Wednesday, November 10, 2004


Money Matters

As requested, I have been doing a little research into money matters in Peru...

Current rate of exchange: 1 nuevo sol (s./) = 16 pence / 1 pound = 6.15 nuevo soles

Peru's economy was advancing in the 1950's and 60's, and the average wage also rose accordingly. Since then, wages have steadily dropped, at times devastatingly. The years from 1980-89 were shockingly severe - the real minimum wage fell by 77%. Thus, minimum wage earners had less than one-quarter the buying power that they had started the eighties with. In 2004, minimum wage is S./480 monthly. However, this is rarely adhered to, and most workers find themselves working long hours for much less than minimum wage. Of course, independent workers, of which there are multitudes, fall outside of minimum wage laws anyway. Over half of Peru's population has been found to exist on less than a dollar a day.

(Very) approximate average wages at the present:
Domestic workers - s./120 monthly
Market vendors - s./6-7 daily
Sales assistants - s./480 monthly
Taxi drivers - s./500 monthly
Qualified state school teachers - s./600 monthly
Private school teachers - s./1000-3000 monthly
Private doctors/lawyers - s./3000-5000 monthly

Take into consideration, these wages are for the lucky few who have jobs. One wage earner will often also be trying to support their (extended) family on their income. In recent studies, it was found that of Peru's 26.6 million people, 14.6 million are living in poverty. Poverty was judged as not having sufficient income to buy a basic basket of essential foods.

Average prices of 'essentials' (obviously some of the items on this list are too expensive for the average Peruvian, but are listed for the sake of comparison):
1 kg rice - s./2.50
1 kg sugar - s./2
1 litre cooking oil - s./4.50
1 litre olive oil - s./30
1 kg carrots - s./.50
1 kg broccoli - s./2
200 gr. Kellogg's cornflakes - s./5.50
6 loo rolls - s./4
20 cigarettes - s./3.50
355ml Herbal Essences Shampoo - s./11.85
25 teabags - s./1.80
Milk (sold in the supermarket only in evaporated form) 415 gr. tin - s./2
330ml tin of Heineken s./3.60
620m bottle of Cristal or Pilsen lager s./3.50
Tin of baked beans (imported) s./6.50

Most people live day-to-day, with little security. Everything is available in single use size: teabags, washing powder, deodorant, etc. Even middle-class people buy cigarettes individually, and share a glass around the group when they drink a bottle of beer. There is a Social Insurance System (SNP) to which a government employee must contribute 13% of their wages. To this 13%, the government adds nothing, nor does the employer. The SNP does, however, guarantee a minimum pension and a legal minimum wage. There is also an optional Private Pension System (SPP) to which you may choose to pay 10% of your earnings.

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