Problems relating to Trade and Investment on Peru
16. Employment |
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Issue |
Issue details |
Requests |
Reference |
| (1) Excessive Dividend Payment Scheme to Workers | - The Workers Dividend Distribution System requires an employer to pay a certain amount of pre-tax profit to its employees, narrowing the free discretion of enterprises for profit distribution. In general, GOP overly protects workers' interest, therefore, it tends to drive employers into curtailment of employment. - The Workers Dividend Distribution Portion is too high, and increases the cost burden to enterprises. |
- It is requested that GOP takes account of the situation in other countries and revises the Labour Act to allow employers to exercise their free discretion on employment. | - Decree No.893 "Regulation concerning Distribution to Workers of Corporate Income" (promulgated on 5 November 1996), and its Implementing Regulation. - Presidential Decree 009-98-TR promulgated on 22 July 2001 |
| (Action) - On 12 April 2010, the 1st Investment Environment Overhaul Committee under the Japan-Peru Investment Treaty, where Japan side brought up the issue concerning improvement of human affairs/labour questions. |
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| (2) Restricted Number of (Professional) Foreign Workers | - Alien workers must not exceed 20% of the total number of employment and their wages must not exceed 30% of the total wages paid by law. In some cases, to fulfill the condition enterprises are compelled to employ unnecessary Peruvian workers so that it may recruit requisite alien workers. | - It is requested that GOP repeals the cap on alien workers. | - Decree No.689 "Foreign Workers Act" (promulgated on 5 November 1991), and its Implementing Regulation - Presidential Decree No. 014-92-TR (promulgated on 23 December 1992), and its Amendment - Presidential Decree No. 023-2001-TR (promulgated on 18 July 2001) |
| (3) Delayed and Vexatiously Complex Procedures on Foreign Registration and Acquisition of Work Visa | - Time consuming procedures for acquisition of work visa and foreign registration certificate (Carne de Extranjeria) (1-3 Months). In regard to acquisition of work visa/foreign registration certificate for Japanese expatriates/spouses, authentication of family register at Peru Embassy in Japan, translation into Spanish, foreign registration on the expatriate and family members are necessary. The procedure is so complex that external assistance is necessary. It takes much time and cost, as authentication is also necessary on the translated documents. - Upon each annual renewal of Carne de Extranjeria (foreign registration certificate for expatriate's family members), applicants must obtain copy of family register, attaching translation and authentication. It requires a lot of work-time and heavy expenses. |
- It is requested that GOP: -- simplifies the procedures, -- prolongs the validity period of registration certificate. - It is requested that GOP: -- streamlines the application procedures, and -- extends the validity period for the registration certificate. |
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| (Action) - On 12 April 2010, the 1st Investment Environment Overhaul Committee under the Japan-Peru Investment Treaty, where Japan side brought up the issue concerning improvement of immigration control. - On 26 November 2012, the 1st Subcommittee for the Preparation of Business Environment was held under Japan-Peru EPA. Among others, there was exchange of views about the practical aspects of facilitating visa complications for businesspersons entering each country. In December 2012, there was a development, resulting from the exchange of views at the immigration control technical meeting on streamlining immigration control: Expediting acquisition of work visa and foreign registration, grant of the maximum stay of (183-days) made available upon entry, allowing Japanese enterprises' prior filing of request as complementary measures. JETRO World Business News of 3 October 2014). |
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| (Improvement) - Since January 2016, GOP has repealed the submission requirement for economic status guarantee upon change of the stay qualifications of foreign workers under work visa and upon filing stay visa application for the applicant's spouse. In addition, GOP has repealed the submission requirement for marriage certificate and birth certificate upon annual application for visa-extension. - Since January 2016, Peruvian national immigrant supervisory board has started on-line service system operation for confirmation of foreigners' tax (TAE) payment upon foreign residents. |
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| (4) Complex Entry/ Exit Procedures of Foreign Residents | - Entry/exit procedures for foreign residents in Peru are extremely complex, for example, compulsory submission of employers' corporate guarantee, each time stating the taxes paid (CSECG). | - For the sake of improving the environment for the entering enterprises into Peru, it is requested that GOP slims down the requirements, by dispensing with the CSECG requirement upon exit/entry of foreign residents in Peru, for example. | |
| (5) Rigid Employment Terms | - The law neither permits reduction of the local Peruvian workers' wage nor does it readily allow their dismissal. It hinders a flexible business operation. - Enterprises' promotion of employment is hindered by the legislation that sets forth no reduction of wage, no dismissal of workers in principle, no setting of retirement age, etc. |
- It is requested that GOP deregulates the terms of employment for local Peruvian workers. | |
| (6) Downside Effect of TW_RE Policy | - Under the GOP Policy for Conversion of Temporary Workers into Regular Employees (TW_RE Policy), Labour Supervisor at his/her discretion may convert Temporary Workers into Regular workers. However, from the employers' perspective, the need for liquidity is imperative, commensurate with the work contents, the project period, and economic changes. | - It is requested that GOP: -- takes into account the period and the terms of employment for temporary workers and -- delineates a more transparent and flexible measures. |
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| (7) Frequent Strikes | - Labour Unions and their upper Trade Unions maintain rigid stance against Employers by frequently resorting to strikes. | - It is requested that GOP turns the terms of employment more flexible. | |
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