Why Peru Leads the Region in Labor Informality and What It Means for Growth

Peru has the highest rate of informal employment in Latin America, according to the International Labour Organization (ILO).

While the region’s average informality rate dropped slightly to 47.6% in mid-2024 from 48% in 2023, Peru remains an outlier. This reflects deep-rooted structural challenges in its labor market.

ILO specialist Gerson Martínez explained that Peru’s informality stems largely from sectors like agriculture, commerce, and services, which dominate job creation. Additionally, the prevalence of micro and small enterprises further drives these numbers.

Countries with a significant share of such businesses often experience higher informality rates. To address this, Peru’s Labor Minister Daniel Maurate proposed creating a registry for informal workers.

This initiative aims to design targeted policies for regions with high informality. Martínez called the proposal promising but stressed that broader strategies, such as poverty reduction measures, are also essential to tackle underlying issues.

The ILO report also highlights gender pay disparities as another labor market challenge for Peru. The country ranks mid-table regionally for gaps in monthly income and hourly wages between men and women.

Gender Inequality and Employment Challenges

ILO Regional Director Ana Virginia Moreira noted that women often occupy low-paying and informal jobs, such as domestic work and retail. She emphasized the need to combat gender stereotypes and discrimination to improve women’s access to quality employment.

Looking ahead, the ILO predicts only modest improvements in regional informality by 2025 due to limited economic growth forecasts—2.5% for Latin America and 3% for Peru.

Martínez pointed out that the link between economic growth and job creation has weakened. He urged governments to explore new strategies, such as fostering skill development and specialization, to boost formal employment opportunities.

Despite slight progress, nearly half of Latin American workers still face precarious conditions, including unstable incomes and lack of social protections. For policymakers and stakeholders, addressing these challenges remains critical for economic stability and social equity.