Itaú BBA - CHILE – Salaried jobs drove employment growth in 2018

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CHILE – Salaried jobs drove employment growth in 2018

January 31, 2019

Some tightening of the labor market is expected this year

The composition of net job creation remained favorable in 4Q18, while total employment growth stabilized following a prolonged slowdown period. The unemployment rate of 6.7% for 4Q18 (0.3pp higher than one year ago) was in line with market expectations, resulting in a 7.0% unemployment rate in 2018 (6.7% in 2017). The labor force growth was 1.1% year over year in 4Q18 (0.9% in 3Q18), more than offsetting the employment growth of 0.7% (0.5% in 3Q18), while still falling participation (-0.4pp over the 12-month period) contained the tick-up in the unemployment rate. Complementary sources of information (capturing formal employment) that the central bank monitors show mixed results. Pension contributors (AFP) are growing at a brisk pace (3.9% for the quarter ending in November, 3.4% in 3Q18 and 4.0% in 2Q18), while data captured by the labor ministry (SIL) shows more moderate growth rates and some deceleration in recent quarters.

Salaried job creation continued to lead employment growth (+59 thousand in 4Q18), a feature that was prominent throughout the year. Public salaried jobs grew 3.2%, moderating from 5.6% in 3Q18 as fiscal consolidation unfolds, while private salaried jobs grew 0.9% (1.1% in 3Q18). Self-employment fell 1.3% from one year ago (+0.2% in 3Q18). Categories driving total job growth in the quarter were health, construction and communications, while manufacturing and retail led the job shedding.

Some tightening of the labor market (unemployment to 6.7%) is expected this year given the lagged dynamism in the labor market relative to the economic recovery.

Miguel Ricaurte
Vittorio Peretti

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