Between 2002 and 2023, 11 of the 13 (85%) increases in the minimum vital remuneration (RMV) in Peru “have coincided with electoral periods or periods of low presidential approval”, making it necessary to make the approval of a formula viable. for periodic updating, according to an analysis by the Central Reserve Bank of Peru (BCRP).
The issuing entity points out that, in the last two decades, the increases registered “a special pattern, which would seem to be related to political factors and not necessarily technical ones.” For this reason, it points out the need for a “formal mechanism for its fixation.”
“It would be appropriate to define a frequency for evaluating the validity of the RMV […] A formal mechanism would reduce its use for political purposes,” the document reads.
However, MEF and MTPE have conditioned the application of the formula to the agreements that can be reached in the National Labor Council (at the end of 2022, unions and the State addressed the issue, but the private parties did not attend) and the exit from the recession, recovery through the formal private sector.
We enter a spiral with no exit. To increase the RMV, the MTPE conditions the reduction of informality. But if we raise the minimum wage, fewer companies will formalize or others will go back in the process, in theory.
“So, it is never a good time to technically raise the minimum wage in Peru,” according to Fernando Cuadros, former vice minister of Employment Promotion. He explains that, in 2022, the ILO provided advice to update the formula agreed upon in 2007, which anchored the increase to inflation in the last year and the variation in the average labor productivity of the entire economy, among others.
“The minister is confused when he says that we must get out of the recession to agree to the increase. It is one thing to define the mechanism, and another to announce the increase with a decree. For the first, you do not need to be growing, we will see later if it corresponds or not,” he explains.
A debt in the MTPE
The BCRP itself assures that an adjustment through a formula would provide the market with “greater predictability regarding future adjustments and would allow companies and workers to make better decisions.”
The general manager of the IPE, Carlos Gallardo, adds that other aspects must be taken into account for an eventual increase, such as that it would only affect 2% of the workers (based on the universe of 24% of the formal workers to date), and that The RMV in Peru “is equivalent to 60% of its average income, higher than that of other countries in the region.”
In this sense, he explains that, according to official data, raising at discretion 10% of the minimum wage can increase inflation by 0.7%, which indicates that an RMV differentiated by region could even be considered so as not to undermine formality.
All in all, Gallardo recognizes a debt from the MTPE to define the formula, regardless of its immediate application or not. Meanwhile, INEI warns that, between last December and February, almost 1.7 million workers in Lima earned less than S/800 per month, and falling.
“It is the best path, since the RMV has had a very political use. President Boluarte even promised an increase in her last message on July 28, and it is not appropriate,” she clarifies.
Data
Example. In Chile, the RMV is reviewed, at most, every two years. In Colombia, Mexico, Costa Rica and Brazil, every year.
Option. According to the OECD, Peru should adopt a differentiated RMV according to age or region.
Source: Larepublica
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