Recent events regarding the strikes and new agrarian law in Peru
On 30 November, an agricultural strike in the Ica region began and lasted five days. The call for a strike denounced the poor working conditions and mistreatment that, according to the workers, were being carried out by the agro-export companies. The mobilization demanded the repeal of the Law N˚ 27360 - Law of Agrarian Promotion (LPA), which had been extended for an additional period of 10 years in December 2019 to the 20 years initially proposed.
The LPA was one of the driving forces behind the agro-export boom in the country. Among the advantages it presented incentives such as half of the income tax payment and lower contributions to the national health system compared to the general regime used by other industries. In less than 20 years, Peru had consolidated itself worldwide as an agro-exporting country in different products with an industry that generated approximately 5.7 billion euros a year. In December 2019, with the LPA coming to an end, President Vizcarra's administration updated the law and extended its duration for 10 more years. However, some items on the agenda, such as the payment of income tax and contributions to the national health system, remained the same or long-term modifications were established to bring it into line with the general regime.
The workers showed their rejection of the Agricultural Promotion Law, which they claim cuts benefits enjoyed by workers under the general regime, allowing agro-export companies to pay them lower wages and to outsource the hiring of workers instead of direct employment.
While the agro-export model seemed to be an engine of progress and stability within the country, the political situation and social conflicts reached alarming levels by the end of 2020. The political instability and conflicts between different political groups in Congress allowed President Vizcarra to be removed and Congressman Merino was appointed as the new president of the country. The population quickly showed its rejection and demonstrations flooded the streets of the capital and some other cities in the interior of the country. After a bloody episode in which two demonstrators were killed by the police, the new government was delegitimised and after failed attempts to appoint a new head of state an agreement was reached in parliament to appoint the current president, Francisco Sagasti, as the new leader. Within a week the country had had three presidents; however, far from having achieved the desired stability, demonstrations in different sectors such as transport and mining were initiated.
The agricultural strike began on 30 November in the Ica region, a region south of the capital and one of Peru's agro-export centres. Ica was the forerunner of the agro-export boom in the 1990s and currently remains one of the most important production centres with significant production of table grapes, asparagus and avocado, among other crops. The demonstrators took over different sections of the Pan-American Highway, the only means of connection to the capital and the port of Callao, the main point of access of sending agricultural products abroad. The demonstrators denounced mistreatment, such as working overtime without additional pay, verbal abuse by field foremen, lack of support from human resources departments, lack of food provision and transport (according to workers these should be provided by companies) by agro-export companies as well as poor working conditions. Their objective was to seek the repeal of the LPA, which they claimed was responsible for the problems in the agro-export industry and a means of oppressing the workers. Later, La Libertad region, another of the most important agro-exporting regions in the country, joined the demonstrations.
After negotiations between the representatives of the demonstrators and a commission established by the Congress, the LPA was repealed and during the month of December the new law was drafted with some mishaps regarding specific themes, such us taxation and contribution to the health system, to reach a final version. Its official publication was on the last day of the year 2020 with the aim of coming into force during the fiscal year 2021.
The new agrarian law is, in broad terms, very similar to the previous one. Some important points stand out, such as a progressive increase in income tax based on time and company size, a plan to increase the economic contribution by agro-export companies to the national health system according to a timetable, a 30% economic bonus of the Minimum Living Remuneration (approx. 2.2 euros per day), a greater participation in company profits according to a timetable, a ban on labour intermediation or outsourcing of services which implies the transfer of personnel, etc.
Despite the progress made by the workers, both employers and employees have expressed their disagreement with the new law. On one hand, employers state that companies will not be competitive in some crops such as pomegranate, citrus and asparagus; as the margins obtained are lower than in other crops. On the other hand, workers feel that the wage improvement should be much greater and with greater access to company profits.
In La Libertad, protest actions were resumed, resulting in three deaths after the two deaths of the initial protest. Given the refusal to accept the new law by both parties, the Congress has been holding working groups in both Ica and La Libertad with different groups of stakeholders in the agro-industry in order to achieve the necessary changes and to be able to generate the viability of the new law under a deadline of 45 working days, which will be mid-February.
Author: Salvador Orrego de La Borda
