Chilean Employment Down in November, but Yearly Growth Trend Maintained

The active sectors of the Chilean economy seem to have moderated a bit in the last couple of months, but are still keeping up favorable comparisons with a year ago. Total employment decreased 34,000 in November and 30,000 in October, but stands 1.7% ahead of November 2004, the same as the growth for 2004 as a whole. These data are reported as 3-month moving averages and seasonally adjusted by Haver Analytics. Within the National Statistics Bureau industry breakdown is a public service-type category "communal, social and personal services". If we subtract this group from the total, the remainder might be seen as a proxy for the overall private sector; it shows somewhat more slowing, with decreases for the last three months and only a 0.7% gain over the last year. The unemployment rate ticked higher in November, rising to 7.8% from 7.6% in October. However, this latter was the lowest figure since late 1998, as the world financial crisis was pushing it steeply higher, and it is down from a peak of 10.4% in late 1999.

One often thinks of mining when considering the Chilean economy, but mining and quarrying represents only 1.3% of its employment. Even so, this modest workforce generates about 7.3% of Chile's GDP. Otherwise, the mix of employment has, as in many other western countries, shifted over the last few years toward service industries, with growth in finance and transportation and communication, as well as the aforementioned "communal, social and personal services". Agriculture, while diminishing in recent years, still holds a sizable share of total jobs, about one in eight.

At the outset, we noted that these data refer to the "active" sectors of the Chilean economy; that distinction is notable, because there is a substantial "inactive" sector. Labor force participation is only about 53% of the population over age 15 and the employment/population ratio was just under 49% last month. These figures contrast with the US, where the labor force is 66% and employment 62.7% of the relevant population age range. Perhaps this is an unfair comparison and we should assess economic participation with Chile's neighbors: in Argentina, the urban population had a 45% participation rate in Q3 and a 40% employment rate and in Brazil, 56.8% and 51.3% for the relevant population segments. While the Brazilian numbers look favorable compared with Chile's, they refer to a sampling of metropolitan area populations which represent only about 22% of Brazil's total population of about 176,000,000. So from a broader perspective, Chile's population can be seen as the most economically active of these three major Latin American nations.