PERU: An Introduction to Labour & Employment

Peru Labour & Employment Practice Overview  

The COVID-19 pandemic has unleashed one of the worst crises in Peruvian modern history as it has impacted the economic, political and social sphere. The way we live, and especially the way we work, has been disrupted by this event. Tensions in labour relations have been compounded by a complex political environment. In this context, employers, employees and institutions have all proved that adaptation is key in navigating crises. A new labour practice is breaking through; one that is using a human-centred approach to reimagine the future of work.

Facing a health, economic and political crisis 

Peru is one of the countries hardest hit by the COVID-19 pandemic. It has one of the highest rates of mortality in the world and one of the poorest economic performances in the region. The current vaccination campaign has helped to alleviate the health crisis, allowing businesses to gradually restart operations.

In terms of the economy, according to the Peruvian Institute of Economics (IPE) and the National Institute of Statistics and Informatics (INEI), the GDP dropped by 30% in 2020, making it one of the worst hit in Latin America. Labour informality, possibly the most serious flaw, increased by 8 points, a decade-long setback. Formal employment declined by up to 39.5%, while the regional average fell 20%. The most affected sectors were construction (-67.9%), manufacturing (-58.2%), services (-56.6%) and commerce (-54%). Fishing and mining were also severely affected, though the latter has a greater chance of recovery due to a rise in the price of certain minerals. This context has expanded inequalities based on gender, class and age, according to a report released by the International Labour Organization (ILO).

The serious economic crisis also brought an acute political and institutional crisis, with an interim government appointed in November 2020 and presidential elections in April 2021 that marked great polarization and fragmentation. The elected president took office on July 28 in a climate of uncertainty and anxiety, after announcements of more state intervention in the economy as well as increased regulatory and oversight pressure on businesses.

There is more political participation and involvement of trade unions in both the legislative and executive branches of the government, which has resulted in some tensions in the industrial relations in both the public and private sectors. The prohibition of outsourcing, the repeal of alternatives for suspension of employment in the context of the crisis, advocacy for collective bargaining by branch, the reform of the social security system, and other measures for specific sectors such as agro-export and mining have all been part of the public debate.

Adapt to survive 

In response to the crisis, several regulatory measures were implemented by the government. The regulation of remote working was introduced, allowing employers to switch from face-to-face to a virtual way of providing services. Over 71.8% of businesses have embraced teleworking in some manner, according to the INEI. In March 2020, 4,586 people were registered as teleworkers, whereas 68,565 employees were registered as such once the quarantine measures were implemented in April. This number kept growing, and by December 2020, there were over 221,670 registered teleworkers in the private sector.

As part of the government's emergency measures, the regulation of remote work was implemented. Some of the regulations were focused on equipment, health and safety measures, and work time. Transnational remote work was also allowed and the “right to disconnect” was recognized to avoid the negative repercussions of hyperconnectivity and to harmonize work and personal life.

This economic context forced many employers to reassess their organization's size, uncover efficiencies, adopt structural changes, or even change their core business. Even the most profitable and successful businesses had to deal with the prospect of bankruptcy as a result of the economic downturn and difficult decisions had to be made in order to avoid insolvency. In this case, labour advisors played a crucial role in the decision-making process of their clients and helped with the implementation of different measures.

Public institutions had to adjust to the new reality as well. Judicial and inspection hearings became virtual, which was a major challenge in the labour practice. Cooperation between parties and flexibility was crucial in overcoming the obstacles of this new method. As a result, lawyers and firms were forced to adapt.

The future of work with a human-centred approach

Faced with the crisis, we now have the chance to rethink the future of the labour and employment practice. There has been a greater emphasis on the introduction of new information and communication technologies in the workplace. Remote work is here to stay, at least partially. Tele-migration and cross-border services are now scenarios to examine in terms of labour organization. Workplace automation, digital platforms, big data and artificial intelligence are all part of our practice. Algorithms are being used not only for hiring purposes, but also for some organizational decisions like role and job position changes.

The future of work needs a social perspective. In 2019, a Centenary Declaration for the Future of Work was adopted in commemoration of the ILO's 100th anniversary, outlining a human-centred approach. This perspective should be incorporated to labour practice as well. In order to create a better work environment that fosters inclusion and diversity, many businesses have been transforming their organizations and HR departments. Gender equality policies, the inclusion and non-discrimination of the LGBTIQA+ community, and other practices that promote interculturality and the insertion of vulnerable groups are becoming more common in practice.

Likewise, there is a greater interest in improving worker well-being and introducing alternative dispute resolution mechanisms and social dialogue processes. As legal advisers, it is key to have a proactive role to prevent conflict. The labour practice is not only focused on the compliance with legal obligations, but also on the identification of the social repercussions of corporate decisions. It entails supporting employers through various decision-making processes, allowing them to understand the risks as well as the options and measures that are available to them, while also providing technical and highly specialized assistance.