Not much is known about the informal economy in Peru, yet it is one of the reasons why many people face poverty, particularly women.
1) The prevalence of informal work.
Even though Peru has the most informal workers, it is not reducing its informal sector at a faster rate than its neighbors.
2) Women are among the highest group forced into informality.
3) As a result…
Women are forced to turn to informal labor because many companies force them to work 12-hour or even longer days and often pay below minimum wage. By working in the informal sector, women have greater flexibility to balance their work and family responsibilities, but they sacrifice income stability and long-term benefits.
With the necessary reforms in education, social programs and infrastructure, the informal economy can be reduced to just 1.4% of the national economy by 2050.
In the meantime, social entrepreneurship and businesses like Housekipp are responding to this need by offering training, contract employment and education loans for the children of women from low-income backgrounds.
By lending to Housekipp, you can help Housekipp thrive — a challenging task as only 30% of small and medium businesses participate in the formal economy.
Become part of a movement that promotes formal employment for women across every industry. Thank you for joining us!Lend Now
Sources from 2016
Economía informal en Perú: Situación actual y perspectivas (CEPLAN)
International Labour Organization
Inter-American Development Bank
With your support, women in Peru will have the opportunity to improve their income, receive professional training, and access micro-loans for their children and families to thrive. By lending $25 or more, you can help Housekipp reach 100% so that it can train and employ 240 women by 2021.
The Story Behind Housekipp
In 2015, Grover and Roberto saw a great need among Lima’s home and office owners (seeking quality housekeeping services) and a great disadvantage among the traditional housekeepers (informality tends towards low income and no benefits).
In Lima, less than 1% of housekeepers have a formal contract with their employers and most of them are treated with indifference. Without a contract, women working as housekeepers earn below minimum wage and lack access to respective work benefits such as healthcare, pension and vacations.
They discovered a way to cover both needs and created Housekipp – a social enterprise that trains women to reach five-star hotel cleaning standards and connects them with the increasing demand from Peruvian homeowners and office managers. This ensures a steady income source. Grover and Roberto partnered with Diana who has extensive experience in premium hotel management and services. She leads the training efforts with the Housekippers.
Over time, the founders realized that Housekippers would benefit from additional support. Many of the women are single mothers and some are survivors of domestic violence.
This is why Housekipp provides flexibility on working hours and ongoing career development. The management team assess each woman’s skills and strengths to identify additional responsibilities she can grow into, such as administration, purchase management or sales. Housekipp also provides trainings on personal finance, counseling, and microloans to support Housekippers’ children and their education.
In a year and a half, Housekipp has trained and worked with more than 30 Housekippers who now have stable contracts, private health insurance and the other employment benefits.
With your support, Housekipp will be on track to employ 240 women by 2021. Become a part of Housekipp’s journey to formalize the domestic services sector by ensuring contract employment for women in Peru.
Hear directly from Denisse, the impact that Housekipp has had on her life.
NESsT is headquartered in San Francisco, where entrepreneurship, innovation, and technology meet to solve problems in our daily routines and in global issues that will impact generations to come.
Our colleague, Nathalie Figueroa, visited the Nasdaq Entrepreneurial Center to hear leading investor and Stanford Business School professor, Andy Rachleff, share the key values he’s observed in entrepreneurs of successful businesses he’s worked with.
Watch the full one-hour interview or read the key takeaways below!
- Ask yourself: What do you uniquely offer to people that they desperately want?
- On market fit and exponential organic growth: Spend no money on marketing initially. Identify product market fit by seeing how it spreads through word-of-mouth. For exponential organic growth, uniquely serve them.
- On Growth: Appealing to everyone appeals to no one. “I’d rather have 70% love us and 30% hate us than 100% kinda like us… From there on, growth took off.”
- How to maintain the company culture? A great leader needs to model the behavior they want. Everyone models their behavior behind the CEO.
- Recruiting talent & the Fear of Loss strategy: People are motivated more by the fear of losing out on an opportunity than by the joy of gaining. Potential hires commit when they think, “I don’t want to miss out on the opportunity of working here,” as opposed to “What a great opportunity!”
- Your Vision: You need a compelling vision. It has to be authentic. If the leaders of the project do not have a vision it doesn’t do well. You can teach management skills, you can’t teach the vision.
- Skills of a CEO: Judgment distinguishes the great entrepreneurs and CEOs. They’re seldom the smartest but they are the oneswith the best judgment. You will never see the exact same pattern, but your judgment should improve. “Pay attention to everything that goes on around you so you can develop that mental database.”
