Informality, an obstacle for everyone

Informality, an obstacle for all When analyzing the economic situation in Peru, we are faced with an alarming reality: over 70% of the country's economy is immersed in informality, a figure that starkly contrasts with developed nations like Switzerland, where informality barely reaches 10%. This gap highlights the arduous task of formalization that still lies ahead in our country, where informality extends across all sectors, including commerce, transportation, agriculture, and mining, generating a negative impact on the economy, society, and the environment. Informality not only represents disorder in the economic system, but also carries profound consequences that go beyond merely economic aspects. This phenomenon leads to illegality in many cases and can even fuel criminal activity. Informal activities outside the system do not contribute to tax revenues, which directly impacts the quality of public services and the lives of the population in general. The current regulatory framework in the country has contributed to fostering informality, creating an environment that disadvantages formal businesses and those seeking formalization. Even sectors like mining are affected by high levels of informality, which are linked to organized crime and unregulated practices that harm the economy, the environment, and society as a whole. Although the Permanent National Employment Survey (EPEN) reported a decrease in informality from 74% to 71% in the period 2022-2023, this reduction is not a cause for celebration, as it is largely due to the loss of over 600,000 jobs in the informal sector during that period. This situation highlights the job precariousness faced by thousands of Peruvians, who lack benefits such as severance pay, bonuses, paid vacations, and contributions to a retirement plan. Informality is mainly concentrated in cities like Lima, Tacna, Arequipa, Puerto Maldonado, and Pucallpa, emphasizing the urgent need to implement effective solutions that promote formalization and improve working conditions throughout the national territory. Various measures are proposed by the business sector, such as economic recovery through the creation of new formal jobs, labor law flexibility with fiscal and administrative incentives that favor formalization, as well as prioritizing attention to informal mining. It is essential that governmental and legislative decisions do not incentivize informality but rather promote formalization and the creation of an environment conducive to sustainable economic development. Public-private collaboration becomes indispensable in implementing formalization programs that boost labor competitiveness and contribute to building a fairer and more prosperous country for all Peruvians. International cooperation, through organizations like the World Bank, can be key in designing and implementing effective formalization policies that have proven successful in other countries. There needs to be a strong and determined political will to address the issue of informality with concrete and well-planned measures, involving all sectors of society and focusing on innovative solutions that drive the country's economic and social development. Peru is not alone in the fight against informality and can look to successful experiences in other countries to learn and adapt strategies that fit the national reality. Only through a joint and coordinated effort, with active participation from all involved parties, can we move towards building a more formal, equitable, and prosperous Peru for all its inhabitants.