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Income in Lima reaches S/ 1,982.30 per month, but still does not exceed the pre-covid level

José Carlos Saavedra - Partner and Principal Economist

19/03/2024

Column in Diario Gestión.

The situation responds to the fall in private investment, uncertain times to invest, to hire, uncertainty regarding labor standards, among others, said José Carlos Saavedra, from APOYO Consultoría.

The average monthly income of workers in Lima reached S/ 1,982.30 between December 2023-February 2024, according to information from the National Institute of Statistics and Informatics (INEI). It is undeniable that, in nominal terms, income has increased over the months. However, taking into account the “hit” of inflation in recent years, it still remains below the pre-pandemic level.

“The average income measured in soles, in nominal terms, is 10.7% above what was recorded four years ago, before the pandemic. The problem is that prices in Metropolitan Lima in that same period have increased 22%. So, real income, the purchasing power of labor income, is down about 9% (compared to the pre-covid level),” explained José Carlos Saavedra, partner at APOYO Consultoría.

This is explained, says Saavedra, by the lack of quality job creation, “The number of jobs has recovered and exceeds pre-pandemic levels, but adequate employment, which is the highest quality, is still below. That means that the post-pandemic employment recovery has been mainly about underemployment, low-quality employment,” he says.

Reviewing the numbers, INEI data shows that total employment in Metropolitan Lima is 6.5% above the pre-covid level. This is supported by the fact that underemployment by income is 53% above, while adequate employment is still 0.5% below.

The main explanation is the lack of growth in private investment, uncertain times to invest, to hire, uncertainty around labor standards, let’s remember what Pedro Castillo wanted to do (Agenda 19). The result of all of them is that the employment created is of lower quality and the higher quality is not enough to absorb the labor force,” considers Saavedra.

It is worth remembering that private investment contracted 7.2% in 2023, its second year in negative territory. For this year, the Central Reserve Bank (BCR) projected in its recent Inflation Report a “rebound” of 2.3% for this indicator, a figure that was adjusted upward from 1.8% in its report last December.

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Income in Lima reaches S/ 1,982.30 per month, but still does not exceed the pre-covid level

“The average income measured in soles, in nominal terms, is 10.7% above what was recorded four years ago, before the pandemic." - Jose Carlos Saavedra

Impacto de la conflictividad

La convulsión social y la incertidumbre asociada al entrampamiento político son de las principales fuentes de preocupación para los negocios.

Escalada de conflictos en minas contamina a
otros sectores

Según estimaciones de APOYO Consultoría, si no se hubieran registrado conflictos sociales en torno a la minería, la producción de esa industria podría crecer en 7% este año.

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