Government seeks an end to miners strike in Chile

As a strike by 2500 miners at the Escondida copper mine in Chile begins its second week, the government has invited representatives of the workers’ union and the mine’s owner to Santiago, the country’s capital, for mediated negotiations.

Escondida, owned by BHP Billiton, an Australian mining conglomerate, is the world’s largest copper mine.

The strike began after BHP and the workers’ union Sindicato No. 1 Trabajadores de Minera Escondida (Workers Number One Union of the Escondida Mines) could not reach an agreement on wages and bonuses.

BHP also wants to create a two-tier benefits plan that would lower benefits, such as aid for education and health care, for newly hired workers. The union strongly opposes such a plan.

To union members, this strike is crucial.

“We will be on strike for as long as it takes, until death (if necessary),” said Karen Vargas, a striking miner to Agence France Presse at the union’s strike camp near the mine. “We have to win back all that we had.”

The workers’ union has accused BHP of gaming Chile’s new labor law in order to lower future benefits.

The new law, which goes into effect in April, aims to give unions a bit more leverage in collective bargaining negotiations.

One of the new law’s provisions establishes a minimum-floor rule which means that the benefits in place at the time that contract negotiations begin are the starting point for bargaining. Companies can’t begin negotiations by demanding benefit cuts.

The union accuses the company of trying undercut the minimum-floor rule by establishing two tiers of benefits, whose lower benefits will become the floor for future contract negotiations.

“It’s very probable that the company intends to lower benefits (for new workers) so that the next negotiation starts with what that established,” union spokesman Carlos Allendes said to Reuters. “(For us) that’s the last straw, the last thrashes of a drowning man.”

In addition to setting a minimum-floor for contract negotiations, Chile’s new labor law among other things:

  • allows sector wide bargaining, meaning that unions representing workers in the same business sector can negotiate a sector-wide contract, which prevents competing companies from undercutting labor costs to gain a competitive advantage;
  • allows temporary and contract workers to join a union
  • prohibits the use of replacement workers during a strike; and
  • requires companies to provide unions with relevant financial information when requested.

A provision in the law that workers must be union members to receive wages and benefits negotiated by the union was struck down by Chile’s Constitutional Court.

The government enacted labor law reforms in hopes that a more fair bargaining relationship between workers and owners will allow workers to share more of the wealth that they help create.

After Chile’s military dictator Augusto Pinochet seized power in a  bloody 1973 coup, he imposed free market policies that among other things severely restricted workers’ ability to bargain collectively.

Because of this and other advantages that Pinochet’s free market policies gave to businesses, most of the wealth generated in the country has been pocketed by the extremely wealthy.

As a result, Chile has the highest rate of inequality of all 30 plus nations that belong to the Organization of Economic Cooperation and Development (OECD).

OECD uses an index called the Gini coefficient to measure the distribution of a country’s wealth. On the Gini index, zero represents a completely equal distribution of wealth, and 1 represents the concentration of all wealth in one person.

According to a 2016 OECD report, Chile’s Gini coefficient is 0.47, the highest among all OECD nations (Mexico is second with a Gini of 0.46 and the US is third with a Gini of 0.39.)

The OECD’s average Gini is 0.30.


The sea of inequality that separates the very wealthy from those who create the wealth has created turmoil the country.

In the last year, pensioners have been in the streets demanding pension reform, students have been in the streets demanding education reform, and airline workers, airport workers, public employees, other miners, food processing workers and others have gone on strike.

The strike by Escondida workers is the latest manifestation of this turmoil.

The union is hoping that the strike can be resolved through government mediation, and the government would like to see the strike resolved because copper production is a vital part of the country’s economy.

But BHP appears to be stonewalling, at least that is what Joaquin Garcia-Huidobro, a columnist for El Mecurio, a daily newspaper, seems to think.

BHP “seems to have nothing to say to Chileans” about how it intends to end the strike, writes Garcia-Huidobro.

“The silence of this Anglo-Australian company. . .  is eloquent,” continues Garcia-Huidobro. “It is an example of a style that has caused great damage.”


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