According to the National Institute of Statistics, by December 2016, 1,758,230 Chileans worked on their own (self-employment), which represents 21.4% of the Chilean active labor market, the highest figure since 2010. A million of them, are men.

Since 2014, the Chilean economy started slowing down its growth rhythm. However, unemployment did not abruptly decrease, as self-employment grew. During the rolling quarter August-October 2016, they represented 1.8 million people, according to official data. According to different experts, these are the workers that support employment.

In Santiago de Chile, the increase of the number of street sellers. In the subway stations, the entrances of malls, or the most crowded avenues, blankets covered with products are part of the scenery.

Data from the INE shows that from the rolling quarter February-April 2014 to October-December 2016, 135,121 jobs in self-employment were created. This represents 46% of the entire number of new jobs created in Chile during that period of time. Most of these jobs were developed in the areas of commerce, services, administration, and support, categories closely linked to self-employment, states Kirsten Sehnbruch, economist of the Institute of Public Policies of the University Diego Portales (UDP).

During the past years many people have been forced to change their activity to adapt to the economy and to new consumption habits derived from those transformations. Sometimes, change has been so radical, that certain self-employed people had to work in entirely different sectors or develop complementary activities that have resulted into their main activity. Selling in the street or in public transports, being a chauffeur or bargaining through social networks is more alived than ever.

The Avon consultant, Evelyn Ogaz, started working on her own when she was left with no job. “My closest goal is to buy a car to increase my independence and deliver my products more easily, without depending on my husband’s help. That way, I can get ore clients and increase my income”, she says.

According to the Chamber of Cosmetics Industry, in Chile there are over 220 thousand women who are catalog sellers.

Augusto Hermo, commercial manager of Natura, another catalog-selling company, with more than 30 years of presence in Chile, states that the industry has grown due to women’s desire to be entrepreneurs.

After starting their operations in 2014, Uber already has 46,000 drivers in Chile. In the Metropolitan Region alone, there are 35,000 Uber drivers and the remaining 11,000 are distributed in the cities where the company operates. In the capital city, according to INE, there are 710,410 self-employed workers (40% of the national total number).

“The combination of flexibility and easy access technology creates opportunities for the kind of people who have more problems to find a place in the traditional labor market and that is a permanent advantage, because it is the way in which Uber operates in other countries”, says Carlos Schaaf, general manager of Uber Chile.

According to the profile of their “partner drivers”, as they call them, 18% were unemployed prior Uber, but around 92% of these drivers declare they prefer to remain as independent workers and not become employees once again.

As regards ages, 47% are between 25 and 35 years old, but 7% are 51 years old or older. According to INE’s statistics, the largest share of autonomous workers can be found among people aged 50 to 59 years old (26%).

65% of drivers use the app for less than 10 hours per week, “which shows us that they use while they keep on looking for a more permanent job or as a complementary alternative for their income”, says Schaaf.

“Starting a business is not for free. I made an important investment for the shop and buy the cakes to a factory to resell them” explains Catalina Rojas. The largest share of these expenses have been covered with her savings, and even so, the cost is way lower than investing in machines. “I can make a living out of this”, she says.

Being prosperous and profitable in times of self-employment is not a simple task. Those who work on their own usually do not save part of their income for emergencies, and several of them do not pay taxes. For that reason, analysts believe that underemployment hides behind self-employment.

Jaime Ruiz-Tagle, director of the Centre of Microdata of the University of Chile, says that “people in this kind of jobs will have no contributions, insurance nor benefits”. The economist of LyD, Francisco Klapp, agrees, and adds that another aspect is the low payment and few hours of work they have. “Around one fifth of these people work less than 15 hours per week, and not the 40 hours per week that we believe are reasonable. Furthermore, many of them work in the streets”, he says.

 So, why do people choose this kind of jobs? Juan Bravo, researcher of Clapes UC, says that most of them are underemployment, something the INE has not reflected: “If someone loses his/her job, and starts selling in the street to support his/her family, the survey already considers him/her as an autonomous worker”, he says.

If we analyze the number of hours worked, 46% of autonomous workers say they work between one and 30 hours per week, and almost 40% of them do it from home. And if we analyze the years of education, two thirds of the group includes people with less than 12 years of formal education. Besides, 60% of the workers with lowest incomes are self-employed.

For that reason, Sehnbruch says that this adjustment has a lot to do with structural problems of the economy. “To the rise of self-employment workers, we need to add the growth of fixed-term workers, who usually get an unstable and low income job”, she says.

The economist also says that those who work on their own, rarely go back to being employees, seduced by the freedom of being their own bosses and without having the obligation to contribute to the social security or the AFP. “Particularly women, who also have to combine their work with house chores and taking care of kids”, she points out.

Is this share of self-employed people reasonable for the Chilean economy? “Instead of discussing whether the total share is reasonable or not, what happens is that what we have seen this year is quite odd. It is not normal that every job created this year falls into the self-employment category. This means that people who are looking for a job cannot get one and have no other chance, and the reason is the economic slowdown we are going through”, says the Rodrigo Cerda, Director at Clapes UC.

The main doubt, he adds, is whether these occupations will remain acting as a support to unemployment. “The most likely scenery is that these sort of jobs continue to be created, but at a lower speed, because there are too many.  So, I believe we will be seeing a combination of little waged employment creation, some self-employment development and a little more of unemployment”, he anticipates.

Source: La Tercera