Effective social policies key to maintaining Chile's strong economic growth, says OECD report

26/11/2007 - More efficient government spending on education and social programmes, success in tackling the "black" economy and getting more women and young people into work will be crucial to maintaining Chile's strong economic growth, according to a new OECD report.

OECD's Economic Survey of Chile says public finances are robust, growth is strong, and inflation, despite having risen recently, remains low. But labour productivity compares poorly with OECD countries. Boosting productivity will require more business innovation and improving the education levels of the workforce.

Chile's healthy public finances are allowing increased spending on education, healthcare and other social programmes. Although educational attainment levels of Chilean pupils compare well with other Latin American countries, they are generally lower than in OECD countries. The report argues that extra money alone will not raise educational standards or enrolment and graduation rates. It calls for more focus on the quality of education through, for instance, greater attention to students from disadvantaged backgrounds and additional training programmes for teachers and school managers.

Improving education and skills is also key to discouraging people from working in the informal or "black" economy. About 20% of Chileans aged over 15 and working at least 20 hours a week did not have a formal labour contract in 2003, the latest year for which figures are available, says the report. Streamlining business registration and tax procedures would reduce the number of enterprises operating informally while the labour code could made more flexible. At the same time, social security schemes should be enhanced to encourage firms and their workers to be part of the formal economy.  
   

The percentage of women aged over 15 in the labour force has risen over recent years but remains relatively low at around 42%. Male participation in the workforce is about 73%. Increasing the number of women in paid employment would support Chile's long-term economic growth and help reduce poverty, the report says. It adds that further incentives could be provided by more flexibility in working time arrangements, adapting  social security provisions and increasing publicly-funded child-care, especially for the poor. Policies to raise educational attainment would also help as participation is higher among better-educated women.

OECD countries have launched a drive to engage more closely with emerging economies worldwide. Chile is one of several countries, along with Estonia, Israel, Russia and Slovenia, which have been invited to open membership negotiations. OECD has also launched a process of "enhanced engagement" with major emerging economies including Brazil, China, India, Indonesia and South Africa, with a view to strengthening mutual links.

The report is available to journalists on the password protected website or on request from OECD's Media Division  (tel: + 33 1 45 24 97 00).