Labour informality and the tax base.
Peru and Bolivia are among the Latin American countries with the highest levels of informality in their employment structures. Informality takes various forms, but one of its common features is escape from the tax net. In the pursuit of raising government incomes, various policies are being adopted to draw firms into formality and make them pay income tax and social security contributions.
A large informal sector is likely to persist longer in Peru and Bolivia than most other countries in Latin America.
A protracted downturn in tax revenues from extractives may force authorities to tap into alternative sources of revenue.
The scale of illicit activity, not least in drug-related activities, will continue to be an obstacle to reducing informality.
Political opposition will militate against radical labour market liberalisation.
