From the periphery to the core

Collective bargaining in Chile as a journey to the potential future of European systems

Gonzalo Duran, Institute for Work, Skills and Training, University of Duisburg-Essen

» Full paper: ilera-2019-paper-179-DURAN.pdf

Umberto Romagnoli, an Italian labour lawyer in industrial relations, once pointed out that European countries are taking now, the early and nowadays consolidated Latin-American neoliberal experiences, as an inspiration for their labour reforms and their conceptions of labour rights. To him, travelling to Latin America is, to some extent, a journey to the future.

The Chilean system of industrial relations could be portrayed as a showcase of radical neoliberalism policies. In 1979, under the rule of the civic and military dictatorship of Augusto Pinochet, sectoral collective bargaining was dismantled and even banned. Along with that, strike action was severely restricted. Following the power resources approach, those transformations sought to reduce the organisational power of unions.

A few decades later, in 2012, the Spanish government implemented a labour reform aimed at decentralising its collective bargaining system. The Chilean model was carefully analysed before.

Between 2014 and 2016, the Chilean government conducted a labour reform to give back some minimal labour rights taken away in 1979. In such a discussion, the IMF pointed out that the Chilean system of collective bargaining works fine and they thus recommended keeping the structure or level without changes. In late 2015, IMF organised an international workshop of collective bargaining structure and fostered an industrial relations agenda expressing its inclination towards a more decentralised collective bargaining, with a clear preference at the firm-level. The key point defended by IMF was that this type of configuration (with the firm-level as predominant or exclusive) is not necessarily related to low coverage. However, it would seem this assessment has not had empirical support.

David Harvey, for example, has sustained that the liberal transformations which occurred in Chile during the dictatorship in the mid-70s were used as an experiment for the implementation of a new model for the core capitalist countries: “...thus, and not for the first time, a brutal experiment carried out at the outskirts would become a model to formulate policies in the core capitalist countries”. Taking into account this move as a possible future of European industrial relations, it seems meaningful to study the Chilean model of fragmented collective bargaining.

This paper examines the introduction and consolidation of what I shall call “abolitionist decentralisation” in collective bargaining. In this model, unionism and the negotiating of collective agreements are confined to the plant-level (the most decentralised one), and legal possibilities of articulated sectorial action are interdicted. The new scheme was released during Pinochet’s regime (1973-1990), and it was only minimally challenged or changed by the subsequent governments between 1990 and 2017. This paper suggests that unions’ reduction in organisational power opened up room for the shaping of a specific socio-technical configuration for the capital accumulation dynamic based in the super-exploitation of labour (using the formulation by Ruy Mauro Marini) intertwined with a fierce control of the labour process.

This institutional setting represents the first piece in a triangular circuit - which I have called “Penrose's triangle of working control” - that undermines the collective action at the workplace, reinforcing control over the workers. The second piece, right next to the institutional base, is the high fragmentation driven mainly by large companies. Particularly relevant here is the on-site subcontracting, the external subcontracting, the upsurge of temporary work agencies, and the pervasive use of the split-up method (where one company divides itself into several new companies, all of which belong to a single owner), among other variants. The triangle closes with a high-level of labour instability, which is characterised by temporary contracts, easy dismissal policies and discontinuous and flexible wages. Although this type of interactions has re-configured work all around the world, there are some specific traits in the Chilean case that merit a focused analysis. Throughout almost 40 years of neoliberal policies, it is possible to identify an effect, which one could label as turbo-stimulation, on this process of fragmentation. This, in turn, reinforces the organisational atomisation of workers.

In the present article, the following questions are addressed: What role does the Chilean system of collective bargaining play in the dynamics of capital accumulation? How does the “abolitionist decentralisation of collective bargaining” work? How does this Penrose's triangle model of analysis may be useful in illuminating these matters? What have its development in recent years been? What are the implications of this type of restructuration? What insights can be posited to building and renewing institutions?

To answer these questions, the empirical analysis uses a combination of methodological approaches. Firstly, with the aim of organising pieces of information into larger categories, Thematic Analysis (TA) will be used. Collected through direct field research, the dataset is grounded in my own involvement as a part of the economic advisory board in different trade unions (as a member of Fundación SOL). The dataset was built between 2007 and 2016 and includes informal conversations with union officials, the rank and file and managers, extensive field notes, and organisational documents including technical reports written by the crew of Fundación SOL ( By using TA, this work aims to show the severity of fragmentation, especially its disarticulating effect on unionism. Secondly, based on data analysis and micro-simulation techniques (MSM), the paper shows an increasing decoupling between real wages and labour productivity between 1992 and 2008 immediately prior to the international economic turmoil of this period. Additionally, it shows that afterwards, despite a small narrowing in the gap, income inequality is still very high when the market-income ratio of top and bottom ventiles (or vigintiles) is performed using MSM.

All in all, the Chilean experience provides an empirical base to understand the challenges of a case of extreme fragmentation and decentralisation in the collective bargaining system. Specifically, this study foregrounds the claim that collective labour institutions in Chile have not made a substantial contribution to promoting an equitable society, and as the trade unions have repeatedly called for, it is necessary to move towards a more appropriate institutional framework.