How informality affects the economic development of southern Peru

The level of informal employment in the Macroregion South of the country affects 8 out of 10 Peruvians according to National Institute of Statistics and Informaticswho earn an average of SGD 835 per month, and this amount is only enough to buy food, because until 2021 the basic food basket for a family of 4 cost 804 soles.

The southern macroregion includes Madre de Dios, Apurimac, Arequipa, CuscoTacna, Moquegua and Fistin the latter, 4 out of 10 people are poor and suffer the most from informality, according to Jesús Salazar Nishi, president of the National Society of Industry.

Informality affects 8 out of 10 Peruvians in the southern macro-region, which includes Madre de Dios, Apurimac, Arequipa, Cuzco, Tacna, Moquegua and Puno.

“In Puno, informal employment exceeds 90%, again the second worst in the country, Huancavelica is in first place with almost 95% and if we take this to the average income, we understand that in Puno a worker earns below the minimum wage, earning an average of 800 soles. an informal worker earns an average of 635 soles, while a formal worker earns just over 2,000,” Salazar said.

In the Southern macro-region, average poverty affects almost 3 out of 10 people who have limited access to basic resources. For example, out of 10 Peruvians: 1 does not have water, 4 do not have sewerage; and almost 6 do not have Internet access.

There is an urgent need to improve budget execution in the southern regions of Peru

Creating opportunities for a decent life falls mainly on public investment carried out by the state for the construction of schools, hospitals, and roads, among other things. However, government spending is inefficient, said Leti Gomez, an economic research analyst at Comex Peru.

“Regional governments left a balance of 696 million soles, while municipalities left over S$3,700 million of public works budget unexpended. What can be done about it? In short, the unspent more than 4.4 billion salts is equivalent to covering the entire gap in the health infrastructure in the Southern Macroregion, which amounts to the construction of 194 first-level care centers and 15 hospitals. figures of Minsa,” Gomez pointed out.

“In Puno, an informal worker earns an average of 635 soles and a formal worker just over 2,000.”

Only Fist It had a lead of 69% of execution, which is the lowest figure in the entire Southern macro-region. The already budgeted 178 million soles were not spent here. This department also tops the list of regions with less competitiveness; that is, it does not have the capacity or conditions to generate economic growth.

Without infrastructure, departments will not attract private investment, which, according to Comex Peru, generates 7 out of 10 official jobs at the national level; However, there are other factors that cause failure, says Oscar Chavez, head of the Institute for Economics and Business Development. Lima Chamber of Commerce.

“Currently it social instability This is something that affects the development of business, to which should be added the economic downturn and the unfavorable international environment with countries that are more concerned about controlling inflation; However, we believe that investments are meant for the medium and long term, so the capital is always there, especially in those countries that have significant economic potential, such as Peru, the spokesman said.

Lima Chamber of Commerce identified 260 mega projects underway in South of the country this implies a government investment of $10 million; however, the institution reminds that the initiatives are designed for the medium and long term.

At the moment, according to the Ministry of Economy, Peru is losing 100 million salts a day due to conflicts in the Southern macro-region, where they demand early elections. The institution has announced projects for the economic recovery of this region of the country, which cannot be carried out unless the conflict ends.