Minimum Salary | Peruvian Economy | Rationality creates nightmare monsters | Comment

Thornbush and Edwards (1990) define population as a set of economic policies aimed at redistributing income by implementing measures that violate “good economics,” including budget constraints and efficiency policies. Dani Roderick (2018) defines it as “a set of irresponsible and unsustainable policies that often end in disaster and harm the vast majority of ordinary people they are meant to help”. Thus, the policy of continuous increase in the minimum wage is deviated from Productivity The worst labor conditions fall into Peru's category Populism And in a highly informal country like ours, it turns out to be the cheapest of its kind.

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Everything points to the president's unpopularity, coupled with his terrible economic management, leading him to seek “solutions” from the wrong side. However, if you really want to make solid progress that increases private investment, creates jobs, and brings greater well-being to people, what you really need to do is focus on policies that reduce social conflict; It puts an end to massive paperwork that kills formality; to eradicate abuse of power by its officers; To decisively address the problem of the illicit economy; Develop a realistic crime reduction strategy; Or an end to the Castillo government's disastrous labor regulations affecting micro, small and medium enterprises (MSMEs). But none of them are seriously planned and promoted R.M.V It has been placed at the level of irresponsible actions which continue to cause a lot of harm to those who cannot get jobs in good condition today.

It is enough to remember that already in 2017 Inter-American Development Bank (IDB) There is already a configuration in the Peruvian labor market that drives workers into the informal sector, where non-wage costs play a more distorting role. According to their data, hiring a formal worker in Peru costs 70% more than the formal salary and 100% more than the informal salary. Under these conditions, there is no way for MSMEs to assume the hiring burden.

Also Read: Maurate Now Says RMV Increase Not On National Labor Council's Agenda

Meanwhile, the same IDB study calculates the minimum cost of salaried employment, measured as a percentage of GDP per worker. In the Peruvian case, it was found to represent 45%, where RMV contributes more than half of that correspondence. These levels are higher than the average for Latin America and the Pacific Alliance. Countries with the highest minimum wages in Latin America, such as Honduras, Nicaragua, Guatemala, Bolivia or Ecuador, cannot be our benchmark. Or does this government believe they are pointers to follow?

The lack of ideas we observe at this stage of the game is truly amazing. The Minister of Labor justifies the increase based on Dina Boluarte's “presidential commitment”. This argument is simply absurd and dangerous in the current situation. It must be stressed that 2024 will be the last period for this government to implement economic policies that can make a difference in getting us out of the hole we have been led into. Because next year we will already enter pre-election terrain. But today, in the midst of an economic recession, if this government keeps thinking about funding PetroPeru, raising taxes, and raising the minimum wage, we simply need to start revising the normal official projections of economic growth and growth downwards. , informality and poverty rates. As we said, everything goes wrong when the cause sleeps or, it already leaves the country.