The most popular post on this blog for 2 years describes why Chile is the best country to move to, mainly because the constant flow of terrible news about the economies of Europe and the fall of the United States drives some people to seek an alternative; but, relocating to Chile is a poor choice for many people. This post is now the most popular because I discuss the prospects for foreigners who aspire to work in Chile, the topic people care most about.
The biggest problem with Chile is that it is difficult for a foreigner to find work, and the available jobs outside the mining industry pay substantially less than in the USA and Europe. Humans are a tribal species and every country subscribes to the false idea that foreigners take jobs from locals without spending money to create demand for local goods and services. Chile does not allow foreigners or Chileans to easily open businesses and the government forces companies in Chile with more than 25 employees to hire at least 85% Chileans, leaving little room for foreigners (Article 19 of the Labor Code).
A prudent migrant saves enough to stay in Santiago for a year, as that is the amount of time that may be required to secure employment. The good news for foreign women is that companies prefer foreign to Chilean women. The government requires companies to take care of Chilean women who become pregnant so most companies avoid or are reluctant to hire young women. Foreign women are expected to be independent so companies are more willing to hire them.
Many foreigners teach English, as Chileans highly value native speakers, but the pay is low. Emily gives tips on finding a job in Chile that you might find useful. If you have any other tips, add them to the comments in her post or this one. Most people avoid commenting so anything remotely useful is appreciated by readers all over the world. Jim Karger makes great suggestions for foreigners to earn a living in Mexico that are mostly applicable to Chile, too.
Chile also makes it absurdly difficult to start a business. According to Nathan Lustig, who has lived in Chile for 3 years, it takes 9 weeks and costs $4260 to start a business in Chile. He is underestimating the cost; he doesn’t count the value of his labor in coping with the functionaries. And, if you’re a Unitedstatesian dismayed that your nosy government has been snooping on every phone call made in the country during the last 7 years, Nathan reports that Chile requires fingerprints to open a bank account and “these barriers to business creation shield the elites and entrenched interests in power and prevent competition and entrepreneurship.” The same process takes $185 and 30 minutes in the USA and requires no fingerprints.
In Chile one grows accustomed to waiting in line. Want to get a refund from the health insurance company? Wait in line. Want to deposit a check? Wait in line. Want to get a copy of your marriage certificate? Wait in line although some of that has moved onto the web. But the time people spend at the notary borders on the ridiculous….
In the USA you rarely needed any document notarized. But here in Chile under the 70 year old system the law stipulates that many documents be notarized. So if you buy or sell a car: go to the notary. Start a new job: go to the notary. Quit the same job: go to the notary again. Rent an apartment: go to the notary.
La Tercera newspaper says the notary business generates gross revenues of between $150 million USD and $180 million USD according to their own guild. 20,000 transactions are processed per year whose costs are from $1 USD to $12 USD and $60 USD and more for more extensive transactions….
The government of Chile recognizes that this system is a drain on the economy so various reform proposals have been put forth. Change was tried under the previous president Bachelet, but those bills went nowhere in the congress. Now the government proposes increasing the number of notaries–currently there are a precious few 400–getting them to use technology, fostering competition between them, and offering some oversight by the consumer protection agency (SERNAC). The Economics Ministry suggests they “…establish that the notaries and clerks of court use technology in order that the registered users can upload or send their documents electronically and consult documents online.”
The government recently removed some obstacles, according to Mary O’Grady of the Wall Street Journal (WSJ):
The country’s rank in the World Bank’s Doing Business survey deteriorated from 2006 to 2010 but the decline has been reversed in the past two years, with Chile moving up to 39th from 53rd. Other Piñera objectives include reducing waiting time for environmental impact studies, eliminating regulatory redundancies, cutting import tariffs and opening sea and air ports to foreign competition. The number of days it takes to start a business is down to seven from 27 and will soon be reduced to one.
Michelle Bachelet is the President and she is likely to reverse much of the progress because Chile is skeptical of capitalism. For instance, she has proposed to increase the corporate tax rate from 20% to 35% and remove the ability to delay paying taxes on earnings that are reinvested rather than distributed to shareholders. O’Grady of the WSJ continues:
A “temporary” corporate tax increase to 18.5% from 17% in the aftermath of the 2010 earthquake is now being raised to 20% and made permanent. Tax cuts for individuals meant to offset those increases may not pass in Congress because Mr. Piñera’s coalition does not have a majority.
