Multi-dimensional Review of Peru
Volume 2. In-depth Analysis and Recommendations
Peru has experienced significant improvements in economic growth, well-being and poverty reduction since the introduction of macroeconomic reforms, economic openness and more effective social programmes in the 1990s. However, the country still faces structural challenges to escape the middle-income trap and consolidate its emerging middle class. This report provides policy actions to tackle the main bottlenecks to boost inclusive development and well-being in Peru. In particular this report presents an in-depth analysis and policy recommendations to boost economic diversification and productivity, improve connectivity and reduce informality. Policy actions in these areas demand better institutions and improvements in areas and markets, including research and development and innovation, fiscal policy, education and skills, logistics and transport infrastructure as well as labour and product markets.
Towards more formal jobs and economic activities in Peru
OECD Development Centre
To promote itself to a high-income country, Peru must address the pervasive, persistent issue of informal economic activity and employment in the country. This chapter analyses informality in Peru and provides policy recommendations to mitigate the negative impacts of informality and promote more formal jobs and economic activities. Informality generally involves lower job quality and labour conditions, leaving many workers in vulnerable situations. Costs of formalisation, linked to both wages and non-wage labour costs, only partly explain informality in Peru. Low productivity levels, strongly associated with low skills levels, mean workers are not sufficiently productive to overcome the current costs of formalisation. Coupled with an economic structure concentrated in low value-added sectors, where informality is the norm, there is little opportunity or incentive for formal job creation. Peru must revise, design and implement strategic short- and longer-term policy actions to redress the underlying structural causes and consequences of informality.