Policies for More and Better Jobs in Chile

Employment growth has been strong in the last decade. However, many jobs are of relatively low quality, affecting well-being and productivity. The segmentation of the labour market, with some benefiting from strong protection and others having precarious jobs without social security benefits or employment protection, has led to significant labour market inequalities. The employment rate is low for vulnerable groups, mainly youth and women. And when in employment, these groups tend to hold precarious jobs. A high share of the population lacks the basic skills and the mismatch between the supply and demand of skills is widespread. Overcoming these challenges will require policies to promote more permanent and formal jobs, such as better targeted training programmes and labour intermediation, and reducing the relatively high severance payments in permanent contracts while increasing coverage of unemployment benefits. The ongoing educational reform will improve skills outcomes, but greater efforts are needed to make the education and training system more responsive to labour market needs by improving relevance. In particular, developing an apprenticeship system linked to formal education and encouraging more work-based learning would improve quality of employment opportunities. Better skills assessment and anticipation information as well as greater efforts to involve employers in the education and training system would also help. Policies to boost female employment, such as expanding opening hours of childcare centres and continue with the efforts towards a universal early education, are also needed to reduce gender gaps. All these policies can create a virtuous cycle between labour productivity and equity, increasing access to higher quality jobs, higher wages, and coverage of pensions, training and unemployment benefits.