Post-pandemic employment recovery is slower in Chile than in the rest of LatAm

The confinements that occurred during 2020 in the wake of the Covid-19 pandemic generated a collapse in global economies.

Slowly, most Latin American countries recovered, but Chile, one of the richest nations in the region, is having a harder time than the rest of its neighbors recovering lost jobs.

In all metrics measured by the International Labor Organization (ILO), it is worse off than in 2019.

In Chile, the employment rate as of the third quarter of 2022 was 5.83% below the values observed in the third quarter of 2019 (54.9% vs. 58.3% pre-pandemic).

In parallel, some countries in the region showed for the third quarter of last year an employment rate higher than that of 2019, such is the case of Argentina, Bolivia, Brazil, Ecuador, Uruguay, and Jamaica.

In the sample analyzed by the ILO, some countries had a lower employment rate in 2022 than in 2019 (Colombia, Costa Rica, Mexico, Paraguay, Peru, Dominican Republic, Barbados, and Trinidad and Tobago).

However, in none of the cases the comparison between both years is as unfavorable as in Chile.

The unemployment rate in Chile went from 7.3% in the third quarter of 2019 to 7.9% in the same period of 2022, representing an increase of 8.2%.

In the same period, the unemployment rate fell in Argentina, Bolivia, Brazil, Colombia, Ecuador, Mexico, Uruguay, Dominican Republic, Barbados, and Jamaica.

Why did employment and unemployment fall at the same time in some countries? This may be due to a change in the participation rate.

Regarding the countries where unemployment increased, the sample analyzed only shows a more worrying situation than that of Chile in Trinidad and Tobago.

Regarding the participation rate, only in Argentina and Bolivia did the ratio grow in 2022 with respect to 2019. However, Chile’s ratio plummeted the most in the sample (from 62.9% to 59.7%).

In its Labor Outlook 2022 Latin America and the Caribbean report, the ILO highlighted the following:

“In Chile, the employment growth rate between the third and fourth quarter of 2021 was 4%, but it was practically zero in the last quarters”.

LOWER INFORMALITY THAN IN THE REST OF THE REGION

It is also true that in many countries, the recovery of employment was supported by an increase in informal work.

Therefore, the ILO clarifies that in Chile, Costa Rica, Mexico, and Paraguay, the lower informality rate (at the end of the first half of 2022) is observed, in parallel, an insufficient recovery of total employment.

“These countries could experience a closing of this gap with higher informality rates than those observed in that year.”

In this sense, the international organization samples 10 countries: Argentina, Bolivia, Brazil, Chile, Costa Rica, Dominican Republic, Ecuador, Mexico, Paraguay, and Peru.

When compared, Chile has lower labor informality in the entire region (26.1%), while at the other extreme is Bolivia, with a rate of 81.5%.

HOURS WORKED

The ILO also takes a sample of nine countries (Argentina, Brazil, Chile, Costa Rica, Ecuador, Mexico, Paraguay, Peru, Dominican Republic) to calculate the hours worked by employed persons.

When comparing the fourth quarter of 2019 with the last three months of 2022, the report states:

“Only in Chile, there are still fewer employed people and for fewer hours than in 2019″.

It highlights, however, that even though in the other countries, the absolute values of both indicators are higher than those recorded before the pandemic, only in a few of them, the increase in the volume of employment implied an increase in the employment rate.

The ILO clarifies that in this general context of recovery of hours worked, in most countries analyzed, those performed in domestic service show the opposite behavior.

“In Chile, the average weekly hours of domestic service went from 33.5 to 31; in Peru, it was reduced from 43.7 to 40.5 hours”.

With information from Bloomberg