Chile's Job Crisis: Growth Alone Isn't Enough, Urgent Action Needed

Chile is facing a significant employment crisis, with the unemployment rate reaching 9.4% in May, the highest since the pandemic, affecting 981,000 people. Youth unemployment is particularly concerning, nearing 25%, and over 100,000 young individuals are seeking their first job. The quality of employment is also deteriorating, as formal salaried jobs decreased by 1.7% in the last year, while informal employment surged by 7.1%. Women are disproportionately affected, experiencing a 10.5% unemployment rate and 28.8% informality. The government's strategy, emphasizing investment and growth, appears insufficient to address the deep-seated issues, as economic growth no longer automatically translates into job creation, a trend observed since 2019. The average unemployment rate over the past four years is 1.5 percentage points higher than pre-pandemic levels, despite similar low growth. While labor reactivation initiatives and short-term measures are being proposed, their slow impact is a concern, especially with a projected economic growth of only 1.8% for the year. Initial employment subsidy designs were inadequate, though the government has since adjusted them to aim for 50,000 additional jobs in the second half of the year, focusing on small, distributed public works. However, questions remain about the sufficiency of resources. The focus on the construction sector, while employment-intensive, faces challenges with unsold housing inventory and a predominantly male workforce, potentially leaving women's employment needs unmet. With unemployment historically rising between May and August, and a unified employment subsidy not expected until October, the situation is urgent. The article argues for a combined approach, including better public investment execution, accelerated public projects, targeted subsidies, and labor reforms, to tackle the complex employment puzzle and address the needs of nearly a million unemployed individuals.