Peru’s labor minister announced on Thursday that the national labor board (CNT) will meet in June to evaluate an increase in the minimum wage.
Labor minister Fredy Otarola stated there would be an increase, but the board would determine the appropriate amount.
“Conditions are right for an increase in the minimum wage. This government has already raised it twice, and next semester there will be a third,” he said.
However Otarola declined to state how much the minimum wage would increase, instead deferring to the labor board. “The CNT formula uses inflation and productivity factors. It is precise and we will adjust based on that.”
According to Pontifical Catholic University economist Felix Jimenez, “The increase could generate a positive impact on the economy by stimulating internal demand, even if a small effect.” He explained that workers would immediately spend money on products from national industry. He added that an extra $24 per month, a 10% increase, would not have a significant effect on the labor costs of businesses.
But there is mounting criticism from the business sector. According to Lima Chamber of Commerce analyst Cesar Peñaranda, the increase will affect small- and medium-sized businesses. Martin Perez, president of CONFIEP (National Confederation of Private Business Institutions), says the increase will only help a small number of workers.
Otarola countered that 200,000 workers will benefit. While business interests claim this is a small percentage of Peru’s 16 million workers, some economists point out the wage hike will also benefit 70% of workers in the informal labor market.
Otarola reiterated the rate of increase will be defined by CNT as a function of inflation and productivity projected by the Economy and Finance Minister, Alonso Segura Vasi. When asked if the monthly minimum wage target was $259, a $19 (8%) increase, the minister declined to specify. He added that the National Labor Board meeting in June would determine the amount.