PERU:PERU'S ARMY will today be on the streets of its big cities, policing a general strike that comes just days after the third stoppage by miners in four months.
The protests, amid economic growth of 9 per cent and strong foreign direct investment, underscore the dilemma facing the administration of Alan García, the president, in distributing Peru's newfound wealth.
While latest government data show a 5 per cent fall in poverty last year, just over 39 per cent of the total population and almost two-thirds of the rural population in mountain and jungle regions, live below the poverty line.
The Confederation of General Workers of Peru, the country's umbrella union body, has called the strike to protest last year's trade deal with the US and to push for improved working conditions.
"Companies are making billions in profits and the government is content with 10 per cent of what it should be receiving," said Ollanta Humala, the nationalist opposition leader who very nearly beat Mr García in the 2006 election.
Mr Humala said on Monday that he supported the one-day strike as a way of pressing government to address inequality, warning that instability would continue if more people did not share in Peru's wealth.
He said his party would introduce legislation aimed at boosting taxes on mining profits and redistributing wealth to compensate those regions lacking in resources.
Companies including Anglo-American, Southern Copper Corporation and Xstrata pay 50 per cent of their income taxes as royalties to local communities but dissatisfaction with the way the government distributes those funds is causing tension.
A dispute between copper miners in the southern departments of Tacna and Moquegua turned violent last month when up to 20,000 protesters burned government offices, took scores of police officers hostage and blocked roads, forcing the government to send tanker ships with emergency supplies of food and petrol.
Workers in impoverished regions say they are not willing to wait for the benefits of growth to trickle down. They want shorter working days, access to state-financed pension funds, a higher proportion of the income tax paid by mining companies and passage of a bill through congress that would remove a cap on the workers' share of profits.
Companies are required to pay a percentage of profits to workers on top of their salaries - 8 per cent in the case of the mining industry. But the proportion of profits returned to workers was capped a decade ago - individual workers can receive up to 10 times their individual salaries, after which the surplus flows to regional funds for education and job creation.
Some observers say the government's tight fiscal control and multi-layered bureaucracy - in part a product of efforts to combat corruption - are hampering attempts to spend windfall profits effectively. It has declared today's strike illegal and is offering a bonus of $5 to public sector employees who turn up for work.
Fritz du Bois, director of the Peruvian Institute of Economics, said the general strike was politically motivated and many workers had a lot to lose by participating.
Peru's construction sector grew by 17 per cent last year, while manufacturing grew at 13 per cent. The income tax received by local communities from mining companies had increased 15-fold since the start of the decade, he said.
"They are against inflation, and the price of foodstuffs is rising, but there isn't a specific labour issue that needs to be negotiated in some way," Mr du Bois said.
- (Financial Times service)