This is in spite of the fact that Peru has some of the most restrictive and onerous labor laws in the world. The reason is that the laws are so bad that, for most people, formal employment is out of the question. Sheer survival requires that they make their living in an entrepreneural way in the informal (ie. free) economy.
In the last ten years the size of the informal economy in Peru has actually increased from 60% to 70%. Anyone who wants to work can find a job in the part of the economy outside of state control where the terms of employment are whatever is agreed upon between employer and employee rather than what the state dictates. Or start a business that operates by ignoring the state almost completely
This situation causes great angst for the political class which moans over all the people working without “social benefits” and at jobs in small businesses that pay no taxes and that the hand wringers consider inefficient. They are preoccupied by the need for the state to do something to fix this “problem,” fearing that Peru can never progress to be a prosperous, developed country like the US with such a high rate of informality (ie. with such a large free economy).
The fact is that Peru has one of the highest growth rates in the world and some 50% of the population has passed from abject poverty into the middle class in the last 20 years. For the first time in the country’s history the bulk of Peruvians are prospering.
The informal or free economy operating in spite of the state is the engine of this progress. Of course, the politicians are anxious to kill it. But my bet is that ordinary Peruvians, rather than the statists, will win out in the end.