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Peruvian women and microenterprises
Janina V. León
Despite the recent international economic crisis, Peru has been identified as an icon of economic growth among developing countries. From 2000 to 2010, Peru’s gross domestic product has sustained a five per cent growth rate per year. In the World Bank’s report Doing Business 2010, Peru places 36th worldwide and second in Latin America as its current regulatory environment favours opening and businesses’ operations. Further, according to results from a recent study on the Latin American region by researcher Nora Lustig, there has been a reduction in income inequality in Peru among other countries. This is on a par with the reported reduction in Peru’s national poverty level over recent years. Reports indicate that even unemployment in Peru remains at low levels, at roughly five per cent. Given this promising macroeconomic context, what portion of the gains in growth and reduction in poverty has reached the women who participate in Peru’s economic activity?
Peru has a total population of 30 million with a labour force of 15 million. According to the Ministry of Labour’s 2008 Annual Report “La mujer en el mercado laboral peruano,” data from the 2008 census and surveys of Peruvian households by the National Institute of Statistics suggests that 46 per cent of the labour force are women. On average, female workers are 40 years old with varied levels of primary education. Thirty per cent are widowed, separated or single heads of households. Practically all of the female workers are employed; minimal open unemployment mainly affects the youngest workers. Female workers are concentrated in Peru’s urban areas: one third live in metropolitan Lima, one third in other cities and one third in rural areas.
How is the female workforce incorporated into labour markets? First, it must be emphasized that since the 1980s, men and women have shared similar tendencies: at least 45 per cent of workers have been underemployed (with incomes lower than the legal minimum), and have worked in microenterprises, be it as independent workers (almost 40 per cent), as owners (roughly five per cent) or as unpaid family members (15 per cent). By contrast, among female workers at least 60 per cent have been underemployed and more have worked in microenterprises than have male workers, working as independent or as unpaid workers. Further, for decades there has existed a great difference in the work insertion profile of female workers depending on their location and the nature of their economic activities. In 2008, an overwhelming 49 per cent of rural female workers were unpaid family members and 34 per cent owned very small agricultural, cattle or handicraft businesses. Thirty-seven per cent of urban female workers are independent and 16 per cent are owners or salaried employees in microenterprises of between two and nine workers. Therefore, to a great extent the employment of female workers in Peru continues to depend on the ability of rural and urban microenterprises to generate employment and income in accordance with their different activities, possibilities of consolidation, market size, etc.
In a context of macroeconomic expansion, the changes in working conditions and income for women especially in modern urban areas appear limited. According to the aforementioned 2008 Annual Report, more than half of Peruvian women continue to work an average of 40 hours per week in rural and urban microenterprises, with longer work shifts in urban areas.
In Peru, informal employment predominates as a result of hiring conditions. As such, at least 80 per cent of female workers are not affiliated with any pension system and more than half are not covered by health insurance. Further, technical and financial conditions are precarious for the majority of microenterprises with few years in the market; except in the case of itinerant workers, most microenterprises are set up in a room in the female worker’s home to provide personal or retail services, which have low entrance barriers and low returns. The majority of these microenterprises have low productivity and minimal scales of production that result in low incomes for their employees. Female workers in Peru have low incomes of roughly US$170 per month; this is less than their male counterparts, who average US$200.
These statistically representative results from surveys of Peruvian households contrast with some successful cases of microenterprises that exported their products during the same period. The document “Handicraft trade and women entrepreneurs: A case study in Lima, Peru” prepared in 2008 for the North-South Institute, finds unique characteristics in female entrepreneurs who export their handicraft: they are adult women with experience in their area of activity who know their market, local and foreign, and who inform and train themselves under their own initiative. They limit their partnerships and debt to their expectations for future growth and include immediate relatives in the business. In the cases studied, the female entrepreneurs exported through a third party for reasons of confidence and scale, either with export associations or with fair trade NGOs, but hoped to export directly in the future. Similar experiences are reported in the clothing and food sectors. As can be seen, there is room for public policy and co-operation to strengthen the activities of these successful female entrepreneurs.
If macroeconomic expansion has not favoured significant numbers of microenterprises, what policy options could be implemented to do so? Access to business services and technical assistance must be expanded in order to strengthen the productive capacity of microenterprises. Peru was recently recognized for its excellent development of microfinance, which will benefit microenterprises. Less priority has been given to broad policies for technical training, information, education and registration that are ultimately decisive for the competitiveness of these businesses. Policies for strengthening businesses and finances should give priority to women’s microenterprises since they have the lowest production scale and income. There is an urgent need for complete and direct knowledge of these microenterprises. We hope this will be possible soon with the data from the new survey of microenterprises that the National Institute of Statistics is gathering. This information can help to improve research and prepare policy proposals that focus on continuously and substantially improving the income and working conditions of female workers in Peru’s labour market.
Janina V. León is Professor in the Department of Economics at the Pontificia Universidad Católica del Perú. She has a PhD in Agricultural, Environmental and Development Economics from Ohio State University. The author can be contacted at email@example.com.