ILO advances multilevel negotiation in Chile

ILO advances multilevel negotiation in Chile
ILO advances multilevel negotiation in Chile

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“Develop, during the third quarter, a tripartite dialogue on the regulation of multilevel collective bargaining. Once this process is concluded, the Government will formulate a legislative proposal that will be presented in the remainder of 2024.” With those words, the Government – represented by the Ministries of Finance and Labor – and the Unitary Central of Workers (CUT) signed an agreement in which they committed to taking a real step towards multi-level negotiation, also known as branch, based on the fact that it could involve different companies and unions – and even confederations of workers – from the same industry or economic sector.

The proposal, as agreed, will seek to “fully guarantee freedom of association” by adjusting to international standards that seek greater dialogue, labor democracy and promote fair and equitable economic development, as well as improve productivity through the participation of union and business organizations. .

This is not the first time that the Executive has echoed this issue. Within the framework of the negotiation of the 2022 minimum wage, the provision had already emerged. But although the initial commitment contemplated presenting a project within 2023, this deadline was not met.

Now, however, both the Labor Directorate, the ministry itself, and even the International Labor Organization (ILO) – particularly the Southern Cone office – have activated academic work around this issue.

“Coordinated and multilevel collective bargaining: international experiences and policy options for Chile,” is the document prepared by the ILO representation. A text that is already in the hands of the Government, and that contains axes to consider when designing a project on this topic.

The lines of action

The report highlights that there are several investigations that have shown that multi-level negotiation can positively impact the productivity of companies.

“When unions are autonomous, organized at the sectoral level and do not focus on defending local or niche interests, they are more likely to have positive effects on productivity,” the document quotes.

With this as a prelude, the experts prepared a list of alternatives and considerations for public policy “that would allow moving towards an application of multilevel collective bargaining in Chile.”

The first axis aims to strengthen the capacities of the social partners. Here, for example, it is recommended to establish clear incentives for employers and unions to participate in sectoral negotiation.

“Entrepreneurs must be sure that the benefits outweigh the costs. The benefits include the relative stability of aggregate wage trends and other non-wage conditions, a level playing field, and the possibility of flexibility negotiated at the company level,” the text states.

It also mentions that small and medium-sized businesses require opportunities to express the specific challenges their business faces, among others.

The second area of ​​considerations relates to a legal framework favorable to collective bargaining. Here, as a starting point, it is indicated that the development of a multi-level collective bargaining system requires an environment conducive to labor relations.

“This requires the Government to strengthen legal protections and freedoms for all workers in all sectors of the economy,” the text states.

In this context, it is also proposed to eliminate obstacles to multi-employer negotiation, since for experts “countries with successful multi-level negotiation systems benefit from rules that allow the extension of collective agreements to other employers in the same sector.” Here it is also proposed to expand the scope and inclusive nature of collective bargaining, among others.

In the last axis, called “a national (public) labor administration system that supports multilevel negotiation”, it is recommended to support the independent role of the social partners.

What does this mean? that in the opinion of experts governments can “actively support” multi-level bipartite collective bargaining in various ways through an adequately resourced labor administration system. This includes the provision of a dispute resolution service, ongoing engagement with social partners to share up-to-date data analysis on the labor market and industrial relations, and the deployment of a labor inspectorate with adequate resources to ensure compliance with labor legislation and collective agreements concludes the list of considerations prepared by the ILO.

Other commitments: new labor court and reducing informality

  • Beyond the multilevel negotiation, the agreement signed between the Ministers of Finance, Mario Marcel, and Labor, Jeannette Jara, with the president of the Unitary Central of Workers (CUT), David Acuña, contains the following commitments:
  • The next minimum wage negotiation will take place in March 2025.
  • An Observatory of Workers’ Income and Cost of Living will be created, being a technical and tripartite body, consisting of fiscal support for its operation. The instance will generate an indicator of the family disposable income of the workers, among others.
  • The proposal to create a Third Labor Court in Santiago will be evaluated with the Judiciary.
  • A bill will be presented aimed at guaranteeing the principle of equal remuneration in accordance with ILO standards.
  • A body will be established to evaluate both mechanisms to penalize the abuses that occur around informality, as well as incentives for the formalization of ventures and labor relations.
  • It will be readjusted by 4.5% to the Single Family Subsidy and Family Allowance as of July 1, and the reactivation of the Electronic Family Pocket for the winter months.
  • A bill will be presented to eliminate the possibility of discounting the employer’s contribution to Unemployment Insurance from the basis for calculating compensation.
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