Peru should help more young vulnerable people into work

This article is brought to you in association with OECD.

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Peru’s remarkable economic growth since the 2000s and policies targeting the most vulnerable young people have helped boost the youth employment rate. Peru should now focus on improving job opportunities for low-skilled youth, young women and indigenous and Afro-Peruvian youth, according to a new OECD report. Investing in Youth: Peru says that the youth employment rate today is higher than both the average of OECD countries and many Latin American countries. But many challenges remain. Income inequality is high and poverty has risen recently. A large share of the youth workforce with a lack of the right skills and a sizeable informal sector hinder the transition to a more productive, better-paid and better quality jobs for Peruvian youth. Young people with tertiary education face an even higher risk of unemployment than their less-educated peers. In 2017 their unemployment rate was 14.6%, compared to 8.7% for people with a secondary education degree and 7.3% for unskilled youth. The situation of limited employment opportunities for many youth also translates into low levels of well-being. Close to 34% of Peruvian youth affirm that they find it difficult, or very difficult, to get by with their present household income. This compares to an OECD average of about 20% and places Peruvian youth towards the worse-off end of Latin American and Caribbean countries. Today’s high proportion and number of youth in the Peruvian working age population is set to decline in the near future. Without action, the opportunities to benefit from the growth dividend associated with the demographic bonus will fade away, according to the report. To help more young people into work, the OECD recommends that Peru:

• Strengthen social dialogue with unions, civil society and employers in order to improve labour market policies that reduce the dualism of the labour market between permanent and temporary contracts and encourage employers to hire young workers.
• Ensure that business incentives, such as tax breaks for small firms, do not discourage them from expanding and hiring young workers.
• Expand and increase the efficiency of the public employment services (PES) by strengthening recruitment and training programmes for caseworkers.
• Continue efforts to increase the enrolment and learning performance of students from disadvantaged backgrounds.
• Engage in ambitious policies to tackle the vulnerability of young Peruvian women.
• Combat discrimination against indigenous and Afro-Peruvian youth; and
• Boost job opportunities for rural indigenous youth by implementing a nationally co-ordinated strategy to help rural populations engage in new and more profitable entrepreneurial activities.