MercoPress. South Atlantic News Agency

Chilean income growth remained near stagnant in 2007

Despite near stagnant income growth Chile has the third largest income growth in Latinamerica. Chilean workers' wages rose 8.6% from this time last year. However, consumer price inflation surged at 8%, so real incomes grew a mere 0.6% compared to the first quarter of 2007, the National Statistics Institute (INE) reported.

Still, Chilean incomes grew by 2.8% annually in 2007, the third highest annual growth rate in the region. Chile's rate was topped only by those of Argentina and Uruguay, whose incomes grew 10.2% and 5.2%, respectively. Real incomes dropped in Paraguay, Colombia and Nicaragua in the same period. In March real wages in Chile rose a mere 0.1% -- the lowest expansion since June 2003, when unemployment peaked at 10.1% and income growth was flat. Economists blame Chile's flat income changes in part to a slowdown in certain economic sectors. "This is part of a necessary, expected change stemming from the growing problem of declining productivity, which is getting slower every day," economist Guillermo Pattillo of Santiago University told La Tercera. "That has to be reflected in salaries." While construction leads the economy with a 6.2% growth rate, no other major sector experienced even half that increase in the first quarter of 2008. Commerce and education grew 3 and 1.5% respectively, but sectors like industry and financial services and gas, water and electricity have all shrunk since this time last year. "There are sectors that are being more productive. Construction is demonstrating an important drive. But in electricity, costs are rising a lot," said Gonzalo Sanhueza, a partner at consulting firm Zahler & Co. So far this year, monthly real income growth has slowed from 1.3% in January to 0.1% in March, compared to the previous year. At the same time, unemployment rates have crept from 7.2 to 7.6%. Industrial production shrank by 2.4% in March, the first negative change since December 2006. The Santiago Times