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WEEKLY NEWSLETTER
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Chile
Index
A construction worker at the Río Melado Dam spillway,
located about seventy kilometers southeast of Talca
Courtesy Inter-American Development Bank
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--see Glossary). 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
(see Labor
, ch.
4).
Data as of March 1994
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