Pensions,Peasants,and the Informal Economy: Family and Livelihood in Contemporary Peru

Theoretical Framework

This analysis uses a political economy framework. In particular, it uses concepts related to dynamic engagements among labor, capital, and the state (e.g., Roseberry, 1998; 2002). The labor requirements of capitalist industry have changed over the past century from large quantities of unskilled labor to a small number of highly skilled workers and managers, and this has in turn changed the relationship between capital and labor. Further, a new policy environment has arisen within which the state is renegotiating its role with respect to capitalist business and citizens. A collection of papers edited by Kasmir and Carbonella (2014) provides an enlightening perspective on these contemporary struggles in which class and labor seem to be absent. Carbonella and Kasmir (2014) expand Harvey’s concept of “dispossession” beyond land to rights to employment and livelihood. They reject a teleological expectation that formal employment will succeed informal and unwaged work in favor of an analysis of the political struggles that arise as capital tries to pursue profits in frequent conjunction with state actors. As a consequence, the present conjuncture is understood not as postclass and postlabor but as transitional to new forms of class and labor. Dispossession of the right to employment is important in the case study. In Peru, with its recent history of violence, the state has taken on a mediating role in addressing both wary investors and economically vulnerable citizens. This conceptual structure provides the backdrop for an examination of the impact of transformations in the Peruvian economy and in government economic policy on low-income household clusters from a specific community.

One way to think about the tools used by the state to manage its relations with citizens is through the concept of legibility (Scott, 1998). In what follows, the implications of state projects to make citizens legible are explored. Forms of legibility dispossess citizens of privacy, although they could also be used to organize for collective rights. The incentives offered through legibility projects reflect a new role of the state as it takes on obligations previously undertaken by employers (providing income, benefits, pensions, etc.) while retaining responsibility for national economic stability. In place of Scott’s emphasis on the contradiction between the simplifying standardization of the state legibility project and the complex pragmatic vernacular knowledge of the people, I am interested in tensions between citizens and the state that arise from the latter’s mediating economic role.

This political economy framework is supplemented by Hareven’s (1982) life course perspective to capture elements related to the aging population (Elder, 1994; Hareven and Adams, 1996). This involves linking life course stages to the historical context in which an individual achieves them. For example, in the case discussed below, the life stages of “adult” and “elderly” are quite distinct at different times, as is the quality of intergenerational relations (Vincent, 2000). Hareven’s work also calls attention to the role of gender in both the elderly and the caregiver generation and to family formation, including the distinct cases of single mothers, families in which there has been marital breakdown (in which typically the woman retains closer ties with the children), and two-parent households. The life course approach draws attention to demographic history in the context of political and economic change.

Allpachico as a Point of Departure

While the discussion below concentrates on the household cluster of an urban informal worker, that cluster cannot be understood without taking into account her community of origin. Allpachico is a legally recognized peasant community (comunidad campesina) ⁶ with few resources in the central highlands department of Junín. Comunidades are territorial polities with both communal and private property. I first went to Allpachico in 1984, and this paper is based on information collected from ethnographic fieldwork among Allpachiqueños over the past 30 years. Most of this work has taken place in the community, but over the past 10 years I have begun to visit Allpachiqueños in Lima. The rural population has fluctuated with the economy, and migration has become the norm. Precise migratory patterns are hard to distinguish because some people move cyclically at different life stages, others travel back and forth without changing their primary residences, and still others may settle permanently elsewhere but retain ties in Allpachico. These people are the focus here; a final group that is difficult to track through community-based research has moved away permanently without retaining ties in the village.

