Chile Immigration Up on Influx From Andean Neighbors

Immigration into Chile leaped 24 percent last year as Latin America’s wealthiest country attracted workers from countries such as Peru, Colombia and Spain, easing pressure on wages as the jobless rate fell.

The number of people obtaining temporary or permanent residency rose to 158,128 in 2013 from 127,362 the year before, according to a report by the Immigration Department. Peruvians accounted for 57,818 of the new arrivals, while Colombians represented 30,137 and Spaniards 5,739, almost double the year before. Immigration has more than doubled from 60,280 in 2006.

The influx of foreigners accounted for much of the 183,240 increase in the workforce last year, helping to keep wage growth to 5.5 percent over the 12 months, said Hermann Gonzalez, an economist in the local unit of Spain’s Banco Bilbao Vizcaya Argentaria SA. The government is setting up a commission to coordinate immigration policies as the numbers soar, the Ministry of the Interior said this month.

“Immigration contributed to economic growth until last year, when there was a high demand for workers,” Gonzalez said by phone yesterday. “They helped stop wage increases, which could have been higher without them.”

The annual inflation rate fell to a low of 0.9 percent in May of last year, even after the economy expanded 4.9 percent in the first quarter from the year earlier. Inflation accelerated to 4.7 percent in May as the central bank cut interest rates and the peso weakened.

Jobless Threat

With economic growth now slowing, immigration may feed into rising unemployment, especially in the construction and retail industries, Gonzalez said.

Unemployment fell to a low of 5.7 percent in the second half of last year from 9.7 percent at the end of 2009, before climbing to 6.3 percent in the three months through May. The jobless rate rose as economic growth slowed to 2.6 percent in the first quarter.

Central bank President Rodrigo Vergara said on June 4 that even if there is no significant deterioration in the labor market yet, unemployment is likely to rise in the next few quarters.

While immigration has been dominated by Peru in the past decade, Bolivians and Colombians are now playing a larger role. Chile is also attracting more people from the developed world, such as the U.S., with 3,756 people last year, and Spain.

The exact impact on the workforce is hard to gauge, as there are no figures in the report on how many of the immigrants are dependents. Students are not a significant share, according to the report.

Wealth Appeal

Chile is attracting immigrants after becoming Latin America’s wealthiest nation, with an income per capita, based on purchasing power parity, of $19,887, according to the International Monetary Fund. That compares with $11,735 in Peru and $11,730 in Colombia.

The Latin American nation is also attracting immigration from southern Europe, which has been mired in economic recession.

Inigo Martinez-Etayo says he didn´t think twice before moving to Santiago in 2011 as Spain’s unemployment rate rose to over 22 percent that year, even though he didn’t have a job lined up.

“I got a call from a Spanish friend in Chile on a Monday and I was in Chile by Thursday with only two suitcases and 2,000 euros in cash,” Martinez-Etayo said by phone from Santiago.

He became brand manager at a division of Cencosud SA (CENCOSUD), Chile´s largest retail company by sales, bought a house and says he has no plans to return to Europe. Many of his friends have followed. He is now a senior consultant at Page Personnel.

The jump in immigration comes as Chile’s population growth slows, compared with its Latin American neighbors. The country had a birthrate per 1,000 people of 14.1 in 2012, according to the World Health Organization, compared with 20 in Peru, 19.1 in Colombia and 16.9 in Argentina.

(A previouis version of this story was corrected to give the full surname of Inigo Martinez-Etayo.)

To contact the reporter on this story: Javiera Quiroga in Santiago at jquiroga5@bloomberg.net

To contact the editors responsible for this story: Andre Soliani at asoliani@bloomberg.net Philip Sanders

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