Cornejo Swears in as Premier, as Villanueva Steps Down

Humala and Premier CornejoPeruvian Premier Cesar Villanueva stepped down on Monday following a public dispute with the Finance Minister and the First Lady over government plans for raising the minimum wage.

Villanueva, who had only been in office for four months, was replaced by Rene Cornejo, who has served since 2011 as President Humala’s Minister of Housing. Earlier, Cornejo, 51, served in the Toledo government and has developed and directed infrastructure projects for the government and private investment, and led several of the government’s privatization programs.

A number of other cabinet members were changed Monday, the most prominent being Mines and Energy Minister Jorge Merino. Merino has been replaced by Eleodoro Mayorga, a petroleum engineer and economist who has experience at the World Bank, in government, formulating sector policies, and at private law firms.  The Minister of Production, Gladys Treviño, who has had to face tough battles over quotas with the fishing industry, has also been replaced — she is succeeded by Piero Ghezzi, until recently in the Finance Ministry and previously an executive director of emerging markets research at Barclays Bank in London.

The spat that led to Villanueva’s resignation and the cabinet shuffle began last week when Villanueva said, in an interview with financial daily Gestion, that the government was looking at increasing the minimum wage. Villanueva said that the issue was being studied by the Finance Ministry.  (Earlier this month, the Executive doubled the salaries of Cabinet members, from S/.15,000 to S/.30,000 per month, or just over $10,000).

Villanueva, Cesar, PremierWhen questioned  by reporters, First Lady Nadine Heredia quickly contradicted the Premier and said the government had no plans to increase the minimum wage.   Villanueva said he was not annoyed by her statement, that everyone had a right to their opinion, but that the minimum wage was a continuing concern on the government’s agenda.

On Sunday, however, Finance Minister Luis Miguel Castilla waded into the public dispute and said during a television interview that Premier Villanueva was wrong to say that his office was considering a hike to the wage.  Castilla had been traveling in the Middle East when Villanueva originally made the comments.

“We were surprised that the Premier said that he had coordinate with me on the issue, which is not true,” Castilla said in the interview. “There has never been any coordination.”

“There is no initiative [on the minimum wage] within the government,” he added.

The following morning, Villanueva officially announced his resignation during an interview with RPP Noticias. The former premier criticized Castilla during the interview, saying that Castilla had got “all worked up” over his comments about the minimum wage, which should not be looked on as “bogey man.”

Castilla is opposed to increasing the minimum wage from its current level of 750 soles ($268), saying that it could force many small businesses to close their doors and push workers into the informal labor market. The government wants to reduce the informal sector as part of a strategy to increase the tax base in order to boost government revenue.

President Humala increased the minimum wage to its current level from 600 soles shortly after he took office in 2011. Castilla said that another hike is not advisable at the moment.

In the interview, Villanueva said there was room to increase the minimum wage. He also reiterated claims that the government had agreed to look at the issue through a national labor council that includes government officials, as well as representatives from the business sector and labor unions.

“The fear that a small increase in the minimum wage represents a risk for informality, my God, we are seeing ghosts, and wanting to hammer it into the heads of people that to maintain low wages is a guarantee for formality,” Villanueva said.

Villanueva was the fourth premier to take on the post, replacing lawyer Juan Jimenez in late October 2013. Prior to that, Villanueva was the president of Peru’s San Martin region, one of the regions that has most effectively used its annual budget.   Villanueva’s appointment to lead the cabinet was supported by most opposition politicians and the business sector because he was seen as an independent and trustworthy politician. However, Villanueva never really gained his footing when he entered the national government, and was often overshadowed by other members of the cabinet.

Analysts say that Villanueva’s successor, Cornejo, has closer ties to the President and his wife. Cornejo had previously led ProInversion, the government agency in charge of promoting private-sector investments, and as Minister of Housing, Construction and Sanitation worked closely with President Humala in government infrastructure projects.

The other new cabinet appointments on Monday include: Former Agriculture Minister Milton von Hesse succeeds Cornejo in the Housing ministry;  Juan Manuel Benites succeeds Von Hesse in the Agriculture ministry, where he has worked for 25 years in rural development, agriculture and irrigation;  former Women’s minister Ana Jara has taken up the Labor Ministry portfolio, and is replaced in the Women’s ministry by Carmen Omonte, a member of Toledo’s Peru Posible party and vice-president of the Congress until this week; and Paola Bustamante, who was a vice-minister in the Ministry of Social Development and Inclusion, now heads that portfolio.

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One Comment

  1. I find a problem with your reporting.
    The statement in this article referring to a disagreement with the “First Lady” is totally unnecessary and of No consequence. She is neither a member of the government and was not elected by any stretch of the imagination. She holds No Office and niether her agreements, disagreements or opinions count at all.
    Tell me,,,, If a see the Doctor do I care what his wife thinks about any health issue…… No,,, I do not.
    I suggest that you keep to the politics of the government and those who participate as political editorialists or officials or former officials.

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