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Peru Employment
The Peruvian labor force increased from 3.1 million
workers
in 1960 to 5.6 million by 1980, and to 7.6 million by
1990. As it
did so, the share of the labor force in agriculture
steadily
decreased, but the shares in manufacturing and mining
failed to
rise
(see
fig. 11). On balance, the decreases in the
agricultural
share had to be offset by increases in the share in
service
activities, some of them offering productive employment at
abovepoverty income levels but many of them not (see
table 17,
Appendix).
Peru's long process of transition away from a rural
society
was far from complete at the beginning of the post-World
War II
period. Fifty-nine percent of the labor force was still
working
in agriculture in 1950. That share fell to barely over
half by
1960 and to 34 percent by 1990. The more surprising trend
is that
the share of the labor force in manufacturing also fell,
from 13
percent in 1950 to 10 percent by 1990. Stable shares in
both
construction and mining meant that the shift out of
agriculture
went mainly toward services, pulling their share of
employment up
from 23 percent in 1950 to 50 percent by 1990.
The persistent decrease in the share of the labor force
in
agriculture could in theory have helped to alleviate rural
poverty by leaving higher average land holdings to those
remaining in agriculture. But the absolute number of
people
trying to make a living from inadequate land holdings
actually
increased. The labor force in agriculture rose 52 percent
between
1960 and 1990. In addition, emigration from agriculture
exerted
increasing pressure on labor markets in the cities, and
the
increase in rural workers kept earnings low in that
sector.
A growing labor force need not drive wages down and in
most
instances does not, provided that investment and technical
change
keep opening up new opportunities for productive
employment fast
enough to absorb the larger number of workers. Peru
managed to
accomplish such growth in the first post-World War II
decades,
but from the early 1970s the trend went downward. As more
and
more workers tried to survive in the service sector by
selfemployment or work with families instead of formally
registered
firms, they created a rapidly growing informal sector.
Workers in
the informal sector are mostly employed, and they
certainly add
to national income, but their earnings are often below the
poverty line.
Overt unemployment that can actually be counted has
been only
a small part of the problem. The overt unemployment level
in Lima
was an estimated 7 percent in 1980, rising to 8 percent by
1990.
But estimates of underemployment in part-time or very
low-income
activities indicate that 26 percent of Lima's labor force
was in
this category in 1980, and fully 86 percent in 1990. Such
measures are invariably somewhat arbitrary, depending on
how
underemployment is defined and measured. However, the fact
that
the share of Lima's labor force fitting the definition
more than
tripled between 1980 and 1990 is readily understandable in
the
light of the deterioration of the economy in the 1980s.
Data as of September 1992
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