Is Peru the fourth most unequal country in the world?

A few days ago, the report analyzed by latinometry, according to what has been carried out by the World Inequality Laboratory (World Inequality Lab – WIL inequality). In the study, it was concluded that Peru is the fourth country with the highest inequality in the world, ahead of Mexico and behind the Dominican Republic.

These data are revealed in the middle of a political crisis and the social crisis that the country has been going through for more than two months. However, some scholars were against the report. In this direction, GlobeLiveMedia met with the former Minister of Economy and Finance, Luis Miguel Castillewho had a similar position and offered some figures, as well as an opinion on the reality of the country at that time.

—Peru is the fourth most unequal country?

-This is information that does not collect clues usual measures of income inequality. They measure changes in wealth, but Peru does not have a measure of wealth as is the case with countries that have wealth taxes. This does not apply in our case, because they even make extrapopulations of variations and this does not exist in our country.

-How should it be measured?

—In the case of Peru, according to data from the world Bank -which are the relevant ones-, if measured by the coefficient of Ginithe most important measure used to determine income or expenditure inequality, there are at least 30 other unequal countries than us in the world.

And within the region, the Gini coefficient is more unequal in Colombia, Brazil, Ecuador, Chile, among others. So to say that we are among the three most unequal countries in the world, based on the study, is not entirely true. On the contrary, we have levels of inequality that count Bolivia, Paraguay and Argentina. The only country that stands out, in fact, for having the lowest values ​​is Uruguay.

—To what extent does the richest decile in Peru concentrate its income?

—(With data from the World Bank) ten% the richest of Peru concentrate the 33% of the country’s income, similar to that of Paraguay and Bolivia. However, it is much lower than in other countries which concentrate a greater proportion of income. That is to say in Colombia (42%), Brazil (40%), Ecuador and Chile at 36%.

—And the poorest concentrate…

-He Poorest 10% in Peru concentrates a total income of 1.7%, similar to that of Argentina, but much higher than other countries. The most unequal is Colombia with 0.7% of income obtained by the poorest 10%. This conclusion (from the Latinometrics report), according to which Peru is among the three most unequal countries in the world, is closed.

The poorest 10% of Peru concentrate a total income of 1.7%.

-Peru has reduced its inequalities?

—Colombia there Peru These are two countries which, at the beginning of the 2000s, had a level of inequality. However, Colombia has maintained and even increased it, while Peru has considerably reduced it. Over the past 15 to 20 years, inequality has decreased significantly in the country.

—What factors contributed to the decline in this comparison?

“Perhaps the most important thing here has to do with the labor market, in Colombia there is higher unemployment than in Peru. Another concerns taxes, the burden is much heavier there. This explains a greater inequality with ours, mainly. The most decisive and important tool for a country is public spending and transfer policies, much more than taxation.

—What strategies should be put in place in the country to have less inequality?

“A society where there are fewer differences starts with improving the quality of public spending. Second, we don’t have a social security system that involves effective health coverage and pensions; So we have a vulnerable population. The (rough) calculation used is that if poverty is 25%, but there are external shocks such as job loss, this percentage becomes vulnerable at 50%; i.e. double.

-Because?

-In the Peru we do not have unemployment insurance to mitigate the drop in income in the event of job loss and we do not have a social protection system or pensions. We have 75% (of the population) who have no pension.

They are fundamentally linked to his person, as a formal worker, and not as a citizen. And this is a big difference with European countries, besides the fact that, whether they work or not, all citizens have these rights from birth. They have a more developed institutional framework.

— What is the impact of taxes?

“In taxes, the 50% that companies pay are evaded. In the case of VIG (General Sales Tax), which is the indirect tax paid by all taxpayers, there is an evasion of 35%; that is, this percentage does not pay the VIG.

There is a non-compliance issue which is why Peru has relatively low tax accuracy. And if we measure the level of progressivity that we have, it means that the rich pay more and the poorest pay less. What we have in the case of Peru, although there is room to gain in progressivity, we already have high tax rates; For example, among the countries that make up the Pacific Alliance, we maintain it.

So if we were to put taxes in place to supposedly capture an income rent from those who are wealthier, we are contributing to non-compliance. (This report) responds to a somewhat misleading analysis.

— Is Peru a rich country, but poor in public management?

“It’s very true (…) we have a problem of resources that we cannot spend on quality. Each year, among the approved hypotheses, some 16 billion soles without execution every year. There is an inability of the three levels of government to execute the budgets that are approved.

The most worrying thing is that in addition to the problems of execution, paralyzed public works are added, being a stock that has accumulated. Currently, they amount to 25 billion soles or more (…) the reasons are due to deficient technical files and contractual breaches of the commitments made by the public entity, which cause the paralysis of the projects.

Fact: there are 1,879 works paralyzed for more than 21 billion shillings, alerted the comptroller general.