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Peru’s President Dina Boluarte announced a 10% increase in the country’s minimum wage. The new rate will rise from 1,025 soles to 1,130 soles monthly, equivalent to about $302. This change will take effect on January 1, 2025. It marks the first minimum wage adjustment since May 2022, during Pedro Castillo’s administration.
Boluarte made this decision after the National Labor Council failed to reach a consensus. She claimed the increase resulted from professional technical analysis. The government aims to boost spending power among lower-income segments of the population. However, some business sectors worry this might encourage informal employment.
Peru’s economy shows signs of recovery after a challenging period. The country experienced a recession in 2023 due to adverse weather and political unrest. Now, Boluarte projects a 3.2% economic growth rate for 2024. She also noted a significant recovery in private investment.
The wage increase comes as Peru grapples with inflation. In November 2024, the annual inflation rate reached 2.27%, up from 2% in October. This figure remains within the central bank’s target range of 1-3%. Food prices saw the most significant rise in eight months, increasing by 1.46%.
Critics argue that the new minimum wage still falls short of actual living costs. The average monthly household expenditure in Peru is around 1,900 soles. This amount is almost double the new minimum wage. The disparity highlights ongoing challenges in addressing income inequality.
Boluarte’s administration faces a delicate balancing act. They must weigh workers’ needs against potential economic impacts. The president emphasized governing based on concrete objectives rather than popularity ratings. Her approval ratings often fall below 5%, making her one of the least popular leaders worldwide.
Peru Raises Minimum Wage Amid Economic Recovery Hopes