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Bringing all-chileans-on-board-oecd-economic-survey-chile
The document is an OECD economic survey of Chile that makes several recommendations. It finds that while growth has been resilient, inequality remains high due to uneven opportunities in education and the labor market. It recommends strengthening social policies and spending to promote greater inclusion, expanding early childhood education, boosting skills development, and improving productivity through initiatives like increasing R&D spending and reducing business regulations.
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Bringing all-chileans-on-board-oecd-economic-survey-chile
- 1. www.oecd.org/eco/surveys/economic-survey-chile.htm OECD OECD Economics 2015 OECDECONOMIC SURVEY OF CHILE Bringing all Chileans on board Santiago, 25 November 2015
- 2. 2 A long periodof growth has reduced poverty dramatically Note: The poverty line for a family of four is a family income below CLP 361 311 per month, and the extreme poverty line is a family income below CLP 240 874 per month, both for the year 2013. Source: Ministerio de Desarrollo Social. 0 5 10 15 20 25 30 35 40 0 5 10 15 20 25 30 35 40 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 % of people% of people Poverty Extreme poverty
- 3. -1 0 1 2 3 4 5 6 -1 0 1 2 3 4 5 6 I II IIIIV I II III IV I II III IV I II III IV I II III IV 2013 2014 2015 2016 2017 Chile Latin America 3 Growth has been resilient Source: OECD Economic Outlook 98 database GDP growth, Y-o-Y % change
- 4. 4 The fall incopper prices has depressed investment Source: Codelco and OECD Economic Outlook 98 database. -80 -60 -40 -20 0 20 40 60 80 100 120 140 -20 -15 -10 -5 0 5 10 15 20 25 30 35 i ii iii iv i ii iii iv i ii iii iv i ii iii iv i ii iii iv i ii iii iv i ii iii iv i ii iii iv i ii iii iv i ii iii iv i ii iii iv 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Y-o-y % changesY-o-y % changes Investment (lhs) Copper price (rhs)
- 5. -12 -8 -4 0 4 8 12 0 1 2 3 4 5 6 I II IIIIV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV 2011 2012 2013 2014 2015 2016 2017 Y-o-Y % changes Consumer price inflation (lhs) Nominal effective exchange rate, chain-linked, overall weights (rhs) 5 Exchange rate depreciation has temporarily raised inflation Source: Central bank of Chile and OECD Economic Outlook 98 database. Y-o-Y % changes
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- 7. 7 The richest 10%earn 26.5 times the income of the poorest 10% Source: OECD, Income Distribution and Poverty Database. Ratio of incomes of the top 10% vs. bottom 10% 0 5 10 15 20 25 0 5 10 15 20 25 DNK CZE FIN SVN ISL SVK BEL NOR SWE DEU CHE NLD AUT LUX HUN POL FRA IRL NZL CAN AUS OECD EST PRT GBR KOR JPN ITA ESP GRC ISR TUR USA MEX CHL ratioratio Growth needs to become more inclusive
- 8. 8 The tax andtransfer system does little to reduce income inequality Raise tax revenues to increase social spending, and improve the redistributive impact of taxes and transfers. 0.2 0.25 0.3 0.35 0.4 0.45 0.5 0.55 0.2 0.25 0.3 0.35 0.4 0.45 0.5 0.55 KOR CHE ISL SVK SWE DNK NLD NOR CZE NZL JPN AUS SVN CAN FIN BEL DEU EST POL HUN AUT LUX ITA ISR FRA TUR ESP USA PRT GBR MEX GRC CHL IRL OECD Inequality before taxes and tansfers Inequality after taxes and transfers % changes in Gini before and after taxes and transfers Source: OECD, Income Distribution and Poverty Database.
