MercoPress. South Atlantic News Agency

Chile experiences employment growth, but how do you define a ‘job’?

Economist Hernán Frigolett: government numbers too good to be true

Chile’s unemployment rate has dropped from 8.6% to 7%, according to official government statistics released this week. The three regions most affected by the February 2010 earthquake were found to have generated 31% of the nearly half a million jobs created nationwide in the past 12 months.

“Such a vigorous growth in employment has not been seen in the past 30 years,” Labour Minister Evelyn Matthei told El Mercurio.

Still, some Chilean economists are questioning the numbers the government released, saying that the definition of “employment” the government used to measure 2010 employment rates is drastically different than in the past.

Previously, employment was defined as working 40 hours a week. The requirement used by the government to measure 2010 employment rates was reduced to just one hour of work per week, a reduction that led former Labour Minister Osvaldo Andrade to call these numbers “fraudulent”.

In January, the daily Cambio 21 released a study showing that despite the rise in job creation during the previous year, 75% of all self-employed workers in 2010 were unskilled, 30% of whom were street vendors.

Economist Hernán Frigolett echoed that sentiment, telling El Mercurio that the disparity between the new and old system of defining employment led to the appearance of over 150,000 “empty” jobs, or jobs that were generated just for statistical purposes.

He said net job creations for 2010 were more like 240,000 rather than 400,000.

The apparent drop in unemployment for the Feb.-April period surprised some economists as well, as this period typically sees a large rise in unemployment due to the changing agricultural season – when farm hands are laid off during winter months.

Thirteen of the 15 regions in Chile showed a drop in unemployment. The two exceptions were Arica and Parinacota.

Bío-Bío, Maule and O’Higgins were the three regions most affected by the earthquake last year. Concepción — the city that experienced the strongest seismic activity — is located in Bío-Bío and the region created 148,230 of the 474,470 new jobs this past year (31%), according to Chile’s National Statistics Institute (INE).

Bío-Bío created 79,740 new jobs in the past year, mainly in agriculture, trade and public administration; Maule created 48,120 jobs with a large growth in industry and trade; and O’Higgins created 20,370 jobs in 12 months, a new record.

Much of the increase in jobs is due to a high growth among employed women, especially among the self-employed. In the past 12 months, 34,030 men found self-employment, compared with 122,450 women.

The Cámara de Comercio de Santiago (Santiago Chamber of Commerce, or CCS) predict that 2011 will generate 250,000-300,000 new jobs.

The five highest sectors for job growth this past year were: industry (110,980 jobs),
Trade (77,359), agriculture (43,390), construction (39,610) and transportation and communications (34,030), reported the INE.

by Zach Simon - The Santiago Times