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by Dan Morgan in Santiago / August 12th 2007

Chile: workers crack the neo-liberal wall

Action by sub-contracted workers in the forestry and mining industries has successfully challenged the pro-business rules which are Pinochet's legacy.

Chile passed from a military dictatorship to an elected government in 1990.  This was the result of a negotiated handover from the dictator Pinochet to a ‘centre-left’ coalition, which promised a series of guarantees to the established order in order to be allowed to govern.  Pinochet remained as commander-in-chief of the army until 1998.  The military continued to operate the rule of ‘o’merta’ (death for those who betray) to prevent the trial of torturers and murderers for many years.  Several have now been tried and some are in prison but many are still walking free.

More importantly, the real rulers of Chile, the business community, was reassured that ‘business as usual’ would literally continue: low taxes on profits (which are even deducted from personal income tax), and Pinochet’s labour laws that castrated the trade union movement.

In the following 17 years, some progress has been made on the human rights front, some reparations made to Pinochet’s obvious victims.  Also, some social progress has been made.  A health service reform now promises subisidised treatment within a reasonable time for 56 specified diseases.  A universal pension is promised soon.

However, income inequality actually increased for most of this time, and a recent small reduction leaves the situation exactly as it was at the end of the dictatorship.  Chile is one of the most inequitable countries for income distribution in the world. Although Chile is one of Latin America's richest countries by per-capita GDP, almost half of household income goes to the top 10% of society.

Chilean big business, having had a real fright under Allende’s socialist government in the early 1970s, developed various strategies to weaken the workers’ movement.  The military dictatorship installed by the September 11, 1973 coup, which killed, tortured and sent into exile a whole generation of worker’s leaders, was one.  Fear of this did not wholly disappear until Pinochet died last year.  Labour laws included in Pinochet’s 1980 constitution forbid ‘inter-company’ negotiation, and many businesses are made up of many different companies, supposedly separate, to prevent the workers negotiating as one body.  The biggest supermarket chain, for example, is composed of a holding company and 170 subsidiaries, one for nearly each shop.

Sub-contracting is another huge scam to reduce wages and reduce workers’ power.  Sub-contracted workers doing the same, or very similar jobs with the same value, may get wages one third those of permanent workers and much worse working conditions.

But the first cracks in this anti-worker wall have been made.  In February, a law on sub-contracting was passed.  This aimed to end the worst abuses of the system, including employers not paying social security payments and providing the worst safety conditions.  Despite right-wing amendments in parliament, expectations were aroused that conditions should be improved.

Forestry workers made the first moves.  Ignoring their sub-contractors, workers demanded higher pay from their ‘indirect’ employers, the huge forestry companies.  After the murder by police of one of the striking workers of one company, the Labour Ministry intervened and helped in the immediate negotiation of big wage increases.  The second company settled quietly soon after.

On 31st July, sub-contracted workers at the state copper company CODELCO ended a major strike with a historic victory.  The company, which is the worlds biggest copper producer, negotiated directly with a confederation of trade unions of sub-contracted workers, and after 37 days granted a good bonus and other promises.

CODELCO workers celebrate victory

As the workers’ leader, Cristian Cuevas, says, “our major achievement was to make a small hole in the economic model.  The present system is unsustainable and therefore government, the business class and we workers, who as the main subject of change, have to play a role.  The trade unions were asleep, atomised, shrunk, and that favoured the model.  So we say that after this victory in CODELCO, the workers in Chile are no longer the same.  Because this subject that has been excluded is now installed as a new player.”

This ‘inter-company’ negotiation poses a real threat to the superprofits of the business community in Chile.  Their leaders have reacted in various ways, some almost in panic, others calm, confident that President Bachelet will 'see reason' and help mend this crack in the wall.  This strike reportedly provoked divisions in the government, and business leaders are after the head of the Labour Minister, Osvaldo Andrade, for his apparently pro-worker role.  The Finance Minister Andrés Velasco, a known neo-liberal, was adamant in opposing the workers’ demands on the state company.

Many other sectors of the economy are possible targets for similar action now.  Only ‘inter-company’ action can give workers the strength to achieve gains in their miserable wages and conditions.  They include the supermarkets, private mining companies, salmon production, forestry, banks and other service sectors