Country Listing

Peru Table of Contents


Labor and Capital in the Industrial Sector

In line with its basic conception of social order, the military government also created a complex system of "industrial communities." Under this system, firms in the modern sector were required to distribute part of their profits to workers in the form of dividends constituting ownership shares. The intent was to convert workers into property owners and property ownership into a form of sharing for the sake of class reconciliation. But in practice, the system never functioned well. The firms did all they could to avoid reporting profits in order to postpone sharing ownership, sometimes by setting up companies outside the system to which they channeled profits, sometimes by adjusting the books, and in general by keeping one step ahead of intended regulations. A small fraction of the industrial workers gained shares in firms, but as a rule workers were not so much interested in long-term claims of ownership as they were in immediate working conditions and earnings. For organized labor, the whole approach seemed an attempt to subvert any role for union action and to make organization irrelevant. The system was not popular with either side. It was quickly abandoned when the more conservative wing of the military took power away from General Velasco in 1975.

Attempted reform of labor relations in the mid-1970s also included severe restrictions on rights to discharge workers once they passed a brief trial period of employment. A review process set up to examine disputes was implemented in a way that made discharges practically impossible. Businesspeople circumvented the restrictions to some degree by hiring workers on a temporary basis up to the point at which they would have to be kept and then letting them go before the restrictions applied. Businesspeople remained unremittingly hostile to this type of regulation, primarily on the grounds that it took away their main means of exercising discipline over their workers. This form of regulation was also eliminated shortly after Velasco lost power.

Data as of September 1992