Improvements that leave core vulnerabilities intact
On the first day of 2025, Peru formalized a series of labor reforms that have been years in the making — raising the minimum wage, expanding collective bargaining in the public sector, and restructuring the precarious CAS employment regime. These changes, affecting millions of workers across formal and informal sectors, represent genuine legislative movement, yet they arrive unevenly, with some protections advanced while others were quietly returned by the executive branch. Labor specialists remind us that the distance between a law on paper and a life made more secure is often where the real struggle begins.
- Peru's minimum wage rose to S/ 1,130 on January 1st, triggering automatic adjustments to family allowances, food vouchers, and night-shift premiums — a cascade of recalculations touching nearly every corner of the labor market.
- Congress expanded collective bargaining rights in the public sector, but experts warn the new rules contain legal gaps that must still be tested against Peru's international labor obligations.
- The executive branch blocked expanded parental protections approved in 2024, citing productivity and fiscal concerns — a reminder that reform in Peru advances on one front while retreating on another.
- CAS contract reforms introduce job classifications and limited permanence for hundreds of thousands of public workers, but former labor minister Christian Sánchez warns these changes do not reach the structural roots of precarious public employment.
- As implementation begins, the real test lies in whether government agencies, unions, and employers can build the consensus needed to turn administrative adjustments into lived protections.
Peru's labor landscape shifted on January 1st when the minimum vital wage rose from 1,025 to 1,130 soles — a change that ripples outward into family allowances, food vouchers, and night-shift premiums. President Boluarte framed it as a necessary correction, but labor specialists like Alexandra Ortiz caution that wage adjustments alone cannot close the persistent gap between formal and informal employment.
Days earlier, on December 28th, Congress approved a measure eliminating restrictions on collective bargaining in government agencies, repealing a key article of Law 32103. Public sector unions can now negotiate with real economic weight, though always within institutional budget limits. The reform builds on a 2022 precedent in which a centralized state agreement distributed 830 million soles across workers — including those in the vulnerable CAS category. Expert Alejandra Dinegro notes, however, that the new rules contain gaps and must be measured against Peru's ILO obligations.
Not all reform moved forward. Proposals to strengthen protections for working parents, approved in 2024, were returned to Congress by the executive, which cited concerns about productivity and economic viability — a pattern of uneven progress that defines Peru's labor reform landscape.
The CAS regime, governing hundreds of thousands of public workers in temporary roles, also underwent structural changes. A late-2024 draft regulation introduced new job classifications, made pre-2021 contracts permanent, and allowed newer contracts to be renewed for up to three years. Law 32223, enacted on December 31st, reinforced these provisions. Yet former labor minister Christian Sánchez warns that clarifying roles and offering partial permanence does not answer the deeper question of why so many public workers remain trapped in precarious arrangements at all. Whether 2025's reforms translate into genuine security — or remain well-intentioned paperwork — depends on a consensus among agencies, unions, and employers that has yet to be built.
Peru's labor landscape shifted on January 1st when the minimum vital wage—the baseline that anchors the entire employment system—jumped from 1,025 soles to 1,130 soles. It sounds like a modest bump, but the ripple effect touches nearly everything: family allowances recalculated at 10 percent of the new floor, food vouchers capped at twice the minimum, night-shift premiums rising to 35 percent above base pay. President Dina Boluarte announced the increase as a necessary correction to labor standards, yet labor specialists like Alexandra Ortiz caution that wage adjustments alone cannot close Peru's persistent gap between formal and informal employment. The math is real but incomplete.
The wage increase is just one piece of a broader reform agenda that began taking shape late last year. On December 28th, Congress approved a measure that fundamentally reshapes how public sector workers can negotiate with their employers. The change eliminates restrictions on collective bargaining in government agencies, repealing Article 28 of Law 32103. This means unions can now push for improvements with real economic consequences—though always within the budget constraints each institution must respect. The move builds on a precedent set in 2022, when the first centralized state collective agreement distributed 830 million soles across workers in various regimes, including those in the precarious CAS category. But even this progress carries shadows. Alejandra Dinegro, an expert consulted by the publication, notes that the new rules contain gaps and must be tested against Peru's obligations under International Labour Organization conventions.
Parallel to these gains, the government has pumped the brakes on other worker protections. Proposals to expand safeguards for working mothers and fathers—initially approved in 2024—were returned to Congress by the executive branch, which cited concerns about productivity and economic viability. The administration argued that not all measures aligned with the country's health and social security framework. It is a reminder that labor reform in Peru moves unevenly, with advances in one area offset by retreats in another.
The CAS employment regime, which governs hundreds of thousands of public sector workers in temporary or trust-based roles, is undergoing its own transformation. In late 2024, the Prime Minister's office released a draft regulation introducing several structural changes to the legislative decree governing CAS contracts. Workers assigned to positions of trust can now suspend their contracts while holding those roles. Contracts signed before March 2021 become permanent; those after that date remain temporary but can be renewed for up to three years. New job classifications—coordinator, specialist, analyst, assistant—replace the old ambiguity about what workers actually do. Law 32223, enacted on December 31st, reinforces these provisions by allowing CAS workers to assume trust positions and have their work experience formally recognized.
Yet here too, the reforms fall short of what many believe is necessary. Christian Sánchez, who served as labor minister, warns that these changes, while meaningful, do not address the deeper structural problems plaguing Peru's public employment system. The regulations clarify roles and offer some permanence, but they do not solve the fundamental question of why so many public workers remain trapped in precarious arrangements in the first place. Implementation will require consensus across government agencies, unions, and employers—a consensus that does not yet exist. As 2025 unfolds, Peru's workers will discover whether these reforms translate into genuine protection or remain administrative adjustments that leave the core vulnerabilities intact.
Citas Notables
The wage increase responds to the need to update labor standards, but will not be sufficient to cover the gaps in formal employment in the country.— Alexandra Ortiz, labor specialist
These reforms are insufficient to solve the structural problems of public employment in Peru.— Christian Sánchez, former labor minister
La Conversación del Hearth Otra perspectiva de la historia
Why does a wage increase matter if the real problem is the gap between formal and informal work?
Because the minimum wage is the anchor. When it rises, family allowances rise, night-shift premiums rise, contributions to health insurance rise. It affects millions directly. But you're right—it doesn't create formal jobs. It just makes the formal jobs slightly less inadequate.
So the collective bargaining win in the public sector—is that real power or just permission to negotiate within limits that were already set?
It's real, but constrained. Unions can now push for raises and benefits with actual economic weight. But they can't exceed the budget. It's like being allowed to fight, but only with your hands tied to your sides.
What about the CAS workers? Are they finally getting stability?
Some of them. If you signed a contract before March 2021, you're permanent now. After that, you're still temporary, but you can renew for up to three years. It's better than the old system where you could be fired at will, but it's not the same as a real job.
Why did the government push back on parental protections?
They said it would hurt productivity and cost too much. But the real answer is probably that they're worried about the fiscal impact. Every protection has a price tag, and the government is watching its budget carefully.
Do experts think these reforms actually solve anything?
No. They're improvements, but they don't fix the structure. Peru still has millions of workers in precarious situations. These reforms make things slightly better for some people, but they don't change the fundamental problem.