Half of Chile’s workers had incomes of up to US$480 per month in 2021

Although there are still jobs to be recovered since the pandemic outbreak, last year, the income of Chileans showed some recovery.

In 2021, half of the employed people in the country recorded an income of up to CLP 457,690 (US$480) per month -that is, less than or equal to this amount- above the CLP 420,000 that reached the median income in 2020.

The Supplementary Income Survey by the National Statistics Institute (INE) revealed a substantial gender gap in income. In 2021, 50% of employed women earned a monthly wage of CLP 405,348 or less; for men, it was CLP 500,000.

The exercise also detailed that the average labor income of the employed population in the country was CLP 681,039 (US$715) net monthly, corresponding to gross income minus discounts for social security and health. This year’s indicator exceeds by almost CLP 45,000 the average income of 2020, which reached CLP 635,134.

The survey -applied between October and December 2021- specifies that the regions of Magallanes, Metropolitan, and Antofagasta presented an average income above the national average but warns that at a national level, 69.7% of the total number of employed people received wages equal to or lower than CLP 681,039.

Of the estimated 8.2 million employed persons, 58.2% were men and earned an average income of CLP 749,046. That compared to the 41.8% that women reached among the total number of employed people, whose average income was CLP 586,178 last year.

It also reveals that between 2020 and 2021, the average income of men increased by CLP 56,757, over the CLP 34,851 that rose for women. All this means that the gender gap in average pay last year was -21.7%, to the detriment of women.

Sandra Quijada, director of INE, detailed in the presentation of the ESI that between 2020 and 2021, the income mass increased by 17.1%, reaching CLP 5.6 trillion last year as a consequence of an increase of CLP 819 billion. It reveals recovery of the upward trend observed up to 2019, detailed the authority.

In the last year, the indicator for men reached CLP 3.6 trillion, while that for women was CLP 2.1 trillion, which implies that the gender gap in the income mass was -43.9%, again to the detriment of women.

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Last year, the income bracket from CLP 300,000 to CLP 400,000 accounted for 18.6% of employed persons, while the groups from CLP 400,000 to CLP 500,000 and from CLP 500,000 to CLP 600,000 accounted for 15.4% and 9.8%, respectively.

Those with incomes above or equal to CLP 1 million per month accounted for 16.9% of the employed population, while those with wages above or equal to CLP 3 million accounted for only 1.9% of the total.

The majority of the employed population – 58.2% – corresponds to salaried persons in the private sector, whose average and median income was CLP 722,211 and CLP 497,489, respectively. Then some are self-employed – 21.6% of employed persons – with average and median incomes of CLP 385,072 and CLP 298,494, respectively.

Public sector employees accounted for 13.4% of the total; their average income was CLP 949,392, while the median was CLP 760,027. The highest incomes were obtained by employers corresponding to only 3.4% of the employed population, receiving an average of CLP 1.3 million and a median income of CLP 800,000.

By educational level, the highest proportion of employed persons – 41.6% – had a high school education and received average and median monthly incomes of CLP 454,910 and CLP 400,000, respectively.

The lowest incomes were those of employed persons with primary education, with average and median incomes of CLP 343,589 and CLP 335,308, respectively. It contrasts with employed persons with graduate-level education, who earned the highest incomes, with a mean of CLP 1.8 million and a median of CLP 1.5 million.

In the analysis by occupational group, the highest incomes were those of executives and managers. This segment corresponds to 4.5% of the employed, receiving average and median wages of CLP 2 million and CLP 1.6 million, respectively.

Workers in services and commerce accounted for 21.1% of the employed and earned a mean and median income of CLP 427,103 and CLP 364,812, respectively.

The survey also found that 49% of employed persons usually work between 44 and 45 hours per week and receive an average income of CLP 795,176 and a median of CLP 531,005.

Those who work part-time – between one and 30 hours – accounted for 18.6% of the employed population and received average and median monthly earnings of CLP 325,268 and CLP 202,674, respectively.

The narrowing of the gender gap would not necessarily be sustained over time.

Juan Bravo, from OCEC UDP, pointed out that between 2019 and 2021, no structural policies were aimed at reducing the wage gap between men and women.

Between 2019 and 2020, the gender gap in average labor income fell from 28.1% to 20.4% to the detriment of women, and the following year it rose to 21.7%.

The INE detailed that the difference between 2019 and 2021 is mainly explained by the increase in women’s income with postgraduate degrees, university education, and executive and managerial positions.

But the entity warned that it is not ruled out that the drop in the gap and redistribution may be transitory. “It is to be expected that, if the labor market adopts the characteristics it had in 2019, the gap will return to levels similar to those it had before the pandemic began,” wrote the INE.

Juan Bravo, director of the Observatory of the Economic Context of the UDP, stated that it is vital to understand the context of the labor market and warned that “it is not clear that the decrease in the occupational income gap concerning 2019 will be maintained over time”.

He explained that part of the reduction has to do with greater relative destruction of jobs with less income-generating capacity among women, such as low-skilled, part-time, or self-employed jobs. He warned that it is not good that the gap is narrowing because jobs that generate lower salaries are being destroyed.

He pointed out that “there have been no structural policies during this period to reduce the gender gap in labor income” and pointed to the lack of laws such as childcare and equal postnatal care. “As long as this does not change, female hiring will continue to become more expensive, and the income gap will continue to widen,” he said.

Another key factor is that the gender gap in occupational income occurs fundamentally in the segment of main household providers, and he said that this is where public policies and research should focus.

The last element is that the differences between men’s and women’s incomes are persistently greater among those who live in households with children up to five years of age.

With information from Diario Financiero