legal system to support the effort and insufficient personnel to enforce even the existing legislation, Peru’s labor system has alarmed international organizations and even US lawmakers, wary of rushing into a free trade agreement with the country.

“We now have a law that works,” Peru’s Labor Minister Susana Pinilla told foreign journalists Feb. 13. But the Labor Ministry receives 1,800 labor-related complaints per day, Pinilla says. There are not nearly enough staffers to handle those. “How are you supposed to enforce the law? With a strong inspection system,” Pinilla said.

Even labor inspections, which Pinilla said will greatly cut down on labor violations, especially in the informal market, seem a bit of a pipe dream. The Ministry has 250 inspectors for the entire country, where 11.2 million people comprise the economically active population. Most are concentrated in the sprawling capital, Lima, where 4 million people are economically active.

Though the inspection system appears to be bordering on a crisis, or extreme inefficiency, Pinilla was eager to speak of the importance of promoting medium and large businesses in Peru, adding that private investment is the Peru’s best ticket out of unemployment figures.

“For a country to get to a point of having full employment, private investment should be 25 percent,” said Pinilla, adding that private investment levels in Peru should reach just over 19 percent by 2009 or 2010.

Growth fails Peru’s poor

But economic growth in Peru does not seem to be helping the labor market.

The minister said unemployment in the country was just 5 percent in 2005 - the most recent available statistics, though she said figures were unlikely to change in 2006. But underemployment reached 53 percent, evidence that in a country where nearly half the population lives on US$2 per day, labor statistics can be skewed.

The free trade agreement between Peru and the United States has highlighted Peru’s weaknesses in defending workers’ rights, some sectors say. The agreement “is a giant step backward from existing trade-related labor protections in the region,” said the Citizens Trade Campaign, a US-based coalition of groups that was founded during the fight over the North American Free Trade Agreement (NAFTA).

The group complains that Peru does not protect workers rights to unionize, collective bargaining, and that temporary workers are prohibited from joining unions. The coalition also lamented that even if textually sound labor law exists in Peru, child labor and sexual exploitation continues unabated.

Peru’s labor laws and labor market reality has also alarmed US lawmakers. While the free trade agreement with the United States has already been signed by Peru’s ex-President Alejandro Toledo (2001-2006) and US President George W. Bush, and has been approved by Peru’s Congress, the US legislature has urged Peru to provide greater protection to its workers.

US Rep. Sander “Sandy” Levin, D-Mich., critized the current agreement after a trip to Peru last year. “This agreement is a seriously missed opportunity to shape expanded trade and make globalization work so the benefits are widely shared by citizens of both our nations,” he said in a statement.

“Without basic internationally-recognized worker rights Peruvians will not be able to fully address the conditions of poverty and deep income inequalities,” he added.

 source: Latin America Press