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The labor market in Chile continues to weaken, both due to the effects of the social crisis and violence after October 18, and due to the impact of the coronavirus.
As reported on Thursday by the National Statistics Institute (INE), the unemployment rate nationwide reached 8.2% in January-March, one percentage point more than in the same period last year and four tenths above the quarter immediately previous mobile. According to the statistical agency, this means an increase of 109 thousand new unemployed in the last year, which is explained by an increase of 172 thousand people who entered the labor force in the last 12 months, while in the same period only 63 thousand new jobs.
But seeing the figures in greater detail the situation is even worse. A report by ClapesUC shows that the composition of employed persons has been deteriorating in recent months, especially after October.
During January-March, those 63 thousand new jobs decompose into a drop of 96,963 formal and an increase of 160,277 informal. “In this way, the trend towards the destruction of formal employment that was already occurring as a result of the social explosion, while the creation of informal employment shows a slight slowdown with respect to what was reported in the previous official report, is markedly deepened” made by the economist Juan Bravo.
With this increase in informal workers, the number of workers in this condition reaches 2,580,000 at the end of March, which corresponds to 28.9% of the total employed (1.6 pp more than a year ago), the highest rate since this measurement was made, in mid-2017. By sex, 27.5% of male workers are informal and 30.8% of women.
“Currently, due to the Covid-19 crisis, we are facing a period of strong contraction in production, which, as economic theory predicts, will lead to a significant destruction of formal private salaried employment. However, the starting point of the economy and the labor market at the start of the crisis is very relevant to determine its impacts. It is not the same to face the current crisis with a robust and dynamic labor market than with a weakened one. Unfortunately, Chile is in the second case, since it already showed signs of deterioration prior to this recession due to the internal social crisis that broke out on October 18, 2019, ”Bravo points out.
Another important change in terms of employment that marks the report, and that is expected in the situation of health crisis, is an increase in those employed who work from their own home. In the January-March 2020 quarter, the annual increase was 97,859. Most of them are self-employed, which are employment formats that offer greater autonomy and flexibility to work (although generally more precarious). In this way, usually the variations of workers who work from home are led by those who do so under their own account formats. However, in the context of the coronavirus crisis, it is the salaried workers in the private sector who are leading the annual increases in employment carried out from home, which increased annually to a record figure of 42,389 in the January-March 2020 quarter.
The report also highlights the segment of people outside the workforce and in particular the phenomenon of discouragement. “Discouraged is defined as a person who did not look for a job in the last 4 weeks, and did not look for a job because they got tired of looking or think they will not find it, but would be available to start a job in the following 2 weeks. This means that when the search for a job becomes or is believed to be unsuccessful, some workers stop looking for it, which implies that they stop being part of the labor force and start to make up the inactive population, ”the document says.
Thus, the data shows a record increase in discouraged people, which increased at an annual rate of 43,769 in the January-March 2020 quarter, totaling 113 thousand people, 62.8% more than a year ago.
That data is key, since if these people continued to be counted as part of the workforce, the unemployment rate would have reached 9.3% in March, 1.1 percentage points more than the official figure.
“In the statistics they are classified as inactive, but they represent ‘latent’ or ‘covert’ unemployment,” says Bravo.
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