Fynsa
Recent local employment data reveal some quite interesting information. We know that the labor market has been weakening recently, which has affected consumer spending, but monitoring the pace at which this continues and the extent to which it will reach are top priorities for projecting what will happen to economic activity through 2023. That is why we wanted to summarize our analysis in a very original way that has never been done before: the good, the bad, and the ugly.
The good news: The unemployment rate remained at 8.0%, after having steadily worsened over the past few months. In fact, to two decimal places, it actually decreased. This was the result of the creation of 26,000 new jobs (0.3% m/m), which exceeded the 21,000-person increase in the labor force (0.2% m/m). By category, the increase in employment came mainly from private-sector wage earners (0.3% m/m), followed by self-employment (0.8% m/m), which was partially offset by a decline in public-sector wage earners (-0.3% m/m).
The downside: The rolling quarter ending in October is, historically, one that exhibits positive seasonality. This means that, for various reasons that recur year after year (think of Christmas and retail, or the harvest and agriculture), this month usually creates more jobs than the rest. However, this did not happen, causing the seasonally adjusted unemployment rate to rise from 7.7% to 7.9%. This weak job creation has left us with a shortfall of more than 400,000 jobs (440,000, to be exact) compared to where we should be if we had recovered all the jobs lost during the period following the social unrest and the pandemic.
The bad news: The figures generally show a labor market that continues to slow down, regardless of what some officials may want to say. This is evident not only when looking at these numbers, but also when considering them alongside trends in wages and job postings, both of which continue to decline. In other words, not only are fewer jobs being created, but the available ones are being sought by an increasing number of candidates, and the effect on wages is clear. Furthermore, certain sectors are showing greater weakness than others, especially those that employ less-skilled workers, such as construction.
The labor market is of particular importance to the economy because of its direct impact on the income and well-being of most families. This is especially true in Chile, where the vast majority of people rely solely on their jobs as a source of income. Without promoting policies that encourage investment and enable sustainable economic growth going forward, we are unlikely to see a change in this trend.
