Chile: Improving opportunities for all is key to a more inclusive and productive economy | WPN World People News

A long period of economic expansion in Chile has raised living standards and dramatically reduced poverty, but more needs to be done now to ensure that the country is in a position to move to a stronger, more inclusive and sustainable growth path, according to the latest OECD Economic Survey of Chile.

The Survey, presented in Santiago Wednesday by OECD Secretary-General Angel Gurría and Chile’s Finance Minister Rodrigo Valdés, says that the Chilean economy has been among the most resilient in Latin America. Monetary policy has been supportive and will help the Chilean economy grow by 2.2% in 2015. The OECD expects it to strengthen to 2.6% in 2016 and 3.3% in 2017.

"Sound economic policies have contributed to robust growth and a sharp decrease in poverty over the past two decades, but the conditions underpinning those successes have changed and Chile is now facing an adverse external environment,” Mr Gurría said. “Today’s challenges will require further economic transformation, away from an over-reliance on commodity exports and towards a more knowledge-based and innovative economy. Renewed efforts must also be made to ensure that all Chileans are brought on board."

To make growth more inclusive, Chile must address high levels of inequality while improving opportunities for all. Raising tax revenues through the recent tax reform will add progressivity to the tax system and allow increased social spending, according to the Survey.

Improving the education system, by raising the quality of schools and teachers and expanding vocational education, will be critical. Skills also need to be reinforced in order to bridge the mismatch between demand and supply in the labour market. Making childcare more affordable, and encouraging women to take up rewarding careers can reduce gender gaps. High labour market duality affecting in particular women, youth and minorities should also be reduced by breaking down barriers between highly protected workers and those who do not enjoy such protection. Pension reform can also help reduce inequality.

The Survey underlines the role that productivity growth can play in providing higher living standards for all Chileans. The new Productivity Agenda is welcomed and should seek to encourage dynamic firms to scale up and carry out innovative activities, through measures to improve public-private cooperation, strengthen competition policy and further reduce regulatory complexity for firms. The OECD is already working closely with Chile to address these challenges.

Source: Organization for Economic Co-operation and Development