Chile's persistent labour informality poses challenges

Significance As well as hampering productivity gains, it is an important cause of low pensions in the country’s defined-contribution pension system and a drag on tax revenues. Because of its heterogeneity, labour market informality is a particularly complex public policy challenge. Impacts The creation of formal jobs is a necessary but not sufficient condition for reducing informality. Informal employment renders women especially vulnerable to future low pensions from Chile’s contributory system. Chile’s rapidly ageing population makes gains in labour productivity particularly important.