Peru’s Labor Income Rises 6.9% in 2025, Youth Employment Still Lags

Peru’s Labor Market Shows Signs of Improvement, But Youth Employment Lags

Peru’s labor market demonstrated positive momentum in 2025, with overall employment growing by 2.2%, adding over 280,000 jobs, according to recent data. This marks an improvement over the 0.8% growth recorded in 2024, which translated to just over 143,000 new positions.

Paola Herrera, a senior analyst at the Peruvian Institute of Economics (IPE), highlighted the strong performance in primary activities, particularly within the agricultural sector. “With improved climatic conditions and a return to normalcy, there was a better performance, for example, in agro-exports. Another important boost came from increased consumption in the commerce and services sectors, reflecting greater dynamism,” she observed.

Carlos León, an economist at the Network of Studies for Development (REDES), commented that while the growth is positive, the pace remains slow, especially considering the country’s overall economic growth of over 3%.

Labor Income on the Rise

A key highlight of the national labor market in 2025 was the increase in average monthly income from employment. The report showed this rose to S/ 1,887.2, a nominal increase of 6.9%, equivalent to more than S/ 121.

In real terms – accounting for inflation – wage growth in Peru reached 5.3%, marking its fastest pace since 2009, sixteen years ago, according to Herrera. After six years, income levels surpassed pre-pandemic levels, albeit by a marginal 1.1% compared to 2019.

This positive trend was driven by improved performance in adequate employment. While overall employment increased by 1.5% last year, the growth in adequate employment more than quadrupled that rate (6.9%), adding 634,300 people and totaling 9.81 million.

Looking at age groups, the largest variation in nominal remuneration was among those aged 45 and over, with a 7.4% increase (S/ 130 more, reaching S/ 1,893.7).

Geographically, Lima Metropolitan Area and the province of Callao recorded the highest average income, at S/ 2,486, followed by Moquegua (S/ 2,426.4), Chachapoyas (S/ 2,392.5), Arequipa (S/ 2,324.6), and Puerto Maldonado (S/ 2,249.9). Pucallpa (S/ 1,790), Chiclayo (S/ 1,671.5), and Juliaca (S/ 1,323.8) reported the lowest averages.

Four Years of Decline: Youth Employment

However, these improvements are not evenly distributed across all worker groups. “A concentration of employment and quality remains within sectors with higher levels of formality and experience, leaving younger workers behind,” Herrera noted.

in the fourth quarter of 2025, the employed population aged 25 to 44 and 45 and over saw increases of 0.7% and 4.9%, respectively. However, among younger workers, there was a decline of over 2.5%.

With this setback, youth employment marked its fourth consecutive year of contraction. Since 2022, this group has experienced a nearly 15% decrease in its employed population, equivalent to almost 400,000 fewer people. In contrast, the older age group added almost 830,000 workers, a 14% increase.

“The recovery after the pandemic has yet to reach young people,” Herrera said. “Where is youth employment going? Here, we see informal activities and jobs in the realm of illegality,” León added.

León observed that the growth in employment among older workers correlates with the advancement of formal employment and dynamism in large companies. However, he dismissed the notion that this indicates increased productivity, stating it is “more a recovery of the formal workforce.”

Herrera expressed serious concern that current government plans – and promises made during the campaign – do not address measures to reverse this unfavorable situation.

Looking ahead, León indicated that the cost to the country of this employability gap is an aging labor market, leading to a loss of the demographic dividend, which will ultimately impact the country’s productivity levels.

Impact of the Electoral Period?

While no significant negative impact from the electoral period has yet been observed in the national economy, Herrera indicated that its effect on employment is often delayed.

She recalled that in the last quarters of 2025, private investment provided a significant boost to national activity, which is expected to continue into the first quarter of this year and potentially throughout the first half of the year.