The first year of the pandemic shook the Peruvian economy in all its dimensions, considering that poverty reached 30% of the population, more than 2.2 million lost their jobs, and inequalities regarding access to welfare increased. German Alarco unravel what happened and trace a route to overcome the blow.
What are the central axes of your most recent research?
Based on an event such as COVID-19, simulation exercises are presented on what could happen in the Peruvian economy between 2020 and 2030. Taking into account trends in labor content per unit of product, plus the impact of the pandemic in terms of boosting communications information technologies, robotics and artificial intelligence, it is determined that these new technologies will negatively impact labor recruitment. The projection widens for 2030 the gaps of economically inactive population, unemployment and precariousness of the workforce.
A serious point inherited by the pandemic was the enormous contrast in inequalities…
The drop in revenue globally was 4%, and in the Peruvian case, 11%. As far as business profits are concerned, these fell in many sectors, but there were others where they did not. The asymmetries were tremendous. In the same agricultural sector, there are subsectors that gained and others that lost the average, as well as others that were below the average, depending on what happened to their final by-products. In short, the pandemic in 2020 it generated a giant inequality gap. Perhaps the only one that was not opened was between the urban and rural areas, because the least affected activities were, precisely, those linked to agricultural activity.
Why did it end like this?
Pandemics have historically generated greater inequalities and, at the same time, these are their main explanatory factor: inequalities in housing, health and income. In addition to the fact that this pandemic has driven technological change, reducing the labor content per unit of product.
What do you see ahead?
The same. There is a slightly higher level of production than in 2019, but the recovery of employment and income has nothing concrete. There is a very different effect between those of us who were able to work with information technologies (at a distance) and those who were able to work directly (face-to-face), who were the most affected.
What policies to bet on to reduce these gaps?
The document does not propose a comprehensive strategy because it seeks to draw attention and give warning signs (…), but Among the key elements of the transformative recovery agenda is the ecological transition and a new social consensus. The latter is discussed elsewhere, but not in Peru.
Is a new Constitution necessary?
I support the need to adjust the Political Constitution as necessary. That’s where the consensus goes. Changing it from scratch is unnecessary. We have an upstart political class that, despite the national agreement where policies were proposed at the beginning of the Government, came to nothing.
And the tax reform?
This is a key issue. It is not admissible to have a tax pressure of 7 percentage points below the average for Latin America, which is 23% (Peru has one of 16%, according to the OECD). These points mean that there is a lack of US$ 12,000 million necessary in collection for better infrastructure, social programs, economic transformation and productive diversification.
There is a lack of political will to make it happen…
We understand that there are serious problems, but management problems are not exclusive to this government. If we review what happened in the last 30 years, we see that they are the same. Those who say “no, everything was wonderful before” are thinking wrongly. Let’s look at what is discussed in the world. We have to line up. These are not new ideas or revolutionary ideas. Let’s see what they say even in the World Economic Forum, who talk about the urgency of a great restart because of the pandemic, but we are still the same. The book presents that the forum asks to focus on dealing with the great inequalities, but in the Peru that issue is vetoed, as is the new social consensus and the ecological transition.
How can the mentioned technological changes affect the workforce?
Insisting on a 100% extractive strategy (such as mining) can only generate an inactive economic population gap, according to our scenarios for 2030, of 500,000 more people. We are not talking about the unemployed, but about people who will now stay at home and seek their means of subsistence through informality, considering this scenario in which technological change is magnified.
Finally, are you in favor of the continuation of the bond program to help the household economy?
No. This is a matter of short-term urgency. The problem that I raise is structural and has to be faced with workforce training and not by prohibiting technological changes, but by proposing the need to regulate this change to enhance its positive elements and try to mitigate the negative ones.
The keys
Upturn. Alarco recapitulates that 6 Peruvian billionaires saw their net wealth increase from US$7.6 billion -before the pandemic- to US$11.4 billion in March 2021.
Changes. The employed population was reduced by 2 million 231,300 workers, and the largest contraction occurred with the population of women, with 1 million 295,000 workers.
Source: Larepublica
Kingston is an accomplished author and journalist, known for his in-depth and engaging writing on sports. He currently works as a writer at 247 News Agency, where he has established himself as a respected voice in the sports industry.
