Have you noticed that, during the last time, all the events we have faced create a "new normality"? It is like the catch-all to refer to any change that seems structural to us and forces us to rethink our paradigms. From the rise of nationalism, trade protectionism, the influence of social media, technological replacement, social explosion and pandemic, we have had about 10 new normalities in less than 4 years. It's like those car brands that come out with a new model, which in reality is an amonement of the past and they call it "all new". What is an "all new" of the past "the new", and so on.

With the national vaccination process well underway (but not the global one, especially in the underdeveloped world), the term again emerged to refer to new customs and uses that are probably here to stay: online shopping, teleworking, greater appreciation for outdoor activities, etc. However, one that has not been so much considered in this new normality refers to the reordering of economic sectors, a product of all the previous changes. This is affecting and will permanently affect the labor market, with a brutal change in its demand that will take a long time to be fully internalized by the actors. It is clear that, for the moment, we cannot know exactly how all this rearrangement will end (especially in the service sector once social interaction can be resumed), but there are some numbers and data that can give us some clues. 

The OECD published a study on the changes that have been observed and are projected to remain in the labor market of its members, but probably extend to the vast majority of countries. One of the most important is higher long-term unemployment, considering that, among the unemployed, those who have been unemployed for six months or more have grown by 60%. There is an impact between sectors, for example, in agriculture, since different mobility restrictions prevent seasonal workers from moving between regions, which is common at harvest time. However, there is also an intra-sectoral effect as a result of the changes mentioned above: in commerce, it is likely that the demand for salespeople in physical stores will decrease, but that related to after-sales service or warehouse management will increase.

I emphasize this last point, because when looking at other indicators, we realize that the situation could be somewhat more complex. We constructed a kind of labor efficiency index, which considers changes in production, but also in workers, within which we were able to disaggregate by some sectors. This index indicates that, as of May 2021, for each worker, the economy produces 12.8% more than the average between 2013 and 2020. However, in the trade sector, the increase is 41.6%. This is important, as this is the sector that alone hires the most people in Chile. It is true that the pandemic is not yet over and that these numbers do not yet take into account the reduced mobility restrictions applied recently, but we have known long before that certain jobs were going to be automated and others were going to be modified, only that the pandemic brought this process forward. 

This market, due to its particularities, will not adjust quickly and the support of the State will be necessary to support the families affected by this structural unemployment, but also to facilitate and enable the relocation of workers, which will probably require the well-known national training programs. However, this could also be done with the private sector, by facilitating the hiring of people whose past activities no longer exist, creating training spaces within the companies themselves. Or for those companies that have not yet carried out the transformation process, but will do so, to allow their workers to acquire the skills that will be needed in the future while continuing to perform their current jobs. 

In this pass we have to be creative. The costs of long-term unemployment are too high for entire generations, but we cannot pretend to apply old-fashioned solutions that failed. There has to be a new normal also in the way we deal with these problems. Otherwise, we are doomed to have a new Lota after the end of coal mining. And nobody wants that.

Nathan Pincheira 

Chief Economist, FYNSA