The new law would encourage small- and medium-size businesses to hire young people who work in the so-called informal sector (which operates outside of the control of the government).
Leaving aside criminal activities, this sector includes those who work in informal mines, household maids, market workers, garbage workers, craftsmen and street vendors—many of them children.
Thousands of other workers in the “formal” economy are subjected to contingency contracts and hunger wages, something that is typical in the textile industry and other maquiladoras tied to exports.
While the growth of precarious work is a global phenomenon, it dominates in Peru. It is estimated that 74 per cent of the economically active population (EAP) —and 9 out of 10 young people—work in the informal sector. This sector and other special regimes of “labor flexibility” have been promoted by all Peruvian government since the first government of Alan García Pérez (1985-1990) of the ostensibly populist APRA party. Since then, the informal sector has grown enormously.
The part of the new law that has caused the greatest controversy is its mandate to cut labor benefits in order to lower the cost of hiring young workers. Young people between the ages of 18 and 24 will have no access to unemployment compensation, life insurance, family bonuses or the right to vacations.
The student protests represent the beginning of popular opposition to the openly rightwing Humala government, whose golden years based on the exportation of minerals, mainly to China, are over, and which is now forcing the people to pay for the slowing of the economy. It is determined to transfer an ever-greater share of the wealth produced by the Peruvian working class to Peruvian and world capital.