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OECD Reviews of Labour Market and Social Policies: Chile 2009

image of OECD Reviews of Labour Market and Social Policies: Chile 2009
This report analyses in detail the implications of recent developments in Chile's labour market and social policy and considers the available policy options from the perspective of OECD countries’ experience.

The report finds that Chile has enjoyed rising living standards over two decades of strong economic growth. The incidence of poverty is now much lower and there is better access to adequate housing, education and healthcare. Nevertheless, Chile’s income distribution remains disturbingly unequal by OECD standards. This is partly due to Chile’s a relatively low employment rate, especially for women, but it also reflects a segmented labour market, where much of the recent job creation has occurred in relatively low-productive sectors. Moreover, despite the existence of an internationally renowned pension programme, Chile’s social protection system as a whole has still a relatively long way to go before reaching the standards of developed countries in terms of effective coverage and capacity to assist needy households.  Chilean policy makers have begun to develop and implement a series of ambitious reforms, intended to promote the twin goals of work and equity.

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Assessment and Recommendations

Chile has enjoyed an impressive economic performance over the past two decades. Apart from a cyclical slowdown during 1998-2003, real GDP increased by nearly 6 % per year over the period 1985-2007. Despite relatively strong population growth – up from 12.1 million in 1985 to 16.6 million in 2007 –, real GDP per capita rose by 4.3% per year over the past two decades. This impressive performance has resulted in a significant catching up with the OECD countries: two decades ago Chile’s GDP per capita was 18% that of the United States; by 2006, it had reached 29%, above the level in Mexico and close to that of Poland. The national poverty rate has also been reduced dramatically, from almost 39% of the total population in 1990 to less than 14% in 2006, with the share of individuals living in extreme poverty down to close to 3% in 2006, from about 10% in 1990.

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