Chile unemployment rises to 9.4% amid reform debate

Chile’s labour market is under pressure. The national unemployment rate climbed to 9.4% in May, the highest level in five years, while the unemployment rate for foreign‑born workers fell to 6.7% for the March‑May quarter. The INE reported that the labour force participation stood at 80.1% and that informal employment rose to around 30%, with about one‑million people out of work.

President José Antonio Kast described the situation as “complex” and warned that the surge in joblessness and a 0.9% contraction in economic activity demand urgent action. The government is pushing a “mega‑reform” that would cut the corporate tax rate to 23% and introduce measures such as temporary VAT exemption for new housing and tax incentives for repatriated capital.

Former President Eduardo Frei Ruiz‑Tagle, speaking at a regional business forum, urged a return to the “confidence, decision and courage” that he says reduced Chile’s external debt from 40% of GDP in 1990 to under 5% in 2007. He criticised current “permisología” and called for deregulation to boost investment.

Economist Rolf Lüders linked the high unemployment to recent policy choices, including a sharp minimum‑wage increase and reduced work hours, and cited the government’s Labour Reactivation Table’s 22 proposals to lower labour costs. In the far‑south, the regional finance secretary for Magallanes highlighted the need to unlock investment in salmon farming and tourism to generate jobs.