In the words of the Organization for Economic Cooperation and Development (OECD), the challenge of informality is of great importance in Peru, since around 80.9% of workers are in informal jobs, without social and labor protection, and outside the tax and formal benefits system.
In the region, Peru thus leads the percentage of labor informality, They are followed by Mexico (68.3%), Colombia (61.5%), Argentina (50.5%), Brazil (35.6%), Costa Rica (27.6%) and Chile (26.0%).
Peru tops the list in the region regarding labor informality. Source: OECD
“Although there is no silver bullet, as the roots of informality are multidimensional, promoting formality through a comprehensive package of reforms is essential to reduce poverty and inequality, boost productivity and improve tax collection. Ensure universal access to basic social benefits (health, pensions and social assistance), for both workers in the formal and informal sectors, it could eliminate some distortions that encourage informality”signed Paula Garda and Michael Koelle in the Economic Study of Peru 2023.
They added that greater social spending is required financed by general taxes instead of social contributions that make the creation of formal employment more expensive and encourage the creation of informal employment. In addition to providing universal access to pensions and health services financed by general taxes, it would offer the possibility of reducing social contributions for low-income workers, promoting formal employment and boosting productivity. It is worth remembering that in Peru there are three proposals to reform the pension system, which are on the agenda.
What other areas should be prioritized, according to the OECD?
OECD specialists highlighted that there is a need to improve access to high-quality education, as it addresses another fundamental cause of informality: low labor productivity. “To close the gap in learning outcomes, especially among disadvantaged students, it is necessary to improve teacher training and address gaps in school infrastructure,” they note.
The Economic Study of Peru 2023 highlights three more priority areas, which would be key to reform with a view to joining the OECD, a process that our country began in 2022. These include: promote long-term growth, strengthen public finances and confront climate change, since the country is “highly vulnerable” to extreme weather events.
Source: Larepublica
Alia is a professional author and journalist, working at 247 news agency. She writes on various topics from economy news to general interest pieces, providing readers with relevant and informative content. With years of experience, she brings a unique perspective and in-depth analysis to her work.
