Informal employment remains a common issue in Latin America, particularly for women due to structural and cultural factors. This phenomenon limits access to decent working conditions and perpetuates gender inequalities in the labor market. In Chile, the Women’s Work Bonus (BTM, in Spanish) and the Youth Employment Subsidy (SEJ, in Spanish) are subsidies aimed at supporting vulnerable in formal employment. However the impact of these subsidies has been limited, with low coverage and effectiveness.
This study analyzes the operational issues of these subsidiees, using both quentitative and qualitative methods to identify barriers from the perspectives of women beneficiaries, potential beneficiaries, and employers.
The findings show that, although the subsidies temporarily help improve income, they fail to become effective tools for the labor formalization of women workers. Major challenges include bureaucratic application processes, insufficient amounts, and limited access, particularly within small and medium-sized enterprises. Additionally, the subsidies tend to benefit women who have already held formal jobs, rather than those most in need of support to transition out of informality.
The study proposes a comprehensive redesign of the subsidies, merging SEJ and BTM into a single program focused on young women and small businesses. It also recommends increasing subsidy amounts, simplifying the application process, shortening delivery times, and linking the program to complementary policies, such as training and caregiving support. These measures aim to improve the effectiveness of the subsidy in including more women in formal employment and moving toward a fairer labor market for all.
