The decisions of the Executive and other factors that affect the pockets of Peruvians

Today is the eleventh day since the strike of carriers began in more than 10 regions of the country, where dozens of Peruvians took to the streets to demand that the Government increase in fuels, the basic family basket and other services with which they disagree. Faced with the various protests that reached Lima, the President of the Republic Pedro Castillo, together with the Executive, took the decision to announce a curfew in Lima Metropolitana and Callao, decisions that have affected the pockets of thousands of Peruvians.

Given this, Jorge Carrillo Acosta, professor and financial expert at Pacífico Business School, spoke with Infobae Peru, mentioning that only the curfew has caused the loss of 1,000 million soles in the country and in these 10 days of about 3.1 billion soles have been wasted, which is 300 million soles per day.

“Peru's income figure is around 550 billion soles a year, if this is monthly or put into daily figures it is roughly 1,500 million soles a day; this is the eleventh day of unemployment and of these 1,500 let's say it affects 20% of products and services, because not only is the transport stoppage, but it is also the destruction of private property and looting, which is why the impact is greater; we are still talking about an impact of approximately 300 million soles per day and in 11 days of unemployment we are talking about 3.1 billion soles”, commented the expert.

“With yesterday's stoppage, the impact is more or less than 1,000 million soles, because Lima surely does not reproduce half of what comes out nationally, it is still lost. There are 3 billion soles due to the stoppages at the regional level and everything that happened nationwide; plus 1 billion soles that Lima loses due to the paralysis on Wednesday in total is 4 billion soles in one day,” he added.

On the increase in the basic household basket, according to the National Institute of Statistics and Informatics ( Inei), a little less than a year ago it cost S/ 1,440 and with inflation in Peru, which is 7%, it increases to S/ 1,540.

“Unfortunately, Peruvian income has also fallen by just over 9% in these two years, it is almost an average of S/1,600 that a Peruvian worker had on average at the end of 2019. (...) If only one person in the family works and supports their children, it is difficult for them to meet those needs. If there are more people who work, all of a sudden, it can reach,” said Carrillo Acosta.

On the other hand, another decision taken by the Executive, together with the president, is the increase in the minimum wage, the professor and expert in finance comments that this measure may sound good and reasonable to a certain extent, but that it ends up being “more of the same”.

“On this, two things must be taken into account: The first is that this increase only benefits formal workers who are only 567,000 people in the country, since they are on the payroll and have a minimum wage; and the second is that large companies will not be affected much, since they count with the financial support to do so, who will be affected is the Mypes or small companies, because this increase implies 95 soles more, it is almost 1,600 soles over the cost that will be annual. This increase will result in more expenses (bonuses, benefits, Essalud, cts, etc.)” , he commented.

The consequences that this measure would leave are that workers are dismissed, since companies will not be able to sustain the expenses or that formal workers who are on the payroll are transferred to informality so that the discounts are not applied to them.

Finally, the exchange rate, which at the beginning of this strike fell, but has now risen again from 3.63 to 3.69

“This drop in the minimum wage has, in a way, benefited the cost of living, because imported products can be a little cheaper, due to the fact that it fell by more than 9% in 2021. However, these days due to the protests the exchange rate closed at 3.69 and will obviously hurt the consumption of these products,” he said.

77% OF PERUVIANS ARE INFORMAL

According to the expert, 77% of the workforce in Peru is informal and that is the main reason that is causing all these decisions of the Executive to affect the pockets of Peruvians, since they live from day to day.

“If you stop a road, a road, an activity is closed or a curfew is made overnight, people don't go to work and if they don't work, they don't get paid. It's not like people who are on the payroll who can ask for permission, justification or ask for vacations; these people when they don't produce they don't get paid. With the decisions that the Government has made, people do not have enough to eat, so it is not even that they have something in store, it worries a lot, because it is going against what it initially defended so much: the people. It has the least resources and the one who is suffering the most,” he added.

Carrillo Acosta ended by mentioning that the consequences of all this are three important:

1) Less is produced and GDP is not going to be as it should. “If this year it was 2.5 to 3, now it will be worse.”

2) It affects investors and tourism. “The investor is going to think twice if he wants to come and invest in the country. A tourist who wants to visit Lima or Cusco runs the risk of them arriving and being locked in their hotel or missing their flights.”

3) Effect for people who live from day to day.

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