Without Reforms, Unemployment Cannot Remain Low

Abstract

According to the latest OECD Employment Outlook published in July, Chile is one of the few countries in the group that has managed to reduce unemployment since the onset of the international financial crisis of 2008. Indeed, according to the OECD, the unemployment rate went from an average of 8% in the three years prior to the 2008 crisis to 10% in 2009 and—after the recovery—reached values close to 6.5% from the end of 2012 onward. A similar situation is estimated for 2014, which positions Chile as one of the leading countries in terms of its capacity to recover from the latest economic debacle. The report also makes three claims: (a) these unemployment rates would be below the long-run equilibrium unemployment rate (around 8%), (b) Chilean labor legislation is rigid relative to the average of the group's countries, and (c) there have been no labor market reforms in recent years. Continue reading...