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1 out of 10 people have access to a formal employment in Peru - Picture (c) Andina

Only 1 out of 10 with formal employment in Peru

Brief peak into the analysis prepared by José Carlos Saavedra for the congress

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TinTin - Last Update: April 29, 2017

The analysis of José Carlos Saavedra (specialist for macroeconomic analysis), indicated that only 1 out of 10 people have access to a formal employment in Peru. The full analysis of José Carlos Saavedra will be presented to the congress on the 6th and 7th of October.

The study analyzed the employment situation in a transition year (new government) for the Peruvian economy in the following segments: formal employment, differences by sector, type of workers, company size, hiring in a changing business environment with new challenges and opportunities for the new government.

The specialist said that in recent years, the business environment in Peru has undergone major changes.

We went from an environment in which sales growth came only when the economy weakened and a lot of efforts had to be invested to meet the goals. Literally speaking: In some cases, against the tide with even fewer people on board. This created several challenges for the areas of human resources like the need to better identify talent, the reorganization of teams to have more efficient structures and redesign the approach of incentives, said Saavedra.

As determined by the analysis, 2017 is the first year for the formal labor market to recover after five years of continued weakness. Currently formal employment is nearly stagnant. Per year between 15,000 to 30,000 formal job positions are being created in contrast to the number of people leaving a work place that is estimated at 200,000. This means that only 1 in 10 people can access formal employment and the informal employment is growing. It is most likely that companies will increase their pace of contracting employees within the next year and even more in 2018. This is mainly based on the recovery of private investment, the business expectations about future growth by the companies and possibly also by the positive expectations from the new government.

By 2017 a growth of 1.5% is expected. The expected recovery may not be enough to generate strong growth in formal employment, but next year will be a year with changes for most economic sectors. At the same time presenting new challenges to the areas of human resources, Saavedra said.

Saavedra also explained that private investment will be the protagonist. After falling for three consecutive years, tendencies show a growth in 2017. The construction and expansion of operations will increase the demand for workers, particularly in activities related to the construction sector, but also in the services sector that will remain the most dynamic economic sector. Much of the new investment is in infrastructure and in Lima. Thus, the Lima labor market will continue to be more dynamic than in the provinces.

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