After almost four years, the minimum wage could be raised

2022 begins and part of the Government’s agenda for this year will be the discussion on the increase in the minimum vital remuneration (RMV), which currently amounts to S / 930 and has not had any variation since March 2018.

That is to say, For almost four years, the minimum wage has been stagnant.

Given this, the head of the Ministry of Labor and Employment Promotion (MTPE), Betssy Chavez, announced last December that in the first weeks of January a session of the National Labor Council (CNTP) will be convened to hold a tripartite debate –company, workers and the State– on a possible rise in the RMV.

There is provision

Last Thursday, the head of the MTPE announced that a meeting at the CNT would be convened between the middle and the end of this month to start the discussion. In this space for dialogue, the Executive’s increase proposal will be presented.

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Julio Cesar Bazán, president of the Central Unitary of Workers of Peru (CUT) and shift coordinator of the CNT Centrals, told La República that they have not yet received the invitation. However, they are open to dialogue.

RMV hike urgently

For the union leader, an increase in the minimum wage is urgent, especially in a context where the prices of basic products of the family basket have risen and the income of workers has been reduced as a result of the pandemic.

Another aspect that the president of the CUT considers is the rapid recovery of the national economy, therefore, there would also be macroeconomic support that makes an increase in minimum wages viable.

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“The reality of the economy, in the words of the ministers, is doing well with growth higher than projected, however, workers have been with salaries frozen for four years. There has to be an increase in the minimum living wage and there has to be a dialogue mechanism, “said Bazán.

The former Deputy Minister of Employment, Fernando Cuadros, agrees on this and points out that there is economic margin to raise the minimum wage.

In this sense, Cuadros Luque stressed that the technical dialogue in the Special Commission on Productivity and Minimum Wages (CESPM) of the CNTP will be key.

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For his part, the labor lawyer Ricardo Herrera, comments that a decision on how to raise the RMV should be discussed in the CNT, since it is necessary to listen to the position of the workers and employers, as well as the proposal presented by the Executive.

He adds that it is necessary that this year the minimum wage can be raised because the cost of living has increased, taking into account that inflation in 2021 closed at 6.43%, being the highest in thirteen years.

“The vital minimum has to be raised. We already have more than two years without an increase at least and we have had significant inflation, it is necessary, but at the same time it is necessary to know if the market is going to be able to absorb this increase, for that the growth of the economy is a variable, the cost of living and especially the productivity of companies ”, explained Herrera.

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Methodology ready

It is important to mention that since 2007 the formula for adjusting the minimum wage was agreed by consensus between workers, employers and the government., where inflation and productivity of companies are taken into account.

In addition, it is detailed that the RMV could be raised “when in practice the underlying inflation rate actually registered at the end of the period is much higher than the initially estimated, which is called the trigger clause.”

However, as it is not institutionalized, it is only referential, but has been used in the last increments of the RMV.

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Given this, former Vice Minister Fernando Cuadros specifies that if the technical mechanism of the CNT had been taken into account, the RMV would be at almost S / 1,200.

Also, based on this mechanism, points out that the new minimum wage should be between S / 1,000 to S / 1,100, being a reasonable amount and that it would not have any impact on the labor market.

For its part, Bazan Figueroa He expressed that the RMV should rise between January and March of this year and argues that this increase should occur periodically until reaching S / 1,500 at the end of the current government.

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Executive could make decision

Although the discussion on the RMV will take place in the CNT, on no occasion was an agreement reached and finally it was the Executive who made a decision on the matter.

According to the labor lawyer Ricardo Herrera, there is always a reasonable amount of time for the issue to be discussed, but in the event of not reaching a midpoint, it is the government of the day that finally decides whether to raise the minimum wage, as well as the amount of the increase.

For his part, Fernando Cuadros, former Deputy Minister of Employment, considers that no later than the beginning of February, with a broad debate, it should be clear how much the new minimum vital remuneration would amount to.

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The word

Fernando Cuadros, former Deputy Minister of Employment

“If the technical mechanism of the CNT is taken into account, which includes factors such as inflation and productivity, there is room to increase the minimum vital remuneration.”

Evolution of the minimum wage until 2022