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Increase in the minimum wage without a negative impact on employment

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After the increase in the minimum vital remuneration (RMV) from S/ 930 to S/ 1,025 as of May 1, various business associations have stated that this measure would cause more unemployment and informality.

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Against this, the Ministry of Labor and Employment Promotion (MTPE) clarified that the increase in the minimum wage would not have a negative impact, since its review has been based on technical criteria and has the approval of the Ministry of Economy and Finance (MEF).

Sociologist and labor researcher Enrique Fernández-Maldonado also agrees with what was stated by the MTPE, since he indicates that the increase is reasonable and necessary because since April 2018 the RMV had been frozen.

Likewise, the also member of the Center for Public Policies and Human Rights (Perú Equidad) maintains that, quite to the contrary, an increase in the minimum wage has positive effects on the local economy, since it stimulates internal consumption.

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“This extra income is not used for savings because the workers who earn the minimum salary they use their extra resources to cover their consumption deficits. This still generates a positive impact on the economy. Formality and informality require policies beyond the minimum wage”, argues Fernández-Maldonado.

Impact on previous increases

During the evaluation for the increase in the minimum wage, the PEMT also carried out studies to find out if there were significant departures of workers from the payroll in the previous increases in the RMV made in 2016 and 2018.

Thus, the results revealed that the salary increases produced in those years did not generate effects on the probability that the worker will leave his job as a result of the increase.

By company size, in those with less than 10 workers, a very small probability was found that the worker would not continue in his job. Meanwhile, in the case of large companies, the probability that the worker will not continue in his job is even reduced.

In this regard, the head of the MTPE, Betssy Chavezassured that there is no evidence associating the rise in the RMV with a slowdown in the economy or the disappearance of micro and small businesses (mypes).

“If there are some sectors that say that the increase in the RMV will have a negative effect, they are incurring in two serious problems: How can they anticipate something that has not yet occurred? And, above all, they do not show any evidence of it, “said the official.

Likewise, the MTPE recalled that Peru is not the only country that raises the minimum wage, Well, most of the region, such as Brazil, Colombia, Chile, Ecuador, Mexico and Uruguay, have already done the same and in a pandemic context.

Family allowance rises to S / 102.5

With the increase in the RMV, the family allowance is also increased and will now be S/ 102.5 per month, since this benefit amounts to 10% of the minimum wage for all employees who have one or more minor children.

Also, with the new basic salary, from May 1 the economic subsidy of the beneficiaries of the labor training modalities (practitioners) will amount to S / 1,025.

In addition, the minimum monthly contribution to the ONP will be $133.25since it represents 9% of the RMV.

Infographic – The Republic

The word

Betssy Chavez, Minister of Labor

“They are incurring two serious problems: How can they anticipate something that has not yet occurred? And above all, they show no evidence of it.”

Enrique Fernández-Maldonado, sociologist

“The latest increases in minimum salary they have occurred within the margins of possibilities of the companies, that is to say, they have been consistent with productivity and inflation”.

Source: Larepublica

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