Itaú BBA - CHILE – Non-salaried job growth keeps unemployment low in 3Q17

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CHILE – Non-salaried job growth keeps unemployment low in 3Q17

October 31, 2017

Employment growth picked up, but continues to be led by the informal sector and public salaried posts.

The unemployment rate in Chile remained low in the third quarter of the year, but job composition continues to point at a fragile labor market. The unemployment rate reached 6.7% in the quarter, down by 0.1 percentage points in 12 months. The print came in above the 6.5% Bloomberg market consensus, and our 6.6% estimate.

Employment growth picked up to 2.3% (from 1.9% in 2Q17), but job growth continues to be led by the informal sector and public salaried posts, while formal private sector lacks dynamism. In fact, private salaried employment shed 39 thousand jobs in the quarter (+13 thousand in 2Q17 and -150 thousand year-to-date), subtracting 0.5 pp from the headline growth. Shrinking manufacturing and construction employment are the main hindrance to job growth in the formal private sector. Public sector job growth (public administration, health and education posts) accounted for 1.0 percentage points of the total growth. While public expenditure has favored the creation of close to 100 thousand jobs so far this year, the expected fiscal consolidation in the last quarter of this year as well as in 2018 means the support from the public sector may not persevere. In additio n, non-salaried employment contributed 1.8 pp to the headline 2.3% increase (+125 thousand jobs added YTD).

We expect the unemployment rate to average 6.7% this year, up from the 6.5% recorded last year. The unfavorable composition of job growth will likely keep the private consumption recovery limited.

 

Miguel Ricaurte

Vittorio Peretti

 



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