The tax increase, a strong economy, and more borrowing have sharply grown government. It is unclear whether it will grow fast enough to strangle the economy.
Investors are losing confidence in Chile, causing a decline in the IPSA index of stocks in 2012-13 after soaring for 20 years. Many countries prosper for two decades but only Hong Kong, South Korea, and Singapore maintained growth for 50 years. Chile might grow at a slow rate or stagnate in the future, especially if they continue to be complacent, allowing the government to expand and strangle the economy.
Chile has enacted restrictive labor laws that hinder businesses; at least one foreign investor is waging a capital strike against Chile. Chile has passed other idiotic laws such as prohibiting McDonald’s and other fast food chains from putting toys in Happy Meals.
John Cobin has lived in Santiago for 15 years and wrote, Things that Americans (and Canadian, Australians, Europeans, among others) will Hate about Chile. He claims, “some Chilean men will consider it good sport to try to sleep with your wife.” This is true, and if you’re a single man at a party and talk to a married woman, her husband will scowl at you because he thinks that you want to sleep with her. On the bright side, if you’re trapped underground in a mine for a few months, your wife and girlfriend will be overjoyed to see you again when you emerge at the surface. Adultery is common not only in Chile but in all Latin America.
Cobin identifies major problems with managing a business in Chile that applies to all Latin America:
90% or more of Chileans do not tell the truth (or avoid telling the truth), since they never like to say “no” or admit that they do not know something. Few lie with the intent to deceive or mislead you intentionally, but many will tell you something that is not true in order that you not be offended (e.g., “I will call you tomorrow”). Chileans use a culturally-accepted lie which “everyone knows” is not true and therefore does not count as a “real” lie made with the intent to deceive. Americans will have a very hard time understanding this difference in practice. Many of them are also willing to cheat, especially on tests or assignments in school, and plenty of people from the lower middle and poor classes will steal from you if they have a chance. Worse yet, they will treat you as if you are a liar….
Chilean people, workers in particular, do not perform or follow through. Nor do they communicate to let you know they have a problem, thus wasting your time as well if you are waiting for them to perform or depending on them.
The Spanish language makes it convenient to “avoid telling the truth” through the use of the subjunctive mood. English includes the subjunctive but it is not as heavily used as the Spanish.
The most common complaint about Santiago is that it is polluted in winter. According to UrbanPeek, pollution in Santiago is higher than every city in the world except Beijing and New Delhi. The Bellas Artes neighborhood near the Santa Lucia hill is so polluted that real estate costs less than other parts of the city, even though it is attractive and sports narrow streets that are easy for pedestrians to navigate. However, Nathan Lustig believes that the adjacent Lastarria neighborhood suffers the same air but streets are quieter and real estate values higher, suggesting that air pollution does not cause decreased housing demand.
Santiago pollution is caused by several factors: the surrounding mountains, heavy vehicle use in a densely populous city of 6 million, industries such as the power plant south in Rancagua, powering copper mine refining using coal rather than nuclear at El Teniente, one of the largest mines in the world.
Mary and I reckon that the pollution during the southern hemisphere summer is similar to cities in the western USA such as Los Angeles, Denver, and Phoenix. If air pollution repels you, the coastal city of Viña del Mar warrants consideration. A bigger problem for non-smokers like us is air at restaurants in Santiago, polluted with so much cigarette smoke that it is nearly impossible to find an outdoor table on Friday and Saturday nights; one must eat in non-smoking indoor areas. Chileans are the heaviest smokers in the Americas; 39% of men smoke daily compared to 20% in the USA and 10% in Costa Rica. I Love Chile describes Santiago pollution:
During environmental alerts, when the air contamination is higher than 300 micrograms by cubic meter, some emergency measures that are applied include the restriction on vehicles that do not have a catalytic converter and restrictions on some industrial activity. The city also has a Decontamination Plan, which includes requiring filters on all public transport, regulation of wood heaters and standardization of the other heaters as well as reduction of nitrogen oxides emissions by the industries…
Last week, after four consecutive days of environmental alerts, the issue of the parameters for these emergency signals caused controversy. The Senator Guido Girardi, a member of the health committee, criticized the way the calculation is done and the alerts are set, which should also include thin particulate materials that are harmful to human health. In several interviews with the Chilean national media he affirmed that the data given by the government should be more transparent and that the levels to decree environmental alert should be stricter. During an interview with CNN Chile he said, “It is evident that if more environmental alerts are decreed in Santiago, it will paralyze industrial activity. And there is an industrial lobby who makes sure this does not happen.”