Kinship, Household Clusters, and the Elderly

Kinship is central to household clusters, which most commonly devolve from parent-child bonds. Peruvians in general maintain strong ties between generations. The most frequent reason people from Allpachico gave for leaving was to give their children better educational opportunities. My earlier research (Vincent, 2000) emphasized continued strong intergenerational ties in the transition from farming to migrant labor, changing in quality from communal interests in the land to complementary interests whose material manifestation was the exchange of produce and remittances. There are family conflicts, but I have rarely heard care for a child or a parent described as a burden. In Allpachico as in Peru more generally, declining fertility has combined with migration to leave aging rural parents with few caregivers. Although the elderly are increasingly living on their own in Peru (Fuertes, Velazco, and Naimark, 2013), Leinaweaver’s (2010) work on the undoing of kin ties with elderly relatives makes the point that this is highly unusual. Allpachiqueños make great efforts to care for their elderly kin, either moving themselves to do so or making space in their homes for them (Vincent, 2016; see also de Bruine et al., 2013). There are children who do not care adequately for their parents, but they are denigrated as unworthy. Daughters rather than sons are the most common caregivers, but sons also provide care. There is little question that the elderly will be cared for in their old age, but the terms and location of that care vary according to their own past livelihoods and the present livelihoods of their kin. Parent-child bonds are most durable, but multigenerational and collateral kin and ritual kin through godparenthood are also of deep significance. These ties link households with mutual claims on assistance. When all are involved in farming or some other venture, the assistance is based on commonality; with migration and greater diversity of income strategies within the cluster it is based on complementarity (Vincent, 2000). Cash, crops, and care are all part of the exchanges that link households in a cluster.

Historical Development of the Political Economy

From the perspective of Allpachiqueños, the past century can be very roughly divided into five periods. The first, between about 1900 and 1968, was one of foreign mining investment in the region. The mining economy created a proletarian workforce out of the regional peasantry to meet the demands of its labor-intensive technology (Laite, 1980: 335). While at the national level the formal workforce remained small, most of the men of Allpachico worked in the nearby mines or refinery for at least short periods. Unionization helped to ensure better pay, benefits, and pensions. The legal institutionalization of the comunidad campesina (originally the comunidad indígena) occurred alongside this rising need for commodified labor and linked peasants to the developing capitalist economy (Long and Roberts, 1978). Mallon (1983: 232) has argued that the institution allowed the state to arrogate to itself the right to intervene in local affairs, in effect providing a way for rural dwellers to be legible. However, there was little actual state presence or support. As a consequence, agriculture declined precipitously in Peru after 1940, when it absorbed more than 60 percent of the economically active population (Angell, 1980: 4), to 24 percent in 2010 (FAO, 2012: 116). Thus, in this first period, Allpachico’s economy shifted away from commercial agriculture and toward a combination of subsistence farming and migrant workers’ remittances, reflecting the dominant role of formal employment, with the state playing a supportive role to capital.

In 1968 a military coup ushered in the second period, a new era of state involvement. The comunidad indígena was restructured as a comunidad campesina but otherwise received no concerted state support. Still, the bureaucratic legibility of the comunidad permitted peasants to organize change and mobilize politically through, for example, the Confederación Campesina Peruana, an umbrella group of peasant communities that was politically active in land reclamations against large landowners. The state also nationalized the regional mining industry, becoming the direct employer of Allpachiqueños with jobs in mining. This collapse of state and industry into one repatterned the relationship among the state, capital, and labor/citizens. The state became responsible for the pensions, medical benefits, and wages of those it employed, an obligation it retains to this day.

Economic decline and political instability increased over the 1970s. Allpachiqueños ceased to find jobs in the regional resource sector and began moving to Lima, where they tended to engage in informal work. By the 1980s, the third period I designate here, there was a serious economic and political crisis that radically disrupted the relations among and roles of the state, industry, and the people (see, e.g., Degregori and Rivera Paz, 1993; Stern, 1998). Fear, repression, and violence were devastating to local political organizations such as the comunidades, destroyed the economy, and severely undermined confidence in the state. ⁷

State power was reasserted in an authoritarian form in the fourth period, the government of Alberto Fujimori of the 1990s. Fujimori neglected the comunidades, bringing in legislation that would facilitate their dissolution. Instead, he directed poverty relief through groups organized on other bases (among them gender) that were expected to support him politically. This instituted both identity-based forms of legibility and a cynical reciprocity between poor Peruvians and the state. His government was so famously corrupt and centralized that when he fled Peru in 2000 succeeding governments had to decentralize governance and funding and implement transparency procedures to earn legitimacy at home and abroad. International legitimacy was increasingly necessary to support natural resource investment.

