Lima’s Executive Salary Map: Why Location and Gender Still Dictate Pay

A staggering 40% difference in executive pay exists within the same city – Lima, Peru – depending solely on where a company is located. New data from the Ministry of Labor and Employment Promotion (MTPE), analyzed by Vinatea & Toyama, reveals a stark reality: executives in San Isidro earn, on average, more than four times what their counterparts do in the Free Town district. But location is only part of the story. A persistent gender pay gap continues to plague the executive ranks, raising critical questions about equity and opportunity in the Peruvian labor market.

The Geography of Executive Compensation

The study, which examined 12 districts within “Modern Lima,” paints a clear picture of income disparity. In San Isidro, the financial heart of the city, executives command an average gross monthly salary of S/ 18,144. This contrasts sharply with the S/ 4,693 earned by executives in the Free Town, a difference that highlights the significant impact of corporate concentration. Surquillo presents a more moderate gap, with male executives earning S/ 10,830 compared to S/ 8,382 for women. San Borja shows a similar trend, with men earning S/ 11,865 versus S/ 7,390 for women.

Beyond District Lines: The Role of Corporate Power

Ricardo Valdiviezo, Head of Research and Development at Vinatea & Toyama, emphasizes that the district itself isn’t the primary driver of these discrepancies. “The decisive factor is the concentration of large corporations,” he explains. “Companies with greater profitability tend to locate in areas like San Isidro, driving up average salaries.” This is crucial to understand because MTPE data tracks the company’s fiscal domicile, not the executive’s residence. An executive living in a more affordable district may still be earning a salary tied to a San Isidro-based headquarters.

Internal Policies Trump Regulation – and Tax Implications

For executive-level positions, traditional labor regulations and collective bargaining hold less sway. Valdiviezo notes that compensation is largely determined by internal policies – performance bonuses, stock options, and profit-sharing schemes designed to attract and retain top talent. However, this approach introduces a complex tax landscape. Companies must carefully navigate whether these incentives are considered “remunerative concepts” subject to contributions to EsSalud (social security) and AFP (private pension funds), as SUNAT (Peru’s tax authority) is known for strict enforcement.

Cost of Living: A Red Herring for Executives

While the cost of living is a significant concern for many workers, it plays a surprisingly minor role in executive compensation. Unlike lower and middle-income earners whose purchasing power is directly affected by inflation, executives’ salaries are often tied to company performance and broader economic indicators. “Executives can better absorb variations in the cost of living,” Valdiviezo states, “their compensation packages are more flexible and tied to corporate results, not the family basket.”

The Unyielding Gender Pay Gap

Perhaps the most concerning finding of the study is the persistent and substantial gender pay gap. In San Isidro, male executives earn, on average, over S/ 5,000 more per month than their female counterparts (S/ 18,144 vs. S/ 13,000). This disparity isn’t shrinking; in some cases, it’s widening. Valdiviezo attributes this to the “glass ceiling” effect, with women disproportionately concentrated in lower-hierarchy positions. This trajectory difference translates directly into income inequality. The gap isn’t limited to specific districts, extending across all sectors, even those traditionally considered female-dominated like healthcare and social services.

Breaking the Cycle: Inclusion Policies are Key

Addressing this inequality requires a multi-faceted approach. Simply implementing equitable salary policies isn’t enough. Companies must actively promote initiatives that encourage and support women’s advancement into senior management roles. This includes mentorship programs, leadership training, and a commitment to creating a more inclusive workplace culture.

The future of executive compensation in Lima, and likely across emerging markets, will be shaped by these forces. The concentration of corporate power, the evolving nature of incentive structures, and the urgent need to close the gender pay gap will all play critical roles. Companies that proactively address these challenges will be best positioned to attract and retain the talent needed to thrive in a competitive global economy. What steps will Peruvian businesses take to ensure a more equitable and sustainable future for their executive leadership?

Explore more insights on Peruvian labor market trends in our Archyde.com business section.