The cost of electric power in Chile is double that of the USA, so most people in Santiago live in homes without air conditioning, even though the city is as hot as Denver in summer. People cope by swimming in pools, taking cold showers, and vacationing on the coast.
Chile is as expensive as Denver, Phoenix, and Austin, although it is cheaper than Europe, New York, and California. Mexico and Panama are better destinations for people seeking economical value in a pleasant climate.
Chile insults foreigners by throwing us out of the country every 90 days and refusing to allow us to open bank accounts, forcing the use of ATM machines, where the banks chisel us with fees. Bankers are crooks that run politics in every country, and it’s revolting to subsidize their incompetence. Chile suffered a banking crisis in 1981-83, resulting in a heavily regulated banking system that stifles competition from foreign banks. Only one of the 10 largest banks in Chile is a foreign bank. In contrast, Mexico suffered a banking crisis in 1995; today only two of the 10 largest banks are Mexican, 80% are foreign.
Chile wants to increase population not by encouraging immigration but by bribing Chilean women to bear more children ($200 for their third child, $300 for their fourth and $400 for their fifth). Apparently, legislators believe that it’s preferable to risk having a native on the dole than for a skilled foreigner to carry his own weight.
It’s difficult to be a tenant or landlord in Chile. The meddling government forces landlords to suffer deadbeat tenants in rental units for 4 months prior to eviction, so most landlords require tenants to find a cosigner who is responsible for the rent if the tenant doesn’t pay. As a result, I was rejected 3 times for apartments and it took a month to find one, although one of the landlords would have accepted me as long as I paid 12 months rent in advance. Not only does this make it difficult to be a renter, but real estate is also a primary option for foreigner investors who want to avoid the risk of buying a small business.
Julia Thiel of the Chicago Reader reports that Chileans were the worst roommates she ever had. After reading her stories, any rational foreigner would avoid living with Chileans. It might be prudent to avoid marrying one, too.
Chile has enjoyed a thriving economy protected by a capitalist Constitution for 20 years but capitalism may be losing the battle of ideas. Michael Bachelet and other socialists are threatening to eviscerate the Constitution and drastically expand the government. Forbes magazine fears for the end of the Chilean economic miracle. The Communist Party increased their representation in the main house of the bicameral legislature from 3 to 6 seats of 120 in the 2013 election. The election was the biggest political disaster in Chile of the last 20 years because Chileans are not convinced that capitalism has allowed them to prosper.
Universities in Chile operate as Communist institutions; profits are illegal. Although there is widespread support for this oppression in the USA and Europe, too, I believe that universities ought to earn a profit like any other entertainment business such as a bookstore, movie theater, club, or studio that teaches people to cook or play musical instruments. Non-profits always use government scams to advance their interests and hide their profits. People should be proud to earn a profit; the lionization of socialism should be shameful.
The Bachelet campaign to expand the government includes hiring 6000 new Carbineers, the national police that once carried carbines, to the existing force of 40,000, and many will be deployed in Santiago. They are unnecessary because Chile has the lowest crime rate in Latin America; the police will become entrenched and used against the citizens sooner or later.
Chile admires the rich countries of Europe and the USA; many Chileans want a nanny state, too, and have enacted many laws for the purpose. For example, packaged foods and soft drinks high in saturated fat, sugar, or salt soon will carry prominent markers on the front of the package, warning that the food is unhealthy. A majority of Chileans wear helmets when bicycling.
Airline service to Chile is poor. Mary and I flew at reasonable cost from Panama the last two winters, but the price doubled to $1600. We decided to live winters in the USA and Mexico. We miss Santiago and perhaps we’ll return someday.