Fujimori had introduced neoliberalism to Peru in 1990, but foreign investment really increased after 2000, the fifth and final period. This timing highlights the importance of the actions of the government in bringing about a climate of political stability within the country in ways that would be read positively by investors outside the country. While natural resource extraction in the twentieth century required labor, this time not only were the mines located far from Allpachico but they were technology- rather than labor-intensive. They needed territory, much of it occupied by comunidades that resented losing their land and having their environment contaminated without even the possibility of employment—a double or triple form of dispossession. ⁸ Instead of formal employment, informal work in Peru has increased since 1990 from 58.2 percent of the economically active population ⁹ (Nunura and Flores, 2001: 35) to 74.3 percent in 2012 ¹⁰ (having fallen from 79.9 percent five years earlier [INEI, 2014: 113]). The lack of jobs and the loss of land have made mining conflicts part of daily life (Li, 2015: 8). While corporate social responsibility programs and the assignment of major shares of royalties to the areas around the new mines have tried to address dispossession of land and environment, ¹¹ new state social spending can be understood as an attempt to deal with territorially and thematically broader rights. ¹² Initially, state redistributive policies took the form of governmental decentralization, in which government funds were allocated to participatory budgeting. This reorganized the local, still marginalizing the comunidad and promoting the municipal, provincial, and regional governments. In 2005 the first cash transfers to individuals on a means basis were implemented. ¹³ The example discussed below is the 2011 noncontributory pension, Pensión 65. Poor people over the age of 65 receive a minimal sum (125 soles a month, or about US$40), but since many had had no expectation of receiving anything in their old age the income makes a difference.

To be eligible to receive Pensión 65 (or any of the new social spending), the recipient must be registered with the Sistema de Focalización de Hogares (Household Targeting System—SISFOH) (SISFOH, 2015). This categorizes households on a poverty/wealth continuum, and only those in “extreme poverty” are eligible for the pension. Site visits are used to determine the characteristics of members of the household (e.g., income, age, occupation, language spoken, participation in social and health programs, etc.) and of the house (the materials of which it is made, whether it has water, electricity, and sewerage, what type of stove is used, whether various appliances are present). This constitutes an unprecedented state presence in the lives of the poor, making them not only collectively legible (as they were through the comunidad structure or the different groups that were beneficiaries of Fujimori’s programs) but personally so. Further, SISFOH evaluates households every three years to see if their status has changed. This state surveillance of individuals contains the power to discipline citizens in very effective ways and is a source of concern for current recipients and those who hope to become beneficiaries.

Demography and Economy of Allpachiqueños

Allpachico’s population has been declining since the 1980s and is currently half or less of what it was 30 years ago. I estimate the total population in 2015 at about 200, compared with more than 600 in 1987. This coincides with the absence of state support for small-scale agriculture and the comunidad between 1990 and 2011. While fertility in Peru has been declining since the 1970s (McDevitt, 1999), the elderly population is still fairly small. In 2015 fewer than 10 percent of the total population were 60 or over (derived from INEI, 2015). My statistics from Allpachico show quite a different picture: in 2015 over 30 percent were aged 60 or older. The working-age population was divided among employment (precarious, much of it in short contracts in regional stone quarries), around 35 percent, agriculture (both on their own fields and as laborers for others), around 34 percent, and rural informal work with a variety of odd jobs, 26 percent. About three-quarters of the population over 60 years of age in Allpachico receive a pension.

