CTS could be reduced by unemployment insurance

One of the important issues for the management of the Ministry of Labor and Employment Promotion (MTPE) is the implementation of unemployment insurance in Peru, which has been working in coordination with the International Labor Organization (ILO) and that it even already has a preliminary proposal that is waiting to be shared and discussed with employers and workers.

In dialogue with La República, the portfolio minister, Edward Garcia, He announced that actuarial studies have already been carried out that show that it is financially viable.

“The one that has been working with the ILO is a very interesting proposal, and What it would be necessary is to be able to reactivate the dialogue with the social actors to be able to finalize how this protection system could be made viable”, added the official to this medium.

CTS would have adjustments

The owner of the PETM it also clarified that the implementation of unemployment insurance will not imply the elimination of Compensation for Time of Service (CTS); however, he did reveal that this could imply making some adjustments for the calculation of this employment benefit.

“The amount resulting from this actuarial study is approximately between 1.7% and 2.2% of the remuneration. The CTS it is 8.33%, so there could be evaluated the way to distribute the assumption of that cost that would assume assuming the unemployment insurance”, he specified.

For Brian Ávalos, partner of Estudio Payet, Rey, Cauvi, Pérez Abogados, it is right that any proposal from the Executive in labor matters goes through a social dialogue. Likewise, he considers that the MTPE proposal would seek that a part of the CTS be a contribution for unemployment insurance, which would not be well received by the workers, who would see a lower deposit of this labor benefit.

“The minister said that it was going to be adjusted, what would be done is to reduce the percentage or the form of calculation of the CTS and with the surplus this insurance against unemployment would be paid, that may be valid, but we would have to see how they take it the workers”, complements the labor activist.

Finally, Minister García stated that, although the implementation of unemployment insurance is important, This will go through a discussion with the social actors and then send the bill to Congress.

CTS no longer covers the worker for unemployment

According to the head of the MTPE, Edward Garcia, The CTS no longer works as a protection mechanism for the worker when he loses a job, since regulations have been issued that enable the withdrawal of this benefit, which in practice “becomes additional remuneration.” For this reason, he believes it is convenient to implement unemployment insurance.

“The CTS has somehow lost that nature of unemployment protection,” he asserted.

The word

Eduardo García, Minister of Labor and Employment Promotion

“The CTS scheme no longer fulfills the purpose for which it was intended, then, I don’t think unemployment insurance can justify the elimination of the CTS, but maybe some adjustment”.