The investigation based on data from the last CASEN revealed that more than half of the workers in Chile earn less than 500 thousand liquid pesos, a reality that highlights the transversality of low salaries in the country. In addition, the study identifies three salary formation mechanisms that could contribute to progress in reducing inequality gaps and better salaries.
“Sun Foundation”. Santiago. 3/25/2024. The most recent study by the SOL Foundation, “Salaries at the Limit: Salary dispossession in Chile. Updated evidence with CASEN data (2022)”, revealed a critical situation regarding the value of the workforce: half of the workers earn less than 500,000 liquid pesos, and only 30% earn more than 700,000 liquid pesos.
The investigation found that 55.7% of workers earn less than 500,000 liquid pesos and only 15.8% earn more than 1,000,000 liquid pesos.
Gonzalo Durán, researcher at Fundación SOL, professor of Social Work at the University of Chile and co-author of the study stated that “the average monthly labor income of employed people was 729,301 liquid pesos, however, the median, that is, The income threshold for 50% of the workers is 500,000 liquid pesos, which is equivalent to only two thirds of the average income and shows that in countries like Chile, which have high levels of inequality, the average is not a representative value”.
The aforementioned can be exemplified with the case of women, who have an average salary of 632,095 pesos, however, the median income only reaches 450,000 liquid pesos.
The research also presents a comparison view according to occupational category, where it was concluded that the lowest salaries are found in the categories of Domestic Services and Self-Employment.
Additionally, it stands out that among salaried people in the private sector, 70% earn less than 700,000 liquid pesos and, particularly in the world of large companies (those that have 200 or more workers), only 30% earn more than 1 million liquid. That is to say, despite the variations depending on the category and size of the company, the problem of low salaries in Chile is a transversal reality.
When analyzing salaries according to company size, it was concluded that the median in companies that have between 10 and 49 salaried workers is only 200,000 pesos lower than that observed in large companies. Thus, while 50% of salaried people in the first type of company earn less than 500,000 net pesos, in companies with more than 200 workers the median reaches only 700,000 net pesos.
Likewise, “Salarios al Límite” details that the problem of income inequality that exists in Chile at the household level can also be seen in salary distribution. It can be seen that more than 90% of workers are located in salary ranges with low dispersion and only from the 92nd percentile onwards are salaries over 1,500,000 pesos recorded, that is, only 8% of employed people earn more than that figure and then a small segment (1.8%) registers salaries above 3 million liquid dollars, reaching a maximum of 40 million pesos.
Regarding the data collected, Marco Kremerman, co-author of the study and researcher at Fundación SOL, added that “it is pertinent to specify that the maximum income captured in the CASEN is under-represented, since the richest people generally do not answer. home surveys. According to income estimates for the super-rich, based on administrative data provided by the Internal Revenue Service, the 1% of the highest-income people, that is, the representatives of large business, accumulate 23.7% of national income and the The richest 1% concentrate 49.8% of the wealth generated in Chile, according to the World Inequality Database.
Salaries at the limit in regions
The study revealed that in the regions of Valparaíso, Libertador Bernardo O’Higgins, Maule, Ñuble, Araucanía, Los Ríos and Los lagos, a deeper salary delay is observed, since 70% of employed people receive 600,000 liquid pesos or less.
Maule, Ñuble and Araucanía are the regions that present a more critical situation, since the median is only 400,000 liquid pesos.
When observing these figures, Kremerman pointed out that “this panorama is similar to that observed in the first studies carried out by the SOL Foundation more than a decade ago, and has been cyclically incorporated into the public debate, depending on the political and social situation it has gone through. the country. However, in general, the serious problem of low salaries has tended to be made invisible, naturalized and associated with an individual problem.”
Finally, the report identifies three wage formation mechanisms that in Chile remain secondary channels and that impact low wages: The minimum wage, it is worth mentioning that the lighthouse effect of the minimum wage has been recognized. Another way is the readjustment of the public sector, where the lighthouse effect can also be seen in the interaction between the public and private sectors. And finally, collective bargaining by sector or branch of production. Regarding this last factor, Durán pointed out “negotiation by branch causes aggregate distribution effects. Thus, the impact on salaries is not limited to a minority group, but rather has a broader scope, over a significant part of the total salary grid of a country. “In these models, income inequality is attacked at the point where wealth is produced.”
