Thursday , June 17 2021

Surveys and employment: the reasons why the Central Bank took the floor of INE numbers

Employment and wages ended up being the most important economic indicators of 2018. This is because, while GDP and investment grew by over 4% and 6%, respectively, labor and wages remained stagnant. However, yesterday, they shook hands with a blatant, if implicit, dispute between the Central Bank (BC) and the National Statistics Institute (INE).

The BC has decided, unprecedentedly, to include a special section on the labor market in the December Monetary Policy Report, published yesterday. And the first time was with scandal. The reason? The agency concluded, basically, that the unemployment, remuneration and job creation numbers of the INE are not reliable.

The document states that "when considering the impact of the significant migratory flow, employment growth since 2016 was higher than reported by the surveys, which adds to the upward revision of the compensation rates calculated by the INE." .

Central Bank experts say that the numbers hitherto given to reflect the labor market "are not just too aggregate but represent net movements." This implies that many relevant information, such as differences in the behavior of different groups or composition changes of flows, is not present in public analysis or debate. "

A methodological question?

Polls and the immigration factor come back to that. The main dart of the bank points out that statistics on employment "are based on an extrapolation of research to the population, through expansion factors, which in turn are based on population projections that are updated in each Census." This, they say, means that indicators can not measure the magnitude of phenomena such as immigration.

In fact, the only figure they are likely to perceive is that in the last three years between 120,000 and 190,000 people have been absorbed by the labor market and INE has been unable to account for this.

So, is Chile blind to understanding its own reality in employment? "There is no need to dramatize, for any research it is easy to deal with abrupt changes in the population, which was what happened 2 years ago. The important thing is that INE is already in the process of making the corrections," says Juan Bravo, a macroeconomic analyst at Clapes UC.

Of course, the expert agrees that "there are elements that are in the process of correction: a non-updated sampling frame and recalibrating expansion factors. Corrections will gradually bring the employment numbers of immigrants to values ​​more in line with reality."

For his part, Jorge Gajardo, an economist at U. Central, points out that "the BC sees the demographic projection failure that would be very old and without migration and that the instrument would be failing." But are INE numbers so wrong? "The labor market gives its own signals, and if there were a lot more employment, there should be a noticeable increase in the wage bill, which is not the case because it is stagnant," says the scholar.

Finally, Gajardo points out that "the general basis of what the CB explains is understandable, but I am impressed that it comes out with such a risky and convenient signal for the government." It is true when he says that we need a more complex set of indicators. to make a more compelling statistical base, but their insurance does not seem convincing. "

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