- What recommendations do you have for competing with a lot of people? Don’t. It’s impossible to beat someone at their own game. Don’t compete if you don’t have an unfair advantage.
- Leadership Tips: Beware – the most dangerous people are high influence and low judgment. Intuition is one of the most important skills.
In less than a week, over 900 people trusted in Pietà by becoming their lenders and partners through the campaign organized by NESsT and Kiva! They are not only making this vision possible, they’re making it stronger.
Project Pietà is a social enterprise and clothing label that was founded by Thomas, a fashion designer, specifically to help inmates independently earn income to support their families while in prison. They are also able to build valuable work experience to assist in securing jobs upon release.
Inmates are paid a portion of the sale price for each unit of clothing they produce, resulting in a reliable income they can send home to their families. Upon release, former inmates can continue working with Pietà or seek jobs at other companies with Pietà’s recommendation and support.
The Kiva loan will help Project Pietà grow its business to employ more than 90 current and former inmates by 2018. Pietà plans to open an additional retail store in Peru and a new distribution center to support increased online and international sales. The loan will go towards the initial rent, furniture and computer equipment needed for the launch of these new facilities.
Thank you from the Founder, Thomas Jacob
“We reached our goal! Thanks to everyone from around the world who is now part of our mission! It feels truly amazing to see so many people believing in Pietà and believing in every human being! Thank you for the privilege of your love and your support in the name of all the inmates part of the Pietà team. Now, it’s time for us to keep up this important work and develop Pietà locally and internationally.”Read about the context of Pietà’s work and why NESsT was compelled to select Pietà for our Peru Portfolio.
The Prison System in Peru
Poor education, low wages and social exclusion are among the factors that are contributing to the growth of crime in Peru. Among the serious problems these jails face are overcrowding and a high rate of repeat offenders.
However, almost 60% of the total prison population are pretrial detainees. Every day, 31,000+ people are imprisoned without being convicted of anything – in some cases for up to two years – as they await trial.
Of all people in prison, more than 70% of male inmates and 85% of female inmates in Peru’s prison system have children to support at home and no opportunities for earning income legally while awaiting or serving their sentences.
Pretrial detention and incarceration causes loss of income and employment, and the ability to support family members or pay for housing that may drive other individuals to criminal activity. Americas Quarterly reports, “[Pretrial detention] creates a vicious circle: many of those caught in pretrial detention are already poor and unable to afford bail, which further hampers their ability to obtain legal counsel that can help them negotiate the pitfalls of the judicial system.”
Pietà directly tackles a key factor that has been found to correlate with future criminal offense: future employment. Through their work, Pietà furthers the use of rehabilitation through economic inclusion that is paving the way for prison reform.
Who are the partners of Project Pietà?
Project Pietà partners with inmates from all backgrounds: 18-68 year olds, men, women and trans folk, people with sentences of two years or 35, LGBTQ+, university grads and the illiterate. Most resounding is the fact that 95% of them have children, and the largest group working with Pietà are teen parents.
Pietà fulfills this desire for youth and adults who want to learn practical skills, earn a dignified income to support themselves and their family, and achieve their potential. They are able to send money to their children to continue their studies, and support the mothers who are left without a key source of income. Some are also able to reduce their sentences for each day of work they complete.
*Pictured are our partners from the prisons in Lurigancho & Santa Monica.
“Many of the prisoners that Thomas Jacob [founder of Pietà] works with do not need to be trained, as they had backgrounds in tailoring and garment-making before they were incarcerated. ‘Sewing is a widespread skill in Peru,’ says Jacob. ‘Knitting and embroidering is typical in the provinces, and generally among the most modest class, who are the most exposed to delinquency. But for others it has changed their lives.’” – The Guardian
Don Carlos, one of the founders of Pietà, is an exemplary role model that has made it possible for more inmates to work. He has been in Lurigancho for 13 years and his passion and diligence led to the development the stamping workshop that he directs and enhances every day. With Pietà, Don Carlos manages four inmates and oversees the workshop as point person to Thomas.
“If you don’t have something with which to occupy your time, your head fills up and that’s where the stress and sickness comes in. The best thing to do is to work. There are few people that believe in that, but we should promote the opportunity to work.” – Don Carlos
The Founder and Behind the Name
“Project Pietà clothing is the brainchild of Thomas Jacob, a French designer who moved to Lima in 2011 to pursue a job with a Peruvian fashion label. A chance visit to a neighbouring jail, Casto Castro, with a friend who was teaching the inmates French opened Jacob’s eyes to the possibility of a clothing project behind prison walls. ‘There were some unused sewing and knitting machines (in the prison). There were also a lot of wonderful, open-minded people – very far from the image you may have of prison inmates here – who wanted to get by, to learn a skill, to work, to earn money,’ says Jacob. ‘These people came from underprivileged upbringings and were idling in prison with nothing to make of their days. I felt that it was an amazing possibility for them to create something strong,’ he explains.” – The Guardian
Over the course of five years, Thomas has developed closed relationships with the inmates, sometimes seeing them more than their family members.
