“Decent work and free trade: the role of international cooperation”, by Enrique Fernández Maldonado

Last week, El Comercio published a survey in which “85% of Peruvians were in favor of free trade.” And 73% considered foreign investment as “the only way to achieve economic development.” Positions that are in line with the “great global consensus” of recent decades, where international trade is linked to the reduction of poverty in various regions and countries of the world. However, in opinion studies, the responses usually focus on the questions and options posed by the pollster, with diverse approaches and biases. Thus, these same Peruvians surveyed could have a different assessment if they were asked, for example, which sectors they see (most) benefited from economic liberalization, and if they are among the main beneficiaries.

Therefore, a topic like the one presented would merit a serene and considered look. Although the “export boom” recorded since the beginning of this century contributed to the 2002-2019 economic growth and the revitalization of regional labor markets (incorporating thousands of workers into the formal economy), it is also true that this growth had an unequal impact on the sectors involved. That is, there were those who benefited more than others.

The International Labor Organization (ILO) recognizes this in a recent report on decent work and trade: “Trade has created employment opportunities for all skill levels in both developed and developing economies, helping to lift millions of people out of poverty.” But at the same time, “the benefits of trade have not been distributed evenly, neither among countries with diverse resources and capabilities nor among sectors with different production patterns.”¹

In Peru, one effect of the unequal distribution of the benefits of export growth (or foreign investment) has been social conflicts. Cases of resistance from Andean communities to mining projects without a social license (Conga, Las Bambas), or the protest of agroindustrial day laborers for better working conditions at the end of 2020, clearly expressed the limits and contradictions of the primary export model. Fractures that occur, paradoxically, in the two sectors that grew the most with economic liberalization and the signing of free trade agreements with the main economies of the world (USA, China and the European Union).

Let’s see in this article what happens in the workplace. What would prevent greater worker participation in the benefits of international trade? In the Peruvian case, we would be faced with a set of institutional arrangements, which come from the nineties, and which are part of the neoliberal “orthodox consensus” that was maintained despite the promises of “change” or “transformation” of the post-dictatorship governments. .

The most publicized example of this type of arrangement was the famous Chlimper law (Law 27360). This “promotional” regime for agribusiness reduced labor rights with respect to the general regime (vacations, bonuses and compensation), set a lower contribution to social security (4% instead of 9%) and cut income tax in half. (from 29.5% to 15%). Despite its temporary and “promoting” nature, it remained in force for two decades. What’s more: it was used in addition to the labor regime for non-traditional exports (which allowed indefinite fixed-term contracts), as well as with the multiple modalities of temporary contracts made possible by the general regime (DL 728).

The result could not be otherwise: the accelerated growth of an agroindustrial proletariat without job stability, with reduced rights and incomes equivalent to the legal minimum. Formal but precarious employment. But, above all, with extensive difficulties in unionizing and bargaining collectively (barely 2% are unionized in the sector). This would be one of the institutional arrangements that would function as a dam for the empowerment of workers, prevented from exercising their freedom of association for fear of dismissals legalized by current regulations.

In large and medium-sized mining, more than 70% of workers are hired by subcontractor or service companies. Thus, segments of workers are formed who, performing similar tasks for the same company, have access to unequal remuneration and conditions. Starting with their exclusion from the negotiation with the main company “for not being part of the payroll” (goodbye profits).

And be careful. Those who observe these inconsistencies are not—only—Peruvian civil society organizations, such as the Ica Human Rights Commission (Codehica) or CooperAcción, unfairly attacked for contributing to the strengthening of agroindustrial unions and communities affected by mining, so that they can demand their rights from the State and companies.

On the contrary, the alerts come from our main trading partners and their diplomatic missions. At the end of May, two officials from the Canadian Ministry of Labor were in Lima monitoring the social and labor impact of the trade agreement in force since 2010. They met with public officials, companies and unions. Simultaneously, the Delegation of the European Union in Peru met with representatives of civil society, unions and indigenous peoples to follow up on the labor and environmental scope of the trade agreement with that economic bloc. A year ago, in July 2023, an OTLA representative visited us with similar objectives. The common denominator, a shared concern about the limited progress in terms of rights in the field of bilateral trade.

Let us remember that the Peruvian trade union centers, with the support of local, European and North American NGOs, filed complaints against the Peruvian Government for not honoring its labor and environmental commitments made in the FTA with the United States (2015) and the European Union (2016). In both cases they were admitted and answered by the competent institutions, issuing recommendations to the Peruvian State that fell, incomprehensibly, on deaf ears.

Persistent non-compliance could lead to trade sanctions that would end up being more costly than a pretentious collective agreement. Therefore, the efforts of some sectors to block and control the articulated and supportive work of international cooperation, NGOs, union, community and indigenous movements. Especially, that related to the promotion of citizen participation and the demand that the State and companies comply with their obligations regarding human and environmental rights.

1 ILO. Integrating trade and decent work: Has trade created better jobs? Conclusions based on Decent Work Indicators. Vol. 1. Geneva, 2023