The Minister of Labor of the Government of Gabriel Boric, Jeannette Jara, achieved that in the first stage of the left-wing Administration (2022-2026) it was patented the Jara formula. The communist militant’s strategy received the label after building bridges between distant sectors and passing laws such as the one that allows a maximum of 40 hours of work per week or an increase in the minimum wage to 500,000 pesos (about $535). Her big challenge now is for Congress to approve a pension reform, a symbol of the changes that Boric promised in his presidential campaign. But it’s difficult for him. From Geneva, where she participates with a delegation of businessmen, workers and senators of different political stripes in the international conference of the ILO, she speaks about the key moment facing the processing of the pension reform.
Ask. What is the most urgent issue to solve in labor matters in Chile?
Answer. An active promotion of women to the world of work. Chile cannot leave more than half of its population out of its productive capacity and that can contribute a lot to the country’s growth, but also to family economies. We have recovered employment, but there remains an important challenge in terms of greater labor participation, wage equity and better conditions for sharing care and allowing women to work for pay.
Q. The Government is pushing for salary equity. What is the project about?
R. This month we will introduce substitute indications to a bill on salary equity that corrects the equal remuneration law, which is from the first Government of President Bachelet (2006-2010), but which has not had much effect. It only establishes the part of the stick, how this lack of salary equity is sanctioned with a procedure where the worker, to initiate a process, has to complain to her own employer. This is corrected by being able to directly attend the Labor Inspection or the courts. It also has the promotional or carrot part, which is that large companies in the public and private sectors estimate their gaps, make them transparent on a public portal, and commit plans to close them every certain number of years. Thinking that this is decreed by law and solved is a fallacy, it is a process.
Q. What is the difference between the salaries of men and women in Chile?
R. About 70% of workers are between the minimum wage and close to the minimum and there is a gap between men and women of 20% or 25%. In terms of monetary amount it is not that much, about 60,000 pesos (64 dollars), since they are all low salaries.
Q. Is the business community willing to match salaries?
R. The most striking thing about conversations with businessmen is that whenever this topic is discussed, they point out that they know it happens, but not in their own company. I wonder then where the gap occurs. But beyond that, I think we are going to meet on this project in Parliament, as we have done extensively in the labor agenda that we carried out during the Government of President Boric.
Q. How would you describe Chilean businessmen?
R. Although we share a common goal, which is for the country to do well, sometimes we have different opinions regarding emphasis, which is why legitimate tensions occur. Entrepreneurs seek the growth of their business, the profitability of their investments. It seems interesting to us that they are doing well, but this growth and wealth has to be shared by all Chileans, not just by some, because if it does not produce significant social disaffection and, if one sees, the greatest The value of the company is the work contributed by those who work in it. Therefore, their work must be recognized and valued with fair remuneration.
Q. And that doesn’t happen?
R. Entrepreneurs can make an effort and pay better. Certainly, associated with economic conditions, but the company’s profits cannot be built based on keeping costs low in terms of recognizing the value of work. Salaries are low.
Q. Their great challenge today is to carry out the pension reform. Why has Chile failed to agree on a reform in more than a decade?
R. Those of us in politics have not been able to reach an agreement and we have gone through different political cycles with positions that vary according to whether we are in the ruling party or in the opposition. And pension systems are social pacts of greater scope. We have been missing a more generous look. Secondly, for economic interest. The AFPs have ensured that their business is not affected so that it continues to generate the juicy profits that they have had throughout this time, for which they have taken a series of actions, such as installing several fake news or actively misinform the population. And that, ultimately, has generated certain unfounded fears that make it more difficult for changes to occur.
