Fynsa
Unemployment That Hits the Extremes Hard
Chile faces a harsh reality: today, we have nearly one million unemployed people, an unemployment rate exceeding 9%, and more than three consecutive years without returning to pre-pandemic levels. But behind that figure lies something even more troubling: the labor market is leaving out precisely those who need an opportunity the most.
On the one hand, young people face unemployment rates of nearly 23 percent. One in five who wants to work cannot find a job. Many are looking for their first job and encounter an absurd contradiction: they are required to have experience to be hired, but they are not given the opportunity to gain it.
On the other hand, people over 55 face a different challenge. They don’t lack experience; they lack opportunities. When they lose their jobs, they remain unemployed for much longer periods than other groups: while a young person takes an average of four months to find a job, a worker over 55 may spend nearly a year looking for a new opportunity.
At the same time, the country is losing both those who are just entering the labor market and those who can still contribute. And this is happening just as Chile’s population is aging: since 2019, the population over age 55 has grown by nearly 20%, while the young population is declining. The system is becoming less age-friendly just when it most needs to incorporate older workers.
The Australian Experience
The contrast with Australia is telling. While Chile has an unemployment rate of nearly 9%, Australia has maintained rates in recent years that are about half that figure. But the most significant difference lies not only in unemployment but also in labor force participation: Australia has successfully integrated students, women, and older adults into the workforce—people who in Chile are often caught between inactivity and unemployment.
What’s interesting is that it achieved this not by cutting wages or weakening social protections, but by building a system capable of adapting to different stages of life. About one-third of Australian workers are employed part-time. Millions of students combine their studies with work, and millions of older adults remain active beyond the traditional retirement age. The system recognizes that modern working life is not uniform.
In Chile, on the other hand, we continue to operate under a system designed for an economy where working life almost always took place under full-time contracts and rigid schedules. The result is that many young people cannot find a way to enter the workforce, and many adults cannot find ways to remain active.
The Role of Small and Medium-Sized Enterprises and the Cost of Hiring
Added to this is another fact that is often overlooked: employment in Chile is not primarily generated by large companies, but by small and medium-sized enterprises, which account for a large share of private-sector jobs, hire young workers, and offer opportunities for reentry into the workforce. At the same time, they are the most vulnerable to rising hiring costs.
In recent years, we have seen a series of labor reforms driven by legitimate goals: shorter workweeks, minimum wage increases, and new regulatory requirements. No one can question the intention to improve workers’ quality of life. The problem is that good intentions do not eliminate economic constraints: when an economy grows slowly, productivity improves at a slow pace, and labor costs rise, the natural consequence is a reduced willingness to hire. This does not always result in mass layoffs; often, it manifests in a more subtle way: job openings that never materialize and people who never find work again.
Flexibility Without Job Insecurity
Flexibility does not mean job insecurity. It means recognizing that a college student probably neither needs nor is able to work forty hours a week. It means understanding that a 62-year-old may want to work two or three days a week without giving up their retirement entirely. It means allowing companies and workers to agree on arrangements that reflect the different stages of life.
Australia also offers a second lesson: it has one of the highest minimum wages in the OECD and, at the same time, unemployment rates considerably lower than those in Chile. This shows that the right question isn’t whether we want higher wages or more jobs (we want both), but how we build an economy capable of sustaining good wages without pushing workers out of the system. The answer lies in productivity, growth, investment, and, yes, flexibility.
The Challenge Ahead
Chile is simultaneously facing labor, productivity, and demographic challenges: nearly one million people looking for work, an aging population, young people who are unable to enter the labor market, and experienced workers who are unable to return to it. Faced with this reality, the answer cannot be to impose even more rigidity.
The country needs a more flexible system that is tailored to the different stages of life, along with a recovery in investment, productivity, and growth. There is no public policy more powerful than formal employment for reducing poverty, strengthening social mobility, and expanding opportunities.
The best social policy is still a job.
