Itaú BBA - CHILE – Uninspiring labor market in May

Macro Latam

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CHILE – Uninspiring labor market in May

junio 28, 2019

With the Chilean growth outlook deteriorating, the labor market is unlikely to improve meaningfully.

The labor market in the quarter ended in May continued to show declining participation and low private salaried job growth, which along with depressed sentiment, points at weaker consumption dynamism ahead. The unemployment rate came in line with expectations at 7.1%, 0.1pp above the rate 12 months earlier. Job creation grew at a stable pace of 1.4%, lifted by the public sector. The labor force also grew at a steady 1.5%, but participation continued to fall 0.2pp from last year (to 59.7%). Complementary labor data (pension contributions; lagged by two months) remained upbeat and in line with elevated public salaried job growth.

With fiscal consolidation efforts expected ahead, the employment boost from the public sector is unlikely to endure. Public administration (8% yoy), education (4.1% yoy) and healthcare (6.0% yoy) led the 1.4% employment rise. Meanwhile, job shedding in primary-related sectors and commerce contained the employment rise. Employment growth was lifted by the 6.9% yoy growth of public posts (3.2% in 4Q18 and 4.1% in 1Q19), while private payrolls were broadly flat (+0.1% yoy vs. 0.5% in 1Q19 and 0.9% in 4Q18). Meanwhile, self-employment grew 1.3% yoy (3.2% in 1Q19).

With the growth outlook for Chile deteriorating, the labor market is unlikely to improve meaningfully, so we see the unemployment rate broadly stable at 7% this year.

Miguel Ricaurte
Vittorio Peretti


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