Chile's Employment Crisis: Beyond Economic Growth

Chile faces a persistent employment crisis, with unemployment rates at or above 8% for over forty months, affecting nearly one million job seekers. Informality now exceeds 26%, and work's traditional role as a driver of social mobility has diminished. Recent surveys indicate that poverty reduction is primarily due to state transfers, not increased labor income. While reforms like the 40-hour work week and minimum wage hikes aim for fairness, their implementation during unfavorable economic conditions has increased hiring costs, as noted by the Central Bank in 2025. This situation is unlikely to resolve without intervention.

Structural challenges exacerbate the problem, including regulations that inadvertently exclude workers and labor laws that paradoxically harm employees. For instance, the nursery care legislation, intended to support women, now discourages their hiring. Severance pay, often perceived as a universal right, benefits only 14% of employment relationships, protecting stable jobs while trapping others who fear losing this benefit. These laws contribute to discrimination and hinder new hirings. A report commissioned by Minister Rau proposed 22 measures to address these issues, though none are easy to implement politically or technically. Resistance to change persists, with flexibility often equated with precarity and expanded rights with increased employer costs. The report emphasizes that polyfunctionality, rather than being an increased workload, is a crucial tool for adaptation in the face of artificial intelligence. Furthermore, a necessary agreement on distributing care costs, which disproportionately burden working women, remains elusive. The report serves as a starting point for tripartite dialogue between the state, employers, and workers, emphasizing the need for basic communication and trust-building.