OECD proposes that the minimum wage in Peru be differentiated by age or region

After the president of the Republic, Dina Boluartein his message to the nation on July 28, expressed his desire to announce “soon” an increase in the minimum vital remuneration (RMV) – currently set at S/1,025 – after consensus between workers and employers, the issue has returned to the public agenda, to such an extent that the Organization for Economic Cooperation and Development (OECD), in its first economic study on Peru, made comments on the matter.

For the economic forum, to which Peru aspires to join, it maintains that increases in the minimum wage must be decided following technical criteria and taking into consideration the impact on employment and informality. They specified that, although a methodology to adjust the RMV based on inflation and productivity was approved in 2007, it has never been formally applied.

Given this, the OECD suggests that a technical secretariat be created within the National Labor Council or an independent commission in charge of monitoring the evolution of the labor market and productivity, as well as making recommendations on increasing the minimum wage, in the same way that other countries that make up the international organization do.

Differentiated remuneration

One of the proposals that the OECD makes to Peru is to consider establishing a minimum vital remuneration in the country differentiated by age or region, which could favor the formalization of young and poorly “skilled” workers in rural areas. Furthermore, the organization emphasizes that a basic salary with this characteristic would facilitate the incorporation of young people into the labor market and reduce unemployment.

“Although minimum wage practices vary from country to country within the OECD, many have a minimum wage that differs by age group (in recognition that young people tend to have less experience, so the minimum wage is a greater barrier to employment) and/or by region (to take into account differences in the cost of living and local labor market conditions)“argues the OECD Peru 2023 Economic Study.

The document sent to the Peruvian Government specifies that differentiating basic remuneration would imply making a constitutional change, which makes said reform politically difficult and the need to achieve a broad consensus in the political debate. Furthermore, it adds that “continuous monitoring and evaluation is warranted when implementing minimum wages to avoid potential inconveniences.”