Chile’s labor market hits 38 months of unemployment above 8% as growth forecast is revised down
INE attributed the increase to a 0.7% rise in the labor force, above the 0.5% registered by the employed population, which translated into a 3.3% increase in the total number of unemployed persons
Chile’s unemployment rate stood at 8.9% during the moving quarter from January to March 2026, a 0.2 percentage point increase over twelve months, according to data released on Wednesday by the National Statistics Institute (INE). The figure exceeded market expectations, which projected 8.6% according to the Bloomberg consensus, and completes 38 consecutive months with the indicator above 8%, confirming a structural weakness in the Chilean labor market that remains one of the main concerns of President José Antonio Kast’s administration, in office since March 11.
The INE attributed the increase to a 0.7% rise in the labor force, above the 0.5% registered by the employed population, which translated into a 3.3% increase in the total number of unemployed persons. Within that group, those who had lost their jobs grew by 2% and first-time job seekers expanded by 14.5%. The participation and employment rates fell to 62.3% and 56.7%, respectively. The informality rate reached 26.5%, advancing 0.7 percentage points in twelve months.
Female unemployment returned to double-digit territory, reaching 10%, with an increase of 0.5 percentage points year-on-year. The female labor force grew 1.8%, above the 1.2% of employed women, while the number of unemployed women rose 7.4%. The male rate remained stable at 8.1%. In the Metropolitan Region, which concentrates around 40% of the country’s economically active population, the indicator climbed to 9.6%, with significant declines in the information and communications (-16%), financial and insurance activities (-14.4%), and public administration (-8.6%) sectors.
The labor market deterioration coincides with the downward revision of growth projections by the Central Bank of Chile, which adjusted its expected range for 2026 from the 2%-3% estimated in December to the current 1.5%-2.5%, attributing the change to the effects of the international rise in oil prices stemming from the closure of the Strait of Hormuz amid the war between the United States and Iran. The bank has also warned that inflation could reach close to 4% annually by the second quarter, up from the 3.5% with which 2025 closed — the lowest reading in five years — in a context of growing pressure on energy costs. Chile grew 2.5% in 2025.
The Central Bank’s Labor Vacancy Index has accumulated six consecutive months of year-on-year declines and recorded a 4.28% contraction in March, its lowest level since 2024, suggesting that the weakness could extend into the coming quarters. Analysts consulted by local media agreed that a significant recovery in 2026 is unlikely, while the government and the Unified Workers’ Central (CUT) negotiate the minimum wage increase, one of the first tests of the new administration’s economic policy.
