Peru President Alan García urges companies to reduce profits and “survive” rather than cutback jobs and slash salaries

In response to the Lima Chamber of Commerce’s suggested cutting back of wages and daily work hours to help Peruvian entrepreneurs ride out the global financial crisis, Peru President Alan García is urging the Andean country’s top execs to opt instead for profit reduction and “survival.”

“When there is a crisis situation, particularly when a company has problems, the first should be to work without profits that year, without profit-sharing, in order to maintain production, installations and the best trained workers,” García said Thursday in a televised interview.

“Before thinking about cutting salaries, we should think that this year, in 2009, if the crisis is going to hit the rest of the world very hard, it’s already good enough to survive, even if you’re making pennies in profit,” he added.

“It’s not about losing, or perhaps losing only very little,” García said, “the important thing is maintaining our businesses in functioning order, and our workers employed.”

Ahead of the global financial crisis, Lima’s Chamber of Commerce suggested this week that reducing wages and daily work hours could help avoid massive amounts of workers from being fired.

But, according to Peters Anders, a spokesperson for the Chamber of Commerce, the recommendation “has been taken out of context.”

“The law provides for personnel reduction. But it’s an agreement that must be taken between both parties, it has to be voluntary, and it’s not something one of both sides can command.”

Peru’s National Society of Industries reported Wednesday that 60,000 Peruvians have been sacked in the past few months.

García, who dismissed the report as “unnecessarily alarming,” also called on Peru’s banks not to impose additional restrictions on credit, in order to keep the economy going at full steam.

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