Labor & Workforce

Peru’s already big informal sector expands further amid pandemic

By Monica Martinez

Lima, Aug 20 (efe-epa).- Lima’s Central Market has seen a rise in the number of street vendors who were forced into that option after their stable job or small business abruptly disappeared amid the coronavirus-triggered lockdowns, one manifestation of a recent expansion of Peru’s already large informal sector.

Jorge Ramirez arrives at 9 am with a load of bottles of disinfectant spray and masks to sell in that popular Peruvian capital shopping district, where importers and wholesalers now display different items to combat Covid-19, including hand sanitizers, face protectors and coveralls instead toys and perfumes.

Ramirez is a former employee of the Education Ministry who used his severance pay to launch a business with his wife, but “the pandemic practically bankrupted us because we were unable to pay our rent. We had no capital, so we’ve had to go and sell on the street,” he told Efe.

He said that he and his family live in the city as opposed to hillside slums and therefore have received no aid from President Martin Vizcarra’s administration, which has provided financial assistance to the country’s most vulnerable households.

Ramirez said he and his wife have gradually used up all of their capital during the four months of quarantine and now “have nothing left.”

A few meters away, Ronald Diaz sells sheets and mattresses. He left his previous formal job due to a sharp pay cut and now works as a vendor along with a female friend from his neighborhood who was left unemployed this year.

“I started (working as a street vendor) when the pandemic began because prior to that I was working at a company,” Diaz told Efe. “But I was left unemployed as a result of the pandemic, so I used my savings and bought my own merchandise.”

The call center company where he had been working laid off more than 50 percent of its work force and started subtracting days from the monthly payment of those that remained, prompting Diaz to resign and set off on his own.

Street vending is prohibited in downtown Lima, but Diaz said Peruvians use their ingenuity to avoid the security guards and sell their wares until shortly before a nighttime curfew starts at 10 pm.

Peru’s lockdowns have exacted a heavy economic toll, with several million left unemployed since the quarantine began and the vast majority of working-age people now making a living in the informal sector, according to figures from economist Kurt Burneo.

“Prior to the quarantine or social isolation, we had 72 percent of (workers) in the informal sector; in other words, just over seven out of 10 were informal,” Burneo said in an interview with Efe,

“Now with the results we’re seeing, the sustained drop in economic activity, considering that from April to June we had 6.7 million unemployed … this has contributed to the informal rate in the labor sector rising possibly to a number near nine,” he said.

“Nine out of 10 (workers), when it had been seven out of every 10,” the economist said.

Leonor Almonacid is a disabled woman who for the past month has been selling coat racks in Lima’s Central Market from her wheelchair. Prior to the pandemic, her husband had a job and she dedicated herself to her home.

“I was at home before because I live with my husband who also is disabled. He had a business. He sold (products) at hospitals, but he can’t now after what’s happened. The hospitals are contaminated and we had to come here to sell,” she told Efe.

Almonacid is one of the beneficiaries of the government’s aid payments, but she said the assistance is not enough to make ends meet and that she and her husband also face workplace discrimination.

“There’s not much (work) for people with a disability. It’s hard for us to find a job,” she added.

The fact that nearly two-thirds of the population works in the informal sector “creates vulnerability in the economy as a whole,” said economist Jorge Chavez, chief executive officer of the consulting firm Maximixe.

“Consumption has fallen in Peru because the large portion of the population that’s informal … accounts for 58 percent of consumption,” which has tumbled as their income has fallen amid the pandemic, he added.

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