Itaú BBA - CHILE – Private employment improves

Macro Latam

< Back

CHILE – Private employment improves

February 28, 2018

Going forward, a re-composition towards formal private sector employment would occur.

The labor market statistics for quarter ending in January show employment growth continues to pick up, although is still inferior to the labor force increase. Public employment remains the job driver, and while the formal private sector is still weak, there are some signs of improvement. The unemployment rate came in at 6.5%, 0.3 percentage points above that recorded one year ago, and above market expectations of 6.4%. The persistence of the public job growth is unlikely amid the expectation of a fiscal consolidation path ahead. Hence, a more convincing pickup of the private sector hiring is key for the maintenance of solid job creation.  

Employment grew 2.5% year over year (+203 thousand jobs), the fastest pace since the quarter ending in February 2014. However, it remains lower than the 2.8% rise in the labor force, itself the highest increase since the quarter ending in August 2011. The 16.9% increase in public salaried posts boosted overall employment growth. The 143 thousand public sector posts created (public administration, health and education posts) accounted for 1.7 percentage points of the total job growth. While private salaried jobs grew a mild 0.5%, it did interrupt a five month job-shedding period, aided by a low base of comparison. Recovering mining, manufacturing an agriculture employment helped explain the 23 thousand private salaried jobs created, taking the total number of these workers to the highest level since early 2016. Self-employment growth slowed sharply to 1.6%, from 4.1% in 4Q17, adding 29 thousand jobs (down from the 73 thousand added in 2016). 

We expect the unemployment rate to remain broadly stable at 6.7% rate this year. As the economy advances on its recovery path, a re-composition from self-employment and public posts towards the formal private sector would occur.

 

Miguel Ricaurte
Vittorio Peretti



< Back