His vision expands beyond providing income and development opportunities for inmates while they are in jail. Pieta also hires inmates after their release. As they continue to expand their business, Pieta will provide training and employment opportunities in logistics, operations, and sales so that inmates directly manage the brand.
Beyond its commercial concept, Pietà represents much more than just a fashion label. Founded and registered by Thomas in 2012, it started full-time operations in 2015,when he left Chanel Latin America to focus on Pietà. Its name – coming from Michelangelo’s Pietà – represents resurrection, a second chance for inmates who want to fight for their families and succeed.View their collection. Get in touch with Pietà on Facebook.
After years in the finance sector, Irina Asaftei realized that she wanted to go beyond her focus on generating profit. She joined NESsT after working in Romania, Uganda, Singapore, the Philippines and the UK, specializing in project design and management, organization development, capacity building, and communications for NGOs tackling a wide array of social issues.
Goodbiz hosted Irina from NESsT Romania at their introductory event “Community for Better Investment” in March 2017. Check out her interview on what makes the NESsT methodology stand out, how enterprise founders without business training are able to run their own businesses and thrive, and how NESsT decides what issues to invest in. Plus, she shares her insight on how projects like this can evolve across Europe in markets like Slovenia.
After forming part of NESsT’s publication Closing the Talent Gap of the BPO/IT Industry in Poland, Coders Lab decided to launch their own social enterprise to make their programming lessons available to youth from underprivileged backgrounds.
Many young people in Poland undertake work where development opportunities are limited or remain unemployed entirely because they are unable to meet the desired qualifications of the labor market. In particularly difficult situations are the young people leaving foster care and government institutions. Faced with the need to become independent, they give up on further education in favor of low quality jobs available. Without prospects for further professional development, they remain in at risk of marginalization.
At the Coders Lab Schooling Program, young people at all levels of education learn programming from scratch, enabling them to work in IT. Coders Lab founded the “Keep Up the Pace” Foundation to implement the professional education program, Możesz ITy, that will make it easier for homestay and foster home children to live independently. In addition to the programming course, young people will take part in soft skills workshops to help them develop effective communication, teamwork and time management skills.
NESsT supports Coders Lab in implementing this venture. With a $ 25,000 NESsT investment and non-financial support, Coders Lab is refining the business model of their social enterprise, establishing partnerships, measuring social impact, and piloting an educational program.
NESsT works with Coders Lab, Siedlisko and Dimpact under the NESsT Empowers program, which aims to facilitate access to decent and stable employment for people from marginalized communities. Through the program,NESsT invests in social enterprises that prepare people from these communities for employment. This is possible due to the cooperation of companies from the fastest growing sectors of the economy with social enterprises.
In response to the needs of employers, they collaboratively formulate vocational training programs for people with stable jobs. In addition to training, social enterprises also offer first aid and early career support and counseling. The program understand that it is social enterprises that are best prepared for the professional activation of marginalized people because they understand the social problems best and have a track-record of working with them.
Thanks to the NESsT Empowers program, 3,500 have received employment or income opportunities to date. In the next five years our goal is double this number and support 7,000 people.
NESsT Empowers is an initiative whose implementation in Poland is possible thanks to the support of J.P. Morgan.
By Nicole Etchart and Loïc Comolli, NESsT Co-CEOs, July 11, 2017
They use innovative business models that connect vulnerable groups to formal labor market jobs; these models range from workforce development and job placement to direct employment. Despite the importance of this work, the majority of these enterprises are only measuring outputs such as number of jobs, and not the quality of these jobs and whether they are truly “decent” and moving these groups out of poverty and toward a path of social mobility.
The reasons for this are many. Qualitative measurement is costly and complex. There are few widely accepted indicators or practices, making many in the sector believe that efforts to date are quite subjective. However, despite these challenges, the growing interest and support for social enterprise across the globe calls on us to begin to make an effort to measure their qualitative impact. Doing something, even if small and somewhat imperfect, is better than doing nothing at all.
This is why in 2015, NESsT decided to begin measuring the quality of the jobs and contracts generated by its portfolio of enterprises. Measuring impact was not new for NESsT. Since it’s founding in 1997, we have been measuring the performance and impact of our portfolio. Our performance measurement has evolved through three phases; each one augmenting the scope and types of indicators collected.
