PERU

PERU

The New Owners of Peru

La Republica

1st July 2007

By Pedro Francke, Professor of the Department of Economy, PUCP

There are seven executives in Peru who earn more than a million soles annually. There are found primarily in the mining sector, according to the consulting firm Deloitte. The highest salary of a manager in Peru is one million four hundred thousand soles annually; about 120,000 soles monthly. I try to imagine what I would do if I earned 120,000 soles every month, year after year. Would I buy and furnish a new apartment every month? With 120,000 soles I could do that. Or better yet, save and buy myself a house every three months? But what would I do with so many houses? Would I spend my money in yachts, private beaches for me alone, servants? In what could someone spend 120,000 soles EVERY month of the year?

It appears that the mining managers earn a whole lot of money. If we compare them to what the mine workers of Casapalca earn, there is no doubt: One mining executive earns more than 200 workers combined.

But if the earnings of managers appears to be a lot, look at what the owners of the companies earn. The owners of the "type C" shares of Southern Peru Copper Corporation have seen their stock rise in price from $10 billion dollars a year ago to some $27 billion dollars today: A profit of $17 billion dollars, over 50 billion soles. This figure definitely escapes my imagination. I don't know how to calculate how many briefcases full of bills would be necessary to hold all this money. How many workers would it be?

What this group has earned with their investment, in just this one company, in just the past year, is more than was earned by all workers in Peru, in all sectors and companies, in the past year. The average worker Peru earned 980 soles monthly. If we combine all of the salaries of the million Peruvian workers, month to month, for a year, we wouldn't reach the sum of what this small group of investors of Southern have earned.

Well, happily, think our readers, the State receives part of these earnings through taxes. In this way, then, all of we Peruvians gain something. WRONG. Whoever thinks this is making a mistake. Peruvian law establishes that those who have shares and gain profits when their value rises does not have to pay taxes on their profits. You and I, workers, every time we cash our monthly paycheck, taxes are already taken out. But for the profits earned in the stock market, nothing is paid, not a sol, zero, nothing.

Southern is one of the three largest mining companies of Peru, and along with Antamina and Yanacocha, make up the half of all of the national mining production, but we can't offer similar figures for the other two, because they do not operate on the stock market. However, we do know that Antamina saw its income rise some $2.5 billion annually solely by the rising prices of copper in international markets: Money which has rained down from heavens, a happy lottery.

In the end, the world is like that: Everyone dances with their own luck. We get what God wills us, what St. Peter blesses us with. Oops, other error... It turns out that the minerals which produce these riches are found in Peruvian territory. According to our Constitution, they belong to the Nation. The winning lottery ticket isn't theirs. These riches weren't given by God to them, they are for all us Peruvians. But if we hold the winning ticket, then why aren't we getting our share of the winnings?