Lima, which has grown to a city of over 8 million of a national population of about 30 million, has been the primary destination of those who have migrated away from Allpachico. Allpachiqueños there tend to work in their own informal businesses, some spontaneous and requiring little investment and others home-based operations that require space, machinery, materials, and contacts sometimes built up over years. A few of these latter have become formal over time, and they are not easily relinquished. Other migrant Allpachiqueños have precarious work through short-term contracts. In one case, after many years, this finally became a formal job, but this is rare. Most migrants I am aware of remain in informal or precarious work.

In other words, the population in Allpachico is aging, unable to get the stable wage income that was available 30 years ago, and less interested than in former times in engaging in agriculture. The situation for Allpachiqueño migrants is less easily quantified. There is clearly a range from the more established and stable to the vulnerable, and there is heavy reliance on informal and precarious work. Migrants’ importance to the community is evident locally through remittances, visits during fiestas, and so on. I now turn to examining how Allpachico matters to those migrants. The case study highlights the opportunities available to people and the resources they can obtain directly or through kin, especially across generations, across space, and through the changing economy.

Teodora’s Cluster: Kinship and Care in City and Country

Teodora is an urban informal worker in her mid-fifties. She has a dynamic personality and is a good manager, making her a central figure in a cluster of households involving her kin. The livelihood strategies of her cluster reflect the imprint of formal employment, pensions, kinship support across generations and space, and skepticism with regard to support from the state. Teodora moved to Lima from Allpachico over 10 years ago when her marriage fell apart. She had earlier lived with her husband in various mining centers and then in Allpachico, where they had farmed some land and lived from her husband’s informal work. To make ends meet in those years, Teodora had spent some school holidays in Lima with her children to earn some money. She currently makes a living selling cooked food in the street near her home, an informal business near the lower end of investment and commitment.

Teodora has two children in Lima, both performing informal work. Melia, in her twenties, is a single mother who is heavily dependent on Teodora for a share of the food stand income and frequently takes it over when Teodora is unwell or visiting in Allpachico. She also engages in other flexible, low-investment informal or precariat activities. Mayte is a few years older. She and her husband have a small household-based business that they started when both left formal employment because they perceived it as “slavery.” Now they experience fluctuations in sales but are generally able to meet their needs and provide for their daughter. There are frequent shortfalls, however, which they alleviate with the help of his parents and, through Teodora, her grandmother, Tina. Their investment in space, machinery, suppliers, and buyers is considerable.

Teodora can eke out a basic living from her food stand because she lives in a house purchased by her father, Jorge. Jorge had worked in mining in the Allpachico area and received high wages by local standards. After he retired in the 1990s he invested money from his wages, retirement benefits, and pension income in land in Allpachico, a cacao plantation in the jungle to the east, and the house in Lima. While she was living in Allpachico, Teodora had been in close reciprocity with her parents’ household, providing labor and receiving assistance. Jorge’s widow, Tina, now receives half of the pension he got from the state-administered plan for retired workers.

Teodora believes that Jorge’s pension was lower than it should have been and that he was unjustly denied the benefits of a state program for mining workers exposed to contaminants. Blood tests conducted by the state-run health plan for workers had shown him as healthy, and permission for further tests was only granted after his death. These concerns over his pension and medical care reflect widespread mistrust of the state’s commitment to its responsibility to retired workers. Many who are eligible for worker health care services frequently pay for private care to avoid being let die. By the time Jorge sought private care, it was too late. Teodora is cynical about state assistance. She benefited from Fujimori’s clientelism in the 1990s by being a member of his party and receiving handouts, justifying this by saying that all politicians were the same and one had to get as much as possible during election campaigns because citizens were forgotten about afterward.

Tina, in her late seventies, is uneasy living alone. She has a son in Allpachico, and Teodora has two sons there. However, the gendered nature of elder care is clear here: the men are busy in precarious or informal work and involved with their own young families, and Tina feels uncomfortable with their wives. Thus, Teodora hosts her mother when Tina goes to Lima and accompanies her in Allpachico when she can. Tina’s half-pension cannot quite cover all her expenses, although it is critical to helping out her children and grandchildren in times of crisis. Health care and medicines in particular easily throw household budgets off. In this context, Pensión 65 is of great interest to her and other elderly villagers.