- 9. 9 Pension benefits areamong the lowest in the OECD Note: “Average” and “low” earnings levels refer to 100% AW and 50% of the AW respectively. Source: OECD, Pension at a Glance Database. The pension system should provide better income support in retirement. 0 20 40 60 80 100 120 0 20 40 60 80 100 120 JPN DEU MEX USA POL CHL KOR GBR SWE FIN IRL FRA PRT CHE ESP EST BEL SVN OECD NZL ITA LUX SVK CAN NOR AUT GRC ISL HUN CZE AUS TUR NLD ISR DNK Low = 50% Average wage Average = 100% Average wage Net pension replacement rates Net pension replacement rates
- 10. 10 Inequality in thelabour market is also high Share of temporary contracts Reduce duality in the labour market between protected indefinite contracts and precarious fixed-term contracts. 0 5 10 15 20 25 30 0 5 10 15 20 25 30 EST GBR SVK LUX BEL NOR DNK AUT CZE GRC IRL HUN OECD TUR CHE ITA CAN DEU ISL FIN SVN FRA SWE NLD PRT KOR ESP POL CHL %% Source: OECD Employment and Labour Market Statistics 2014.
- 11. 11 Reducing gender gapsis key to boost growth and reduce inequality Source: OECD Employment and Labour Market Statistics 2014. Further expand availability and quality of early childhood education and care. 50 55 60 65 Chile Latin America OECD Labour force participation rate 2014, women aged 15-64
- 12. 12 Very few womenare on corporate boards Source: World Values Survey Association. 0 5 10 15 20 0 5 10 15 20 DEU JPN NLD CHL CAN PER IND IRL EGY ITA ARG TUR MEX POL AUS NZL GBR BRA CHE PRT GRC LUX DNK OECD ESP BEL USA FRA SWE NOR % % Promote gender diversity in leadership positions in parliament and private companies. 38
- 13. 13 Gender pay gapis highest for the poorest Source: OECD calculations based on CASEN(2013). Bring gender issues into the public debate through information campaigns. 0 10 20 30 40 50 60 0 10 20 30 40 50 60 Poorest decile 3rd decile 5th decile 7th decile Richest decile %%
- 14. 14 Spending on activelabour market policies is low Note: The figure for Chile does not include the recent programme MasCapaz. Source: OECD Employment and Labour Market Statistics 2014. Increase investment on active labour market policies to help promote labour opportunities for women. 0 0.5 1 1.5 2 2.5 3 3.5 4 0 0.5 1 1.5 2 2.5 3 3.5 4 MEX USA CHL JPN GBR CZE KOR SVK NZL EST ISR POL CAN NOR AUS HUN SVN CHE LUX DEU ITA SWE AUT PRT FRA FIN BEL NLD IRL DNK ESP % of GDP% of GDP
- 15. 15 Better skills forinclusive growth
- 16. 16 Many students lackminimum skills Source: OECD, PISA 2012 Database. Ensure that schools are more responsive to vulnerable students, especially by boosting the quality of outcomes. Undertake a skills strategy to assess labour market needs and guide training and education policies. 0 10 20 30 40 50 60 70 OECD Chile Latin America % of students with poor skills
- 17. 17 A low shareof students beat the socio-economic odds stacked against them Source: OECD, PISA 2012 Database. Improve the quality and access to pre-primary education. Implement legislation to end school selection. 0 2 4 6 8 10 12 14 0 2 4 6 8 10 12 14 CHL ISR GRC MEX SVK HUN SWE DNK USA ISL NZL NOR FRA GBR SVN CZE LUX AUT AUS IRL OECD ITA ESP BEL TUR DEU PRT FIN CAN POL NLD EST CHE JPN KOR % of disadvantaged students with top PISA math scores
- 18. 18 Education and skillsimprove growth Note: The bars in Panel B refer to annual growth rates (in percentage points) once the whole labour force has reached the specific goal. Source: OECD, PISA 2012 Database and OECD (2015). Change in annual GDP growth if universal basic skills are attained by 2030 0 0.1 0.2 0.3 0.4 0.5 0.6 0 0.1 0.2 0.3 0.4 0.5 0.6 Universal enrolment in secondary school at current school quality Every current student acquired basic skills Universal enrolment in secondary school and every student acquired basic skills Percentage pointsPercentage points
- 19. 19 Chile has ashortage of qualified teachers Source: OECD, PISA 2012 Database. Percentage of certified teachers (as reported by school principals in PISA) Approve the legislation to strengthen teachers’ career paths. 0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100 CHL MEX LUX ISR NLD FRA GRC CHE ITA BEL OECD AUT SWE NOR FIN TUR DEU SVK GBR SVN USA NZL PRT CAN ISL AUS POL IRL KOR JPN ESP %%
- 20. 20 Tertiary education: thepoor enroll far less than the rich Source: CASEN (2013). Percentage of students enrolled in tertiary education by level of family income 0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100 Poorest quintile Quintile 2 Quintile 3 Quintile 4 Richest quintile %% Expand and improve income-contingent loans to finance tuition fees and help students access tertiary education. Link funding for tertiary education to improved quality, especially for the least well-off students.
