Chile - Unions and Labor Conflicts

Unions and labor conflicts

After reluctantly accepting the Labor Plan of 1979, unions became active again in the early 1980s and were able to push for wage concessions during the economic boom of that period. A minority maintained a tough stance in opposition to the new system, but they lacked significant influence, so opposition eventually disappeared.

The most radical change experienced by the union movement with the return to democracy has been its reintegration into the national discussion of labor reforms and social policies. The reforms of 1990-91, which introduced some changes to the original Labor Plan, represented a moderate increase in workers' bargaining power in each of the three central areas of the labor law: dismissals; the right to collective bargaining; and the right of employers to hire temporary replacements or to impose lockouts during strikes.

Law 19,010, enacted in 1990, regulates individual contracts. In the area of dismissals, it introduces two important differences relative to the previous law--the size of the severance compensation and the right of the worker to appeal. Whereas the Labor Plan had introduced the practice of dismissals without cause and established a severance pay equal to one month's salary per year of service up to a maximum of five months' worth, this reform reinstates the principle of dismissal only with cause, and it increases the severance-pay ceiling to eleven months. The law considers two possible reasons for dismissal--the traditional "just cause" (serious misconduct) and the new "economic cause." If the employee appeals and the employer fails to prove "just cause," the employer would have to pay a 50 percent penalty in addition to the usual severance. Failure to prove "economic cause" would result in a 20 percent penalty.

The previous law was also modified to provide an option to replace the normal severance with a "payment in all separations." This option is available to workers with more than seven years of service with the same employer. If this option is exercised, the employer would establish a fund in the worker's name, with monthly deposits of a minimum of 4.1 percent and a maximum of 8.3 percent of the salary (the salary base having a maximum) in a private financial institution. These contributions and the corresponding accumulated interest would be nontaxable income and would constitute a fund that would be withdrawn on separation.

Law 19,069, enacted in 1991, regulates the rights of employers and employees during collective bargaining. Under this law, enterprise-level workers' organizations have the right to negotiate with employers, and employers are obliged to negotiate with them. The law gives the employer the right to limit to thirty-five days the period of bargaining with all unions representing the enterprises' workers. Under Law 19,069, collective agreements can establish pay scales, indexation formulas, fringe benefits, and the like, but they cannot limit the sovereignty of the employer over the organization and administration of the enterprise (Article 82).

One of the important departures from the previous law is that trade unions or workers' associations are given the right to bargain with more than one employer. Yet this right can only be exercised under the following circumstances: in the case of collective bargaining affecting more than one enterprise, prior agreement of the parties is required (Article 79); submission of collective agreement by other trade union organizations (such as federations or confederations) requires approval by secret ballot of the absolute majority of the member workers of the enterprise (Article 110); and a given worker cannot be covered by more than one collective agreement (Article 83).

A strike would suspend the individual contract, give employers a conditional right to temporary replacement, and give employees a conditional right to renounce union membership and return to work. Employers can use temporary replacements from the first day of the strike if their last offer, before the strike was declared, was equivalent to the previous contract adjusted by the consumer price index ( CPI). If the last offer was lower, employers cannot use temporary replacements within a minimum of thirty days after the strike is called. Employees have the right to renounce union membership and go back to work fifteen days after calling the strike, as long as the outstanding offer of the employer is equivalent to the last contract adjusted by the CPI. If the last offer is lower, employees must delay their walkout a minimum of thirty days after the strike is called. The law does not establish a maximum duration for strikes, but if more than half of the workers return to work, the strike must end. At that point, all workers must return to the job. In order to make use of the right to replace workers temporarily, employers must make an offer that at least adjusts wages by past inflation. If the employer also offers other fringe benefits but workers still go on strike, the employer may hire temporary replacements. However, the employer loses that right if the wage adjustment for past inflation is given but some fringe benefits are cut. That would not be a contract equivalent to the previous one adjusted by inflation. If workers go on strike, the employer cannot use temporary replacements within thirty days of the declaration of the strike.

It was unclear in 1992 what the final form would be for the new legislation on labor-management relations, labor productivity, investment, on-the-job training, and other aspects of labor markets' performance. However, workers have almost doubled their participation in labor unions since 1983, and by 1990 about 13 percent of those employed were affiliated with unions. During 1990, 25,000 workers, out of 184,000 who participated in collective contracts, used strikes as a means of pressing their demands. Most strikes during 1990 and 1991 were of short duration.

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