Currently, less than a third of active Peruvians have access to stable employment, with a productivity that allows the remuneration necessary to survive adequately. Unemployment is only 10 percent of the 2/3 who do not have a quality job.
In an open economy, the creation of quality and productive jobs depends on the growth of private investment, which will require appropriate competitive conditions to materialize.
In this context, the purpose of this paper is to argue that, in the current situation in the country, the best strategy for creating quality jobs is a combination of policies aimed at expanding external markets for Peruvian exports, with others aimed at improving the competitiveness of the country and its companies, raising the productivity of all resources, especially labor.
Background
Between 1990 and 2002, the growth of formal employment was only 1.2% per year, in contrast to the 4.8% registered by informal employment. This continues trends recorded from 1982 onwards, and shows the weakness of investment growth to sustain a significant increase in quality employment.
The weakness of the increase in investment recognizes several causes. One of them, the most relevant for an open economy, is the weak competitiveness of the country and its companies. An example of this is what happened with two key variables for competitiveness: total productivity and the real exchange rate.
Regarding total factor productivity, it has remained stagnant in the last three decades, with the exception of the period between 1992-19972.
The multilateral real exchange rate fell by 68% between 1986 and 2002. Consequently, Peru lost competitiveness in both ways (real exchange rate and total productivity), in a period in which many countries devalued and made efforts to improve the productivity and competitiveness of their economies.
The escape valve in the face of these events was the reduction in average labor costs, through the reform of labor contracts initiated during the early 1990s. However, this measure only served to keep some companies afloat, but not to generate the necessary stimulus to permanently increase private investment and, with it, employment.