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- 22. 22 Boosting productivity growthis one of Chile’s foremost challenge to raise living standards Source: UAI/CORFO (2014), Boletín trimestral Evolución de la PTF en Chile, No. 7. Total factor productivity Fully roll out the Productivity Agenda, to strengthen the capacity of dynamic firms to scale up and carry out innovative activities. -12 -10 -8 -6 -4 -2 0 2 4 6 8 -12 -10 -8 -6 -4 -2 0 2 4 6 8 1993-1998 2000-2008 2010-2013 Average annual % growth Average annual % growth Total Fator Productivity (TFP) : Aggregate TFP: Aggregate without natural resources TFP: Mining
- 23. 23 Spending on R&Dremains very low Source: OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. R&D expenditure Increase spending on R&D to scale up and support innovative activities. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 CHL MEX ARG ZAF GRC SVK POL TUR RUS LUX ESP ITA NZL PRT HUN IRL CAN GBR NOR EST CZE NLD CHN AUS FRA BEL ISL SVN USA AUT DEU CHE DNK SWE FIN JPN KOR ISR Private Non-Profit sector Government sector Higher Education sector Business Enterprise sector OECD average % of GDP % of GDP
- 24. 24 Business regulation remainsrestrictive in multiple areas Sources: OECD, Product Market Regulation Database. Further reduce the complexity of administrative procedures for business and simplify sector-specific regulations. Product market restrictiveness 0 1 2 3 4 5 6 Best 3 performers Average OECD Chile Regulatory complexity Barriers in network sectors Startup burdens Increasing in stringency of regulation (Index 0-6)
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- 26. Main Findings o Thesound macroeconomic framework made growth more resilient than in other countries in the face of the recent fall in commodity prices. o However, income inequality remains very high and is passed from one generation to the next, reducing opportunities to climb the social ladder. o Chile is now reforming its tax system to make it more progressive and expand social programmes. o Key reforms seek to reduce gender gaps and thus achieve a fairer society. o But labour market duality still results in a very unequal wages distribution. o School enrolment is high, although the quality of education is uneven, and access to the best schools is reserved primarily for well-off families. o The government’s education reform seeks to make schools more inclusive and reshape teacher careers. o More investment in vocational education and training will be needed. 26 EducationInclusionMacro
- 27. Recommendations to widenopportunities Strengthen policies to make growth more inclusive. Raise tax revenues to increase social spending and improve the redistributive impact of taxes and transfers. Further expand availability and quality of early childhood education and care. Promote gender diversity in leadership positions in parliament and private companies. Bring gender issues in the public debate through information campaigns. Reduce duality in the labour market between protected indefinite contracts and precarious fixed-term contracts. The pension system should provide better income support to the retired. 27
- 28. Recommendations to improveskills Ensure that schools are more responsive to vulnerable students, especially by boosting the quality of outcomes. Undertake a skills strategy to assess labour market needs and guide training and education policies. Improve the quality and access to pre-primary education. Implement legislation to end school selection. Approve the legislation to strengthen teachers’ career paths. Link funding for tertiary education to improved quality, especially for the least well-off students. 28
- 29. Recommendations to boostproductivity 29 Fully roll out the Productivity Agenda, to strengthen the capacity of dynamic firms to scale up and carry out innovative activities. Increase spending on R&D to scale up and support innovative activities. Further reduce the complexity of administrative procedures for business and simplify sector-specific regulations. Pass the competition bill that strengthens sanctions for cartels, reform the merger control regime and facilitate market studies.
- 30. More Information… www.oecd.org/eco/surveys/economic-survey-chile.htm OECD OECD Economics Disclaimers: Thestatistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 30
Editor's Notes
- #2 Slide 1: I crafted all the bullet points by combining the titles of key recommendations to make sentences.