March 30, 2016 / 11:54 PM / in 3 years

Peru's Humala hikes minimum wage 13 percent ahead of elections

LIMA (Reuters) - Peruvian President Ollanta Humala raised the minimum wage on Wednesday by 13 percent to 850 soles ($252) per month, effective May 1, following pay-increase proposals by the country’s presidential candidates.

Peruvian President Ollanta Humala talks during a business forum in Lima, Peru, February 3, 2016. REUTERS/Janine Costa

Humala, a former leftist military officer who turned conservative after taking office, last increased the minimum wage in 2012 to 750 soles. It was 600 soles at the start of his five-year term, which ends on July 28. He is constitutionally barred from seeking a second consecutive term.

Inflation quickened to 4.4 percent last year and the central bank expects it cool to around 3 percent by the end of the year.

Humala signed a decree authorizing the new minimum wage before a crowd of supporters in the highland region of Puno, one of the poorest in Peru.

“You all will be the judge of who can do better than this government. When candidates come here looking for votes ... don’t settle for just anything,” Humala said.

Presidential contender Pedro Pablo Kuczynski praised the new minimum wage, which matched his proposal for an increase, and said he would evaluate raising it further if he won the April 10 election.

Kuczynski, a former World Bank economist and Wall Street investor, has been running second in opinion polls since March 13. He was seen in a recent Ipsos survey as narrowly beating front-runner Keiko Fujimori in a likely June run-off.

Center-right Fujimori had said she might raise the minimum wage but did not offer a figure. Leftist lawmaker Veronika Mendoza, just behind Kuczynski in opinion polls, had promised an increase to 1,000 soles.

Humala’s party withdrew from presidential and congressional elections earlier this month after trailing far behind others in polls. Humala has not endorsed any candidate and his approval rating has sunk in recent years.

Labor unions hailed the new pay floor but Lima’s Chamber of Commerce said it came too soon as economic growth was still sluggish.

Peru’s mining-fueled economy has slowed sharply at the end of a decade-long mining boom but has been recovering in recent months on surging copper output from new mines.

Reporting by Mitra Taj and Teresa Cespedes; Editing by Richard Chang

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