2026/01/29 | Andrés Pérez M., Vittorio Peretti, Andrea Tellechea & Ignacio Martínez
According to the INE, Chile’s unemployment rate closed 2025 at 8.0%, well below Bloomberg’s market median of 8.3% (Itaú 8.2%). The unemployment rate was similar to the 8.1% in December 2024, with unemployment during 4Q unfolding in a similar vein to recent years amid seasonal drivers (8.5% in 3Q to 8.0% in 4Q25). The labor force participation rose 0.5pp to 62.1%. On a seasonally adjusted basis, the unemployment rate of 8.5% was slightly lower than in November, with total employment advancing 0.2% MoM. Over the previous twelve months, the economy created 167,000 jobs—an annual increase of 1.8%—with both formal and informal employment contributing to growth. The average unemployment rate for 2025 came in at 8.5% (in line with 2024). Informality rose to 26.8%, up 0.5pp in twelve months. Support services and the health sector led job creation in annual terms, whereas public administration continued to show notable declines.
Our Take: Significant hikes in labor costs in recent years and the move towards automatization have led the unemployment rate to hover at the upper bound of the NAIRU range (7.5-8.5%), even with economic activity expanding somewhat above potential. The minimum wage increased by 1.9% in nominal terms this month, completing a 54% nominal rise since April 2022; the next minimum wage negotiation should take place in May 2026. Complementary data showed total layoffs based on administrative records increased by 5% YoY in November, rising by 2.3% in the rolling quarter. Consistently, labor demand proxies remain well below pre-pandemic levels. Meanwhile, the Central Bank’s Business Perception Report (November) signaled limited appetite from firms to expand payrolls over the next year. Going forward, with business sentiment on the up and investment recovering, a gradual labor market recovery is expected, especially if labor-intensive sectors like construction can regain traction. We expect the average unemployment rate to edge down to 8.3% this year, after averaging 8.5% over the past two years. The INE is scheduled to publish labor market survey data for the quarter ending in January at the close of next month.
