From The Economist print edition
Stronger democracies have brought demands for a share-out of economic growth. Two reports, the first fro
m Chile, the next from Peru (see article)
m Chile, the next from Peru (see article)
DESPITE a transition to democracy and rapid economic growth, Chileans have grumbled a lot over the past 20 years—but only quietly. Many felt let down by the terms on which General Augusto Pinochet yielded power in 1990, which let him stay on as head of the army for eight years; but their complaints were muted by relief at the return of democracy. Many were also disappointed that the centre-left coalition, called the Concertación, which has governed since 1990, maintained the dictatorship's free-market policies; but that disappointment was tempered by the prosperity and improved services that these policies delivered.
The muted complaints have suddenly become louder. Last year, encouraged by the promise of Michelle Bachelet, Chile's president since March 2006, to lead a more “participatory” sort of democracy, secondary-school children took to the streets to demand better education in the biggest protests since the 1980s. With the price of copper, the main export, at record levels and the economy growing at 6% this year, workers are protesting too.
Until recently, strikes were relatively rare in Chile. Last year, however, miners at Escondida, the world's biggest copper mine, won a hefty increase after a month-long strike. This year has seen stoppages in the forestry industry and a 36-day strike by sub-contracted workers at Codelco, the state-owned copper producer.
“Workers see a country that is growing and companies that are doing well and they're tired of waiting,” explains Arturo Martínez, president of the Central Unitaria de Trabajadores (CUT), the main trade-union confederation. The unions point to Chile's unequal income distribution. A government survey last year found that almost 1m workers, or 15% of the total, were earning less than the legal minimum take-home pay of just over $200 a month.
With unemployment dropping sharply, wage demands are unsurprising. They are also being fanned by the Communist Party. It is aggrieved by the government's failure to act on a campaign promise to reform an electoral system, left in place by the dictatorship, which makes it almost impossible for small parties (such as itself) to win seats in Congress.
Trade-union leaders say the country is on the brink of social conflagration. Certainly, recent strikes have been unusually violent, as was a national day of protest called by the CUT, the Communist Party and others on August 29th. This gained the support of some Concertación politicians, who have taken to railing against their own government's “neoliberalism”. They object to a strict fiscal policy under which much of the windfall gain from the copper price is being saved for the future. (This will enable the government to spend its way out of any future recession.)
Rather than a big ideological shift, the discontent reflects a change in labour relations. Workers are more aware of their rights and want them respected, says a senior manager at Codelco. One matter of contention is sub-contracting. This has helped to keep exports competitive, but in some industries it has been used as a means of obtaining a low-wage workforce on short-term contracts.
A new law seeks to prevent the misuse of sub-contracting. Last month the government set up a committee to consider broader changes in labour laws. “We're not condemned to look at poverty and inequality and merely wait for growth and the trickle-down of wealth to take care of them,” said Ms Bachelet recently. The government also wants to set up special courts to settle worker grievances and to strengthen unemployment insurance.
Economic, political and social stability since 1990 has been crucial in attracting the investment, both local and foreign, that has secured rapid economic growth. As a result, Chile is a much richer country: income per head is almost $9,000, up from $2,400 in 1990. At this stage in its development, further capital investment and better education should raise productivity and thus wages, in a virtuous circle.
There is plenty of scope for improving productivity. The management of forests and plantations is five times more labour-intensive than it is in Scandinavia, for example. But improving education takes time. And as an alternative to capital investment, Chilean firms can import cheap labour from poorer neighbours, such as Peru and Bolivia, points out Rosanna Costa of Libertad y Desarrollo, a conservative think-tank. That is happening in low-paid jobs in construction and agriculture.
Chileans are throwing off the mental shackles imposed by the dictatorship. The process was accelerated by Pinochet's death last December. But political freedom has bred impatience for a fairer share-out of the fruits of growth. Ms Bachelet has proved less adept than her predecessors at serving up the Concertación's successful recipe of economic liberalism combined with redistributive social policies.
Even so, Chile seems unlikely to veer towards populism. Greater prosperity has brought mortgages and credit-card debts. These are “the new chains of the workers,” complains Mr Martínez. They are also a sign that most Chileans now have a stake in stability.
The muted complaints have suddenly become louder. Last year, encouraged by the promise of Michelle Bachelet, Chile's president since March 2006, to lead a more “participatory” sort of democracy, secondary-school children took to the streets to demand better education in the biggest protests since the 1980s. With the price of copper, the main export, at record levels and the economy growing at 6% this year, workers are protesting too.
Until recently, strikes were relatively rare in Chile. Last year, however, miners at Escondida, the world's biggest copper mine, won a hefty increase after a month-long strike. This year has seen stoppages in the forestry industry and a 36-day strike by sub-contracted workers at Codelco, the state-owned copper producer.
“Workers see a country that is growing and companies that are doing well and they're tired of waiting,” explains Arturo Martínez, president of the Central Unitaria de Trabajadores (CUT), the main trade-union confederation. The unions point to Chile's unequal income distribution. A government survey last year found that almost 1m workers, or 15% of the total, were earning less than the legal minimum take-home pay of just over $200 a month.
With unemployment dropping sharply, wage demands are unsurprising. They are also being fanned by the Communist Party. It is aggrieved by the government's failure to act on a campaign promise to reform an electoral system, left in place by the dictatorship, which makes it almost impossible for small parties (such as itself) to win seats in Congress.
Trade-union leaders say the country is on the brink of social conflagration. Certainly, recent strikes have been unusually violent, as was a national day of protest called by the CUT, the Communist Party and others on August 29th. This gained the support of some Concertación politicians, who have taken to railing against their own government's “neoliberalism”. They object to a strict fiscal policy under which much of the windfall gain from the copper price is being saved for the future. (This will enable the government to spend its way out of any future recession.)Rather than a big ideological shift, the discontent reflects a change in labour relations. Workers are more aware of their rights and want them respected, says a senior manager at Codelco. One matter of contention is sub-contracting. This has helped to keep exports competitive, but in some industries it has been used as a means of obtaining a low-wage workforce on short-term contracts.
A new law seeks to prevent the misuse of sub-contracting. Last month the government set up a committee to consider broader changes in labour laws. “We're not condemned to look at poverty and inequality and merely wait for growth and the trickle-down of wealth to take care of them,” said Ms Bachelet recently. The government also wants to set up special courts to settle worker grievances and to strengthen unemployment insurance.
Economic, political and social stability since 1990 has been crucial in attracting the investment, both local and foreign, that has secured rapid economic growth. As a result, Chile is a much richer country: income per head is almost $9,000, up from $2,400 in 1990. At this stage in its development, further capital investment and better education should raise productivity and thus wages, in a virtuous circle.
There is plenty of scope for improving productivity. The management of forests and plantations is five times more labour-intensive than it is in Scandinavia, for example. But improving education takes time. And as an alternative to capital investment, Chilean firms can import cheap labour from poorer neighbours, such as Peru and Bolivia, points out Rosanna Costa of Libertad y Desarrollo, a conservative think-tank. That is happening in low-paid jobs in construction and agriculture.
Chileans are throwing off the mental shackles imposed by the dictatorship. The process was accelerated by Pinochet's death last December. But political freedom has bred impatience for a fairer share-out of the fruits of growth. Ms Bachelet has proved less adept than her predecessors at serving up the Concertación's successful recipe of economic liberalism combined with redistributive social policies.
Even so, Chile seems unlikely to veer towards populism. Greater prosperity has brought mortgages and credit-card debts. These are “the new chains of the workers,” complains Mr Martínez. They are also a sign that most Chileans now have a stake in stability.
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