Unfortunately, Tina’s having a pension (about half of Peru’s minimum wage) and health insurance means that she is ineligible for Pensión 65 (about an eighth of Peru’s minimum wage). Despite the restriction of this program to those in extreme poverty, people in Allpachico spoke of others who were on the list for it (which is posted before the bimonthly distribution), and there was much discussion of effective strategies for accomplishing this. People’s experience of the way benefits were distributed had taught them that formal rules mattered less than other mechanisms, including personal relationships. ¹⁴ As with the health care program, they were simultaneously desirous of the benefits they saw both as needed and as their right but deeply suspicious of the quality of treatment they would receive and the terms under which they would receive it. Both Pensión 65 and the widow’s pensions are small, though, and can only provide very limited support. Whereas Jorge’s wages could buy resources (land, a house) that his children could use as a basis for a livelihood, these pensions can only help to alleviate crisis. Thus, a year after her father’s death, Teodora was compelled to go back to Lima, where she could earn money. She sees the city as a place where a determined person can earn money selling one thing or another. She is ambivalent about staying there, however. The house lacks a solid roof (though it rarely rains in Lima, security is an issue), but if she were to invest in improving it she might be less likely to be eligible for Pensión 65 when she becomes a senior. She is well aware of the house visits made by state employees to verify that potential recipients are appropriately poor. Demonstrating poverty might be easier from the peasant surroundings of Allpachico, and Teodora is trying to think of ways to return there. Achieving a livelihood is the difficulty. Her own health, marked by poor nutrition during her childbearing years, when Peru was in economic and political crisis, would not permit her to undertake the hard work of farming anymore, and there would be no steady flow of clients for her prepared food. Because of her age, Tina has also given up farming, and most of the land in Allpachico is left fallow.

This is a major change from my first visits to Allpachico in the 1980s. Then, Allpachiqueño farmers sent produce from their fields to urban kin as a material manifestation of the ties between households. Migrants, whether formally or informally employed, sent remittances, sponsored fiestas, and shared information about income-earning opportunities. Many migrants who maintained ties to Allpachico pictured the community as a quiet, healthy, secure, and inexpensive place to live in contrast to large, polluted, dangerous Lima. Given the decline of produce as a concrete reminder of Allpachico and those who live there, the future of the community depends on alternative ways to attract migrants. I have argued elsewhere (Vincent, 2016) that the desire of rural communities to invest local development funds provided by the state in beautification projects is, in part, a strategy to attract retirees, given the lack of other viable economic opportunities. A few migrants in Lima told me that they would return to Allpachico if they could earn an income there. Very few Lima migrants have actually returned, although those who worked in mining frequently retire there. Pensión 65 may permit some elderly informal workers to do this if they are independent or have children who can care for them there.

Where the elderly live is only partly related to their own preferences. Their financial position and that of their children are also significant factors. Jorge, for example, had an adequate income that permitted Teodora to leave her informal work in Lima and help look after him in his final illness. Tina’s widow’s pension, as we have seen, will not cover the needs of both women in Allpachico. So far, Tina has been able to base herself in the community; she does not like to leave her house for extended periods and cannot get used to Lima. She does travel there frequently, though, and her pension money helps tide Teodora and others in the cluster over. If Tina’s health were to deteriorate, she would likely be forced to leave. This is what happened to Federico, who went into a sharp decline after his wife died. His children were in established informal work in Lima and had built up solid houses over the years. Their children were either still in school or beginning their own careers. Clearly, Federico’s children were better off than he, and against his wishes he spent his last years in Lima.

