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Labour Reforms Rejected, Gov't Awaits Fallout

By Gustavo Gonzalez, IPS
2 December 1999

SANTIAGO, Dec 2 (IPS) - The Chilean Senate voted down government-proposed labour reforms, raising questions about the failed bill's political impact on upcoming presidential elections, and leaving the country in a tricky situation for future international trade negotiations.

Senators from right-wing parties and five of Chile's nine appointed senators caused two tie votes on the reforms Wednesday, automatically postponing legislation on the issue for one year.

The debate and votes at the Senate headquarters in Valparaiso, 120 km west of Santiago, ran seven hours over-time, drawing to a close late Wednesday night, amid the tense environment sparked by trade union demonstrations in favour of the reforms.

President Eduardo Frei's labour bill, which had been approved by the Chamber of Deputies, parliament's lower house, was loudly criticised by right-wing parties and business associations, who portrayed the bill as a step backwards.

The bill's reforms would have ended the provisions of the Labour Code inherited from the Augusto Pinochet dictatorship (1973-90). Pinochet applied neo-liberal policies for labour market deregulation in order to encourage private investment.

The dictatorship's laws were modified during the democratic transitional government of president Patricio Aylwin (1990-94), based on consensus agreements with the right-wing, reinstituting some labour rights.

The second round of reforms was presented before parliament five years ago, but had been shelved until Frei recently declared labour reform an urgent matter. The presidential manoeuvre is interpreted as a challenge against the rightist parties, because it came during the run-up to the Dec 12 presidential elections.

The Senate rejected changes in labour laws including collective bargaining for inter-business unions and terminating employer rights to replace striking workers if they did not accept an agreement within 15 days of the work stoppage.

The reforms would have extended collective bargaining rights to unions of temporary, part-time or provisional workers, who make up a large part of the workforce in the agricultural and construction sectors.

The president's bill also proposed to increase compensation for firings arising from anti-union practices from 50 to 100 percent of the worker's wages, the difference to go to the union. The bill would also require businesses to inform employees of their economic and personnel policies.

Felipe Lamarca, president of an industrial business-owners organisation, sharply criticised the reforms a week ago, and, on Monday, the president of the Production and Trade Confederation, Walter Riesco, stated that the bill's implementation would mean a "return to the UP (Popular Unity Party)."

Riesco alluded to the leftist alliance that governed Chile from 1970 to 1973, until president Salvador Allende was overthrown by Pinochet's coup. Joaqu¡n Lav¡n, presidential candidate for the rightist Alliance for Chile, however, said Riesco's comparison was a gross exaggeration.

Ricardo Lagos, candidate for the governing centre-left Coalition for Democracy, chastised business leaders for lacking a vision for the future and for defending discriminatory labour laws that most other countries have eliminated.

Lagos warned that international trade and investment negotiations now generally include labour and environmental rights as decisiive factors.

Mar¡a Rozas, legislator and former vice-president of the Workers Central United (CUT), indicated that the "social label" is essential for trade relations with the rest of the world.

The Frei government attempted to put the right-wing and candidate Lav¡n "between a rock and a hard place," forcing them to approve the reforms or pay the political price in the upcoming elections. It is not clear, however, if the president was successful.

The right-wing and business community's rejection of the reforms was evident in their publicity campaign that created an image of chaos and alleged that the labour reforms would harm the workers themselves, especially employees of small and medium-sized companies.

Public declarations in favour of the reforms, made by the CUT, several other trade unions and popular Catholic bishops, did not achieve the same mass media circulation as the anti-reform campaign.

According to the results of a telephone survey released Thursday by the rightist Future Foundation, 38.1 percent of Chileans polled support the labour reforms, 32.4 are against, and 29.4 percent are undecided.

In the end, the government gave in to the anti-reform campaign and made it known before the Senate vote that, once the bill was approved, Frei would veto the bill in order to "correct" the points the right-wing and business community considered most controversial.

This political move created problems within Frei's own Christian Democratic Party, between trade unionists and left-leaning factions on one side, and senators and ministers who backed the veto idea on the other.

The veto would have been implemented if the labour reforms had been approved, but the strategy hit bottom when the rightist and designated senators were able to gather 23 votes in order to tie the governing coalition in the two rounds of balloting.

The government hoped to reach a majority in the Senate, but the opposition was able to win over appointed senators Ram¢n Vega, from the Air Force, and Fernando Cordero, of the Customs Police.

In addition, the rightist parties pushed Marcos Aburto, the Supreme Court's designated senator, to attend the decisive session, despite his poor health, in order to cast the vote that resulted in the ties. (END/IPS/tra-so/ggr/ag/ld/99)