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Chile's Minimum Wage Proposal on Shaky Ground

When the Chilean government made its initial proposal early last month to increase the monthly minimum wage to 193,000 Chilean pesos ($390.53), it may have felt it was already conceding too much ground to the demands of Chile's workers union: the Central Unitaria de Trabajadores (Central Workers’ Union—CUT). It signified an increase of 6 percent from the previous minimum wage of 182,000 Chilean pesos ($368.60).

It has been a series of back-and-forth negotiations that saw arrival at this figure, with an original initiative proposed by the government in congress on June 19 for a minimum wage of 191,000 Chilean pesos ($386.48). After further discussion in the House of Representatives, the figure was amended to 193,000.

Despite the significant jump, the new minimum wage resulted in significant backlash from the CUT and politicians concerned with the lower class. It underwent further discussion last Thursday, with the proposal passing a vote in the Senate to undergo further debate in the House of Representatives last Tuesday.

Senator Camilo Escalona asserted, "I understand that the difference could seem minimal, but 8,000, 9,000, 10,000 pesos for a person being paid 150,000 can be valuable and important." He also made note of the need for dialogue between the government and the opposition in order to define an appropriate figure.

In a seemingly ambitious stance, the CUT—led by President Arturo Martínez—are demanding a minimum wage of 250,000 pesos ($505.87) which they claim is in line with inflation and the growth of Chile's economy. Last Thursday about 700 protestors took to the streets of Santiago to demonstrate.

 

Although the group lobbied to have the protest authorized and officially recognized, it was denied under what has unofficially become known as the "Hinzpeter Law," which seeks to clamp down on unauthorized marches in the city. As per usual with both authorized and unauthorized marches in Santiago, the protest concluded with police using tear gas and water cannons to disperse the crowd. Not before however, Martínez and his followers pledged to deliver a letter to President Sebastián Piñera outlining their demands.

Piñera spoke on the issue on the morning program "Buenos Días a Todos," emphasizing the increase was much higher than the final adjustment made under the previous government. He also highlighted an added bonus of the proposal which sees people aged between 18 and 25 along with female workers receiving a minimum wage of 227,000 pesos ($459.33). The difference of 34,000 pesos ($68.80) is to be paid by the state under the guise of the "Youth Employment Subsidy."

In defense of a tentative increase of the figure, Piñera’s administration cites employment in environments such as call centers and jobs within the oyster industry lost to neighboring Peru and Bolivia as means to keep Chile's job market competitive. Therefore striking a balance will be both pivotal and intricate, with employment levels of concern on one hand and quality of life on the other.

Nick Lavars is a contributing blogger to AQ Online. He is a journalist and writer currently living in Santiago, Chile. His Twitter account is @NickLavars.

Any opinions expressed in this piece do not necessarily reflect those of Americas Quarterly or its publishers.
Tags: Chile, Minimum Wage

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