Have you noticed that, lately, all the events we have faced create a "new normal"? It's like a wild card 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 unrest, and the pandemic, we have had about 10 new normalities in less than 4 years. It's like those car brands that release a new model, which is actually a rehashing of the past, and they call it "all new." What is "all new" from the past "the new," and so on. 

With the national vaccination process well underway (though not so globally, especially in the developing world), the term has resurfaced to refer to new customs and practices that are likely here to stay: online shopping, teleworking, greater appreciation for outdoor activities, etc. However, one aspect that has not been given much consideration in this new normal is the restructuring of economic sectors as a result of all the above changes. This is affecting and will continue to permanently affect the labor market, with a dramatic change in demand that will take a long time for stakeholders to fully internalize. It is clear that, for the moment, we cannot know exactly how this reorganization will end (especially in the service sector once social interaction can resume), but there are some figures and data that can give us certain 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 it is likely to be applicable to the vast majority of countries. One of the most significant changes is higher long-term unemployment, considering that, among the unemployed, there has been a 60% increase in those who have been unemployed for six months or more. There is an impact between sectors, for example, in agriculture, as various mobility restrictions prevent seasonal workers from moving between regions, which is common during harvest seasons. However, there is also an intrasectoral effect resulting from the changes mentioned above: in commerce, demand for salespeople in physical stores is likely to decrease, but demand for after-sales service or warehouse management is likely to increase.

I emphasize this last point because, when we look 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, which we were able to disaggregate by some sectors. This index shows that, as of May 2021, for each worker, the economy produces 12.8% more than the average between 2013 and 2020. However, in the commerce sector, the increase is 41.6%. This is important, as this is the sector that alone employs the most people in Chile. It is true that the pandemic is not yet over and that these figures do not yet take into account the recent easing of mobility restrictions, but we have known for a long time that certain jobs were going to be automated and others were going to be modified, only that the pandemic has accelerated this process. 

Due to its particular characteristics, this market will not adjust quickly, and state support will be necessary to sustain families affected by this structural unemployment, but also to facilitate and enable the relocation of workers, which will likely require 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 opportunities within the companies themselves. Or for those that have not yet undergone the transformation process, but will do so, allowing their workers to acquire the skills that will be needed in the future while continuing to perform their current tasks. 

This time around, we have to be creative. The costs of long-term unemployment are too high for entire generations, but we cannot expect to apply the same solutions that failed in the past. There must also be a new normal in the way we address these problems. Otherwise, we are doomed to have another Lota after the end of coal mining. And nobody wants that.

Nathan Pincheira 

Chief Economist at FYNSA