As Teodora thinks about her future, she takes account of the costs of living in Lima compared with Allpachico and the opportunities for income, including how to ensure her eligibility for state support and what she might be able to count on from her children. Although she has been able to benefit from her father’s relative wealth, her own income is too unstable for her to be able to count on a comfortable old age. While Pensión 65 can provide some minimal support, it would be insufficient to meet the costs of living alone in Lima. The cost of living is lower in Allpachico, but there would be fewer opportunities to earn supplementary income. Further, while she has two sons in Allpachico, sons are less likely than daughters to perform personal care, and her daughters are in Lima. Mayte, for example, is thinking of applying for a state program that builds houses for poor Peruvians (Techo Propio, “One’s Own Roof”) to provide an addition for her mother because she is worried about the toll Teodora’s work takes on her. Evidence of support from her daughter might prejudice Teodora’s eligibility for Pensión 65, however, and Mayte’s income is not always adequate. Having independent access to income is important to Teodora, and she is weighing the alternatives of dependency on the state and dependency on her children.

Conclusion

Teodora’s case offers insight into the way Peruvian urban informal workers negotiate their livelihoods as they approach their senior years. There are some continuities with livelihood strategies of the past, while the changed economy and role of the state present new limitations and opportunities. Neither Teodora nor her children have stable formal employment with benefits. In particular, Teodora’s informal business is too small and volatile to provide much security, and carrying the heavy pots and other equipment is hard given her weakened health.

As in the past, kin are important and constitute the basis of bonding between households in a cluster. Teodora’s father’s wages and later his pension have provided major support for his children both in cash and through his investments in land and the house in Lima. In return, Teodora in particular provided care and assistance to him and her mother. The link between rural and urban also continues, especially since kin straddle the two locations, although it has changed in substance. While produce from the fields helped to cement bonds between rural and migrant households in the past, today rural kin and the community of Allpachico in general are beginning to frame the village as an attractive retirement option for their urban relatives.

The scarcity of formal employment and increased state supports are clearly part of Teodora’s circumstances and strategizing. Given the volatility of her own income and that of her children, any secure source of income, however small, infuses cash that can help deal with crises. Tina’s widow’s pension currently performs this role, but Teodora has her eye on Pensión 65 both for her mother, if possible, and for herself. She understands the need to conform to state requirements and therefore has refrained from making improvements to her living quarters that might suggest she is too well off to be eligible for support. It is this tense relationship with the state that points to the most significant features of the current situation.

In the past 100 years, from the point of view of people from Allpachico, income opportunities have come first from foreign natural resource extraction employers and then from nationalized state corporations and informal and precarious work. They now include state social programs, which offer some limited support for those who are eligible in terms of poverty, age, or other conditions. These programs are possible because of increased state revenues from resource extraction, which now offers few jobs. The state, mediating this compensation for the loss to citizens of Peru’s natural resources, frames it as poverty relief and requires beneficiaries to make themselves legible in its terms and to submit to state surveillance. Dispossessed of a right to work, poor citizens strategize to ensure their eligibility.

State social spending is not, however, only a mediated payment between resource extraction capital and poor citizens; it is also intended to leverage economic activity as it filters through kin. In 2009, then Minister of Women and Social Development Carmen Vildoso wrote a prologue to an influential publication by the nongovernmental organization Caritas. The work pressured the Peruvian government to implement universal old age pensions (the one in place is means-based rather than universal), and Vildoso (2009: 7) argued that these would convert the elderly into investors in their families and communities. ¹⁵ Productive investments derived from kin could relieve unrest about joblessness, and the indirect support for informal businesses could help supply goods and services for the resource sector and beyond at low cost. It is worth pointing out that the unprecedented surveillance that goes along with Pensión 65 and the other programs provides a way to contain unrest—important in a country with a recent history of political violence.

State-administered pensions and other social spending figure large in urban informal workers’ planning, but they do little to relieve the lack of formal employment. Further, the inadequacy of the funds, the eligibility requirements, state surveillance, and experience of difficulties in obtaining state-promised support and concerns about its quality all feed anxiety about the costs and future availability of these programs. The volatility of the natural resource extraction economy only adds to the unease. While there is uncertainty about whether they can count on the state, urban informal and precariat workers themselves appear here to stay. Social spending can alleviate poverty, but it does not address wider inequities in the Peruvian political economy.