Q. Could you exemplify how serious the pension situation is in Chile?
R. Between 2007 and 2021, the median number of women pensioners is 48,000 pesos ($51), which comes from the AFPs and includes women who contributed a lot and a little. In the case of men, the median is 155,000 pesos (165 dollars). These are dramatic data that have two specific impacts: on the quality of life of pensioners, and on the legitimacy of mandatory contributions. If with the Universal Guaranteed Pension (PGU) or a non-contributory pillar they obtain a pension of 214,000 pesos as in the PGU (228 dollars), but after having made an effort to contribute they obtain a pension from their AFP of 48,000 pesos (51 dollars), many People wonder what they pay for. When there is such strong opposition to making changes in a system that clearly needs them, what we are seeing is that there is resistance or a check to the pension system itself.
Q. The idea of legislating will be voted on in the first days of July. Is the Government running out of time?
R. I hope it is approved. Therefore, rather than thinking that time is running out, what needs to be done is to make it possible for the indications to be entered. There are some that aim to improve the profitability of pension funds, in agreement with the opposition and its technicians. There are several aspects in which we are going to move forward, but we need it to be approved. There are things that we may not agree on.
Q. Like the distribution percentages for individual capitalization. Do you think a consensus will be reached?
R. At this point I think I would have to have a magic ball to answer that question. The opposition in this matter, instead of making it more flexible, has been increasingly rigidifying his position. Even leaving behind what President Sebastián Piñera proposed. I couldn’t predict what will happen with the percentage distribution. What I could point out with certainty is that if there is no distribution or social security, the pensions of the current million and a half retirees will continue as they are. And that is political irresponsibility.
Q. A sector of the right has shown a willingness to resolve the issue now because they predict, as the polls indicate, that in the next Administration they may be the ruling party. And there is another sector that says that it will be resolved in the next Government.
R. Those who have proposed that this be resolved in the next Government (2026-2030), I want to tell you that the candidate or mayor Evelyn Matthei herself has indicated that for her the issue of pensions is not a priority. You have to be careful with the things you commit to. Today there is a tremendous opportunity to solve a citizen problem and make a system viable for the medium and long term that is threatened by lack of legitimacy. And it is threatened around the corner with a discussion of withdrawals that has been taking place in Parliament.
Q. Are the parliamentarians who support a new withdrawal seeking to dynamit the private system, as some propose?
R. No, I think what several parliamentarians have suggested is that if there is persistence in refusing to advance a reform, they will encourage withdrawals. But more than that, I would say that if there is no reform here, the AFP will be mainly responsible.
Q. Why would the AFP be responsible and not the political system or any particular sector?
R. The political system must respond. It cannot be that after 10 years of debate, in this third opportunity we will not be able to agree to carry out a reform that improves current and future pensions. However, since we presented the pension reform project, the AFPs have opposed it. They have invested a large amount of resources in a campaign that, rather than informing, deliberately misinforms citizens. For example, in a widely broadcast commercial on television they tell people that ‘6% of your pension contribution is yours and your family’. To begin with, this contribution does not yet exist and, if legislation is passed, it is a contribution that employers will make, not workers. And they do this with the signature of the AFP Association in very small print and with the money that comes from the contributors, because the contributors are the ones who generate their income through commissions.
Q. You were criticized for the use of resources in the advertising campaign for pensions, which they also said were paid by everyone.
R. There is a request in the Comptroller’s Office that we are going to answer. We are calm about what we have done in this regard, but if one looks at what the Government could have invested in informing citizens in relation to what the AFP has done in advertising expenses, there is a universe of difference, 13,000 million pesos by the AFP. It is striking that when the State informs about social security benefits once, the entire right comes together to say that this is not possible. What interest are they defending?
Q. The right has publicly shown its differences regarding the path to carry out the reform, right?
R. Well, they have had different positions. At the beginning of the Government, 3% and 3% seemed good to them, when we proposed a social security of 6%. Afterwards they have been varying, putting an inflexible proposal in which everything goes to individual capitalization. The pension system is not something individual, it is something social. In the rest of the countries in the world, 83% have mixed systems. Chile is in a corner, it is an exception.
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