Social Security and Labor Market in Chile

Viviana Salinas, University of Texas at Austin

During the last 25 years, the Chilean economy has been object of a deep re-structuring. An import substitution model was replaced by an open-economic model. Two major pieces of the transformation were the labor and the social security reforms. Labor regulations were relaxed and a more complex labor structure emerged, increasing labor vulnerability. The old pay-as-you-go social security system was replaced by a private, mandatory system based on individual accounts, usually considered successful. The design of the social security system, however, did not consider changes in the labor market. As a result, a substantial part of the population (40%-50%) is excluded from social protection (both in the private and public systems). This study focuses on them, inquiring about the strategies of social protection, both formal and informal, they develop, both for the future and at the present. A mix of quantitative and qualitative methods is used to approach the problem.