OECD Economic Surveys: Chile 2022
Chile’s economy recovered swiftly from the pandemic on the back of exceptionally strong policy support, which eventually led to a significant overheating of the economy. Inflation has risen amid buoyant private consumption, further aggravated by the Russian aggression on Ukraine. Monetary authorities have acted swiftly to contain inflation, and the fiscal stimulus is being withdrawn. Looking ahead, main challenges for boosting productivity and investment include strengthening competition, reducing regulatory barriers and spending more on research and innovation, while pressing social needs call for more attention to how incomes and opportunities are distributed. Around a third of the workforce is in informal work, which limits their access to social protection benefits. Ensuring a well-defined set of benefits for all, with no distinction between formal and informal workers, will be key. Expanding access to high-quality early childhood education would improve educational outcomes and allow more women to work. Environmental challenges and risks loom large, but also provide significant opportunities for the future. The current high fossil content of the energy matrix contrasts with Chile’s strong potential in renewable energy generation.
SPECIAL FEATURES: RAISING PRODUCTIVITY, EXPANDING SOCIAL PROTECTION, REDUCING LABOUR INFORMALITY
Also available in: French
Towards lower poverty and inequality in Chile: Strengthening social protection and job quality
Chile has developed one of the most comprehensive social protection systems in Latin America. However, after the social unrest in late 2019, the pandemic has highlighted significant gaps in social protection, in particularly among informal workers. A key lesson emerging from the pandemic is the need for developing a better social protection system that does not differentiate between formal and informal workers. Ensuring some basic social protection coverage for all, including in pensions, health and unemployment insurance, while simultaneously reducing the cost of formal employment, would reduce labour informality. Unifying social assistance programmes into a single cash benefit scheme while increasing coverage and benefits and providing incentives to take up formal employment will be key to tackle poverty and raise job quality. These reforms would raise productivity and decrease inequality, two priorities and long-standing challenges.
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