Navigating the Challenges: Peru’s informal economy in the fishing industry

Image of a Peruvian port, with boats and rafts to get to vessels.

Peru, renowned for its coastal beauty and marine biodiversity, faces unique challenges within its informal economy, particularly in the fishing industry. The livelihoods of countless fishers are intricately tied to informal practices, presenting a set of issues that impact both individuals and the sustainability of marine resources.

Peru is one of the leading fishing nations in the world, historically coming in second only to China in terms of tons of wild fish caught. It’s no surprise that the fishing industry is a vital component of the nation’s economy, with artisanal fleets responsible for a large portion of the sector’s contribution. The artisanal squid fishery alone accounts for approximately 9-15% of the fisheries sector GDP, and 59% of the total value of export for direct human consumption. While artisanal fishers as a whole are responsible for more than 80% of the fish that feed the population in Peru, demonstrating its importance to food security.

According to a report by the National Institute of Statistics and Informatics (INEI), a substantial portion of fishers engage in informal activities, lacking the formal contracts and structures that characterize the regulated fishing sector. It is estimated that 62% of the artisanal fishing fleet in Peru is informal, causing a myriad of challenges. These challenges include:

Limited access to financial services

Informal fishers in Peru often struggle to access essential financial services. According to a study by the Central Reserve Bank of Peru, a significant number of informal fishers face challenges in securing loans or financial support to invest in equipment, vessels, and safety measures due to the lack of formal documentation. Oftentimes, they are forced to use local money lenders, who provide unfavorable loan conditions further perpetuating the cycle of poverty. 

Unstable income and job insecurity

Informal fishers grapple with unstable income and job insecurity. The absence of formal contracts and employment agreements leaves them vulnerable to market fluctuations, this compounded with global climate uncertainty and less availability of fish leads to economic uncertainties. During the COVID shut down, many fishers were ineligible to apply for government aid that was made available to the industry due to the informal nature of their work. This unpredictability affects not only individual fishers but also their families and communities. 

Resource management challenges

The informal nature of many fishing operations in Peru contributes to challenges in resource management. According to the Food and Agriculture Organization (FAO), informal fishers may not adhere to sustainable fishing practices, posing risks to marine ecosystems and the long-term viability of fisheries. Sustainable resource management becomes crucial to balance economic activities with environmental conservation.

Safety concerns

Informal fishing often means a lack of adherence to safety standards. Inadequate equipment, insufficient training, and substandard working conditions expose fishers to occupational hazards. Due to the informal nature of the industry, many fishing vessel casualties and work-related accidents go unreported to maritime authority. Additionally, 76% of informal workers in Peru lack legal protection, exposing them to exploitation and compromising their well-being. Addressing safety concerns is essential to protect the well-being of fishers and ensure a secure working environment.

Community impact

The informal economy in the fishing industry has broader community implications. Communities dependent on fishing may face economic instability and social challenges when the sector operates informally. Workers engaged in informal activities typically earn lower wages than their formal counterparts. Informal workers in Peru earn, on average, 38% less than formal workers, perpetuating a cycle of poverty. Additional challenges include lack of access to healthcare, limited infrastructure and reduced access to quality education. Sustainable development and community well-being hinge on addressing the unique issues within Peru’s informal fishing economy.

Navigating the challenges of Peru’s informal economy in the fishing industry requires a collaborative effort from government bodies, stakeholders, and the fishing communities themselves. This is why Future of Fish Peru is part of a USAID funded coalition Por La Pesca alongside 8 other NGOs who are empowering local communities to formalize artisanal fishing organizations. Implementing measures to formalize fishing activities, providing financial support, promoting sustainable practices, and ensuring safety standards can contribute to a more resilient and sustainable fishing sector. By addressing the specific needs of informal fishers, Peru can strike a balance between economic development and the conservation of its precious marine resources.

Published Feb 12, 2024