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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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Key Trends

Strong Economic Growth but Insufficient Job Creation

Chile’s unequal income distribution is linked with relatively low employment and a segmented labour market, two factors that also contribute to the difficulties in extending social protection to the whole population. Despite strong and sustained economic growth, job creation has been insufficient to give opportunities to under-represented groups and to cope with a growing working-age population. For women and youth, in particular, employment rates are low by OECD standards. The manufacturing sector’s share in total employment declined in the 1990s, after which it has been mostly stagnant at a low level for a country at Chile’s development stage. Informal employment is less widespread than elsewhere in Latin America, but still sizeable by OECD standards. The recent job creation has occurred partly in sectors that employ many high-skilled workers, but also in the areas where jobs tend to be low-productive and precarious.

English

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