Chile Forum

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VALPARAISO MOST AFFECTED BY RECESSION

Friday, 14 August 2009

The current economic recession has hit the port city of Valparaíso hard, resulting in 17.9 percent unemployment rate, the highest in the nation, where the average unemployment rate is 10.7 percent.

Valparaiso’s extensive contact with external markets – including tourism, exports, and commerce – make it more susceptible to the current world financial crisis, experts say.

“Valparaíso handles approximately 80 percent of the country’s exports to world markets,” notes Universidad de Adolfo Ibánez professor Alejandro Montecinos. “Exports of fruit and vegetables produced in the area – apples and avocados, for example – are being exported much less.”

Normally Valparaíso has always had lower employment rates than the rest of the country.

“The most worrying thing is that even without the crisis, the levels of unemployment are still elevated,” said Professor Piero Moltedo, Director of the School of Business at Universidad de Viña del Mar. He cited statistics from the National Institute for Statistics (INE) showing that pre-financial crisis unemployment rates in Valparaíso were still the highest in the country.

Local colectivo (taxi that follows specific routes) driver Fernando Acevedo has also noticed the recession’s effect in his line of work. “Before, people would return to their houses to eat lunch,” he said. “But these days they are not returning home, they bring their lunch with them to save the money. The colectivos at lunch time used to be full, now they are empty.”

The local hospitality scene has felt a similar impact, as confirmed by Reggie Goddar, owner of resto-bar Manchester in Viña del Mar, “We haven’t noticed a difference in the quantity of customers, but rather in the amount each customer spends. . . last summer, (usually the high season for tourism) was not a good season for us, there were very few tourists.”

Professor Montecinos predicts the unemployment situation will track what occurred in Asia in 1998: “Unemployment levels took 10 years to recuperate in Chile after the Asian Crisis. And it will probably take a long time to bounce back again with this crisis, as our labor market structure has not changed since then.”

Moltedo also believes job recuperation will be slow in coming: “Without a clear and effective means to promote new entrepreneurship - that takes advantage of the synergy of our business structure - the creation of new workplace positions will be incapable of absorbing the growing demand for employment.”

SOURCES: INE, EL MERCURIO
By Aline Fitzpatrick (santiagotimes.cl)

the synergy of our business structure