The current set of indicators (from Phases 1 through 3) includes 36 metrics collecting data at the social enterprise and beneficiary levels. These indicators framed our definition of ‘decent work.’ See Table 1 for the list of indicators.
NESsT launched Phase 3 focusing on job quality measurement, in response to its new strategy to exclusively support social enterprises that provide employment and income to those most in need.
Were these jobs moving these communities out of poverty by providing them with a secure and livable wage?
Although we had some indications that this was happening among the beneficiaries of our portfolio, given the lack of both financial and human resources, we had not measured it in a systematic way. It was now necessary to collect job quality metrics to validate these beliefs and to do so we put the following process into place:
- Research existing employment measurement models to understand their objectives and applications
NESsT reviewed existing measurement systems from international organizations (e.g., ILO) measuring employment quality to understand their applicability for social enterprises. Furthermore, the research surveyed 25 emerging market countries to collect employment metrics and use as benchmarks for jobs created by social enterprises. These metrics include minimum and average wage, poverty rates, job longevity and job security, and employment subsidies. The research also analyzed employment barriers for the following target groups: at-risk youth, ethnic minorities, women, people with disabilities, immigrants and the elderly.
- Pilot job quality definitions and metrics on a sample of social enterprise beneficiaries
We consulted a cohort of social enterprises and their beneficiaries to define the concept of job dignity. These enterprises include employment, placement and supplier business models. The results led to seven key concepts that social enterprises and their beneficiaries consider important for dignified employment, including (a) adequate earnings, (b) decent hours, (c) stability of work, (d) work-life balance, (e) fair treatment, (f) safe work environment, and (g) social protection.
We decided to measure primarily on the first three concepts, and added demographics concepts to capture the profile of social enterprise beneficiaries. The research then grouped job dignity and demographic concepts into three categories and 16 indicators (see Table 2 below).
Table 2: Dignity Indicators
Although we recognized the importance of understanding work-life balance, fair treatment, safe work environment, and social protection, we decided to keep the survey simple, and not overwhelm beneficiaries with too many indicators. We hope to add these dimensions the future.
NESsT collected these metrics on a sample of 50 vulnerable individuals employed by our portfolio enterprises. The main findings of the pilot include:
- 46% of beneficiaries stopped their education at high school
- Beneficiaries worked 36 weeks of the year for the social enterprise
- Majority of beneficiaries have worked for the social enterprise for less than one year
- Beneficiaries were optimistic about the operations of the enterprise, but they were concerned about their job stability
- Beneficiaries received wages above the minimum wage for their countries
- Share of social enterprise income to total household income is much higher for employees than suppliers
We identified and addressed a number of challenges to streamline the metrics and data collection process during the rollout phase. These included:
Table 3- Dignified Employment Pilot ChallengesChallenge Solution Implemented Working with external consultant versus in-house staff to collect data NESsT validated the survey methodology and tools with external researchers and ecosystem actors before starting the pilot. Data collection was conducted by NESsT Portfolio staff – persons that are working closely with social enterprise managers but not with beneficiaries who were subject of the survey. Interviewers were very well trained and prepared to do the survey to mitigate the risk of data distortion. Income data are a delicate topic, need to build trust during the survey Face-to-face interviews were much more efficient than phone interviews – beneficiaries had the opportunity to ask questions and to understand objectives of the research. It helped to build trust and relationships with the interviewee. Geography and weather conditions In Peru and Brazil, it was difficult to interview members of remote communities. In some cases NESsT asked social enterprises to conduct interviews since they are closer to the beneficiaries. Furthermore, NESsT plans to collect data taking into account weather conditions: e.g., end of the year in Peru due to the rainy season and March/April in Central Europe to avoid travelling during the winter. Resources – time, money, staff Data collection is time and money consuming and NESsT is looking for more efficient ways of conducting this process. We are researching different technologies including mobile apps to reduce costs. During the pilot we conducted interviews to coincide with portfolio site visits to save money and time for our staff. Educational and social background of beneficiaries Some beneficiaries have difficulties understanding survey questions, to calculate income, and even to communicate with interviewers. Direct face-to-face contact with interviewee helps to communicate efficiently. In some cases tutors or social enterprise staff assisted during the interviews or confirmed the validity of the data (e.g., in the case of people with mental health problems). Language We had to translate the questionnaire into five languages and keep it consistent. We adjusted the questionnaire to the realities of five countries through internal trainings. Sampling size and representativeness Due to limited resources, we need to keep sample size at a reasonable and feasible level, while keeping it representative and inclusive (all countries, all marginalized groups, all business models). NESsT decided to survey 100% of social enterprises in the portfolio, and around 10% of the beneficiary population. We will use quota-sampling, which is representative. Benchmark data It was challenging to find reliable benchmark data for all countries and all types of business models, including the industries in which they operate. While in Central Europe statistical data is current and available, in Latin America it is more challenging to obtain. For these reasons we limited benchmark data to a few, easily- available variables including: minimum and average wages, poverty line, purchase power parity. Cultural and legal differences Many country differences exist in terms of labor laws and social protection. To address this issue, we limited the number of indicators to income level and job longevity. These two indicators allow us to compare results among countries and to aggregate data at the portfolio level. Methodology does not measure impact in terms of long-term psychological change of beneficiaries NESsT does not have the capacity to conduct such research and to track this dimension of impact. We might consider this in the future, as an additional survey conducted less often than annually (every 3-5 years). Methodology was sometimes too complex Based on the feedback from interviewers, we re-designed the methodology after the pilot, reduced number of questions, removed data that was not relevant for us and made an e-version to simplify the process of gathering and aggregating data. Now the questionnaire has 17 questions and takes approximately 10-12 minutes to complete.
During the pilot phase NESsT also upgraded its current Customer Relationship Management (CRM) system to manage and analyze the new job quality metrics. We worked with an outside vendor to customize our CRM platform for the new metrics.
In late 2016 and early 2017, NESsT rolled out its employment survey in order to begin capturing baseline. Data was collected on demographics, income and job longevity through a questionnaire tested and validated during the pilot.
We collected data from 16 enterprises in our portfolio (out of 28) and a sample of 10% of their beneficiaries. The sample represents approximately 350 individuals and included supplier models, employment models and placement models.
No doubt that this was not an easy process. In addition to having to plan around the effects of El Niño in Peru and the long distances needed to reach beneficiaries living in remote communities, capturing the data from the beneficiaries themselves was also challenging.
A key goal of the survey was not only to understand individual income- from both suppliers and direct employment/placement models- but how it compared to overall household income. Often interviewees did not have this information and did not know how to obtain it. We used a series of proxy questions to derive the information.
In relation to job longevity and security, we asked interviewees if they had a contract, and if so, we asked its duration. But since some do not, it was also important to know if they thought they would have this job the following year. The results of this were quite positive, with 80% having a contract that they expected would be renewed and 85% believing that they will still have their jobs next year.
By sifting through the data to benchmark against minimum wage and poverty level, we are beginning to capture a very clear picture of our portfolio and their beneficiaries. On the plus side, we see that beneficiaries are earning between 56-256% of minimum wage in their countries. Once we are able to compare income earned in 2016 to that earned in 2017, we will begin to understand how income improves in correlation to enterprise performance.
On the delta side, we are concerned that the data shows that some of our supplier models are contributing a smaller percent of household income than we had expected, and we want to understand why; although we were pleased to see that overall household income ranges from 98-580% of the poverty line, depending on the country.
By creating this baseline, we can set precise goals and indicators with our portfolio on where beneficiaries should be a year from now.
This in turn will help our portfolio companies make more informed decisions related to their businesses and weigh the trade-offs between reaching more people versus providing their current employers and/or suppliers with better quality jobs and contracts.
It’s critical that we analyze the outcomes of these efforts and similar ones with our colleagues so that we can learn from each other and begin to benchmark the sector overall. Ultimately, this data will be shared in the form of dynamic data and storytelling with the social enterprise sector, and other intermediaries- investors, accelerators, incubators, – that are supporting social enterprises.
We are excited to have taken these concrete and pioneering steps to measure the dignity aspects of the jobs generated by our portfolio. The process is by no means perfect. In particular, we need to explore lean data technologies that lower the costs and time for data collection, as well as improve analysis and reporting.
However, these initial efforts have been eye opening. By adding dignity dimensions to the numbers, we can really begin to make qualitative impacts on the lives of those most in need. As one of our colleagues said:
“Even if individual incomes are still small, they can be meaningful at the family level or for a single mother. When conducting the surveys, we encountered cases where two people live on a 400 lei salary. 1000 lei extra per year is a significant amount, representing an increase in annual revenue of 20%.”
By deepening our measurement, we are hearing directly from the people we exist to serve.
 World Bank. 2012. World Development Report 2013: Jobs. Washington, DC: World Bank.  The ILO defines decent work as “opportunities for work that is productive and delivers a fair income, security in the workplace and social protection for families, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equality of opportunity and treatment for all women and men.”
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