The employers and the re-democratization

By Simon Gajer

1. Industrial Relations: The key players in industrial relations

What are industrial relations and why are they important for an analysis of Chile’s welfare system? One important characteristic of industrial relations is they represent political relations (see Müller-Jentsch 1986: 17--18; Müller-Jentsch identifies two other characteristics: social relations and economic relations). However, the capital side and the workers’ side alone do not establish industrial relations: usually, negotiations of trade unions and employers do not take place in an undefined area. The state provides the legal way of negotiations. The state provides the area in which the actors act. (see Müller-Jentsch 1986: 17--18; the main actors are also described in: Birle 1997:123--124, Imbusch 1995: 35--36 or Dombois / Imbusch 1997: 26--27).

For analyzing industrial relations of a certain country--in this seminar those of Chile, Germany and the USA--it is now important to look at the different strengths the three actors--state, employers and employees--have within the industrial relations. With such an analysis, the direction of the industrial-relations’ pendulum can predict whose ideas will be important in the future

This paper, however, will focus only on the employers’ side of the Chilean industrial relations after the Pinochet dictatorship. It is an important view since the democratization process could have changed the roles of the actors in the system. (A paper by Tobias Kaphegyi focuses on the employees’ side. Both papers will probably show the specific role of the state after the re-democratization. Therefore, a discussion of the overall industrial relations and its (mabye) changed balance could be started in the newsgroup of this class.)

2. The role of Chilean employers at end of the Pinochet regime

Before I analyze the role of employers in the re-democratized Chile, it is necessary to provide a short overview of the employers’ role and position under the Pinochet government--particularly towards the end of the era.

The economy was neoliberally oriented (see Johannes Widmann’s paper dealing with different economic phases of Chile). The economic leaders saw the industrial relations as the main factor of establishing a successful economy (Imbusch 1997: 225). This paper deals with industrial relations in Chile. So, how did the role of employers look like during the Chilean neoliberal model during the Pinochet era? (An overview is provided by García et al. 1994: 151--154,
Imbusch 1995: 260--326, Imbusch 1997.)

One of the main attributes of the neoliberal model was the non-acting state. Only the employers and employees had to deal with each other. How was the role of the employers defined? In the year 1979, the so-called Plan Laboral was passed by the regime (before this act, hardly any regulation dealt on a level of workplaces: for instance, wages, contracts or „hire and fire“ could be managed by the employers). Dealing with industrial relations, this legislation allowed collective bargaining only on the companies’ level. Strikes were allowed; however, analysts see them as inefficient: the employers were allowed to let strike-breakers work (Imbusch 1997:
234). Another factor strengthening the role of the employers was legislation dealing with the dismissing of employees: employees could be dismissed with no reason.

How did the employers see themselves in the regime? Although some different opinions existed within the group of employers, the employers and their associations knew the regime would guarantee their existence, and, furthermore, strengthen their role compared to trade unions. As one author says: the employers were the group gaining most power in these years (see Imbusch 1997: 230). Therefore, the employers supported the regime (García et al. 1994: 159).

This chapter showed the role of the employers under the Pinochet regime. It showed the strong role of the employers referring to the way on how to hire people. Therefore, in the years of transition towards the democratic Chile, the employers were in favor of keeping the Pinochet-based industrial relations. However, what happened then? Did a re-democratized Chilean system cut down the employers role?

3. A new and weaker role of employers in a democratic Chile?

Towards the end of the old regime, they started becoming politically autonomous actors with their own party. In the years of transformation, they started a campaign praising their economic model (Imbusch 1995: 443). With the Chilean „no“ to Pinochet in the referendum in 1988 the re-democratization could begin. However, the established democratic system did not break with its past. Analysts have found three factors to understand a (maybe) new system of industrial relations (see Thiery 1997: 255--257; also García et al. 1994: 172--177):
a.) the old regime did not step back from all areas, but was still important in some fields,
b.) the new government still focused on a neoliberal economy, and
c.) the new regime wanted to establish some kind of consensus among societal groups to construct the new Chile--therefore, intensive communication took place between the government and the different groups.

4. Keep the old system alive?

One of the first actions taken by the government was the alteration of the Plan Laboral--the reforma laboral. The aim was to establish equal bargaining partners in the industrial relations (for instance, the power of employers to dismiss employees after 60 days of strike was canceled; Thiery 1997: 258--260). However, the employers have not faced a major cut back in their role. A „deal“ had kept their importance alive: strengthened trade unions and some forms of redistribution of the wealth were made possible while the economic model favoring the employers was not changed (for example, collective bargaining still was only possible on the
company level; this meant, an increase of the salary was connected to an increase of the companies productivity; see García et al. 1994: 201--203).

With keeping Chicago Boys in important ministries and having a close cooperation in question of foreign trade, the state also tried to get the industries’ support. In 1993, this cooperation of the two sides was even institutionalized: the Comisión de Relacionmes Económicas Internacionales dealt with questions of international trade (Imbusch 1995: 438--439).

Therefore, it can be said the employers did not only have an important position within the Pinochet era but kept their strong role alive in the democratic Chile. Although the employers now have to face trade unions, the overall power is still at the employers’ side. Analysts say the first two governments were not interested in conflicts with the strength of employers. Instead, the Frei government tried to increase the societal wealth by strengthening the economy (Thiery
1997: 268-269). This means the main factor characterizing the Chilean economy since the beginning of the military regime can be seen in the consensus of employers and the government on how the economy should run. Both sides have strengthened the importance of a non-interfering state, while building powerful participants on the market (which means an important role of the employers). This state-employers connection was vital during the time of transition. The employers stopped criticizing the new government because, among other factors of course, the new regime tried to establish social equity with market mechanism. This, however, intensified the role of employers: not only in the Pinochet-era but also in democracy, the Chilean economy is built on freedom of the market. (see Imbusch 1995: 434).

This relationship as well as the efficient economic model made possible the special status of the employers. During the Pinochet regime, the employers were able to increase their influence in the political system and were able to carry it over into the new system (Imbusch 1995: 454--455).

5. Bibliography

Birle, Peter 1997. Arbeitsbeziehungen in Lateinamerika. Traditionslinien, Reformen und Perspektiven. in: Rainer Dombois / Peter Imbusch / Hans-Joachim Lauth / Peter Thiery (editors). Neoliberalismus und Arbeitsbeziehungen in Lateinamerika. Frankfurt am Main:118--125.

Dombois, Rainer / Peter Imbusch 1997. Neoliberalismus und Arbeitsbeziehungen in Lateinamerika. Einführende Bemerkungen. in: Dombois et al.:9--39.

García Ligia / Eugenio Rivera / Juan Enrique Vega 1994. Chile. in: Barbara Töppers / Urs Müller-Plantenberg (editors). Transformation im südlichen Lateinamerika. Chancen und Risiken einer aktiven Weltmarktintegration in Argentinien, Chile und Uruguay. Frankfurt am Main:148--203.

Imbusch, Peter 1995. Unternehmer und Politik in Chile: eine Studie zum politischen Verhalten der Unternehmer und ihrer Verbände. Frankfurt am Main.

Müller-Jentsch, Walter 1986. Soziologie der industriellen Beziehungen: eine Einführung. Frankfurt am Main.

Thiery, Peter 1997. Der Wandel der Arbeitsbeziehungen im demokratischen Chile (1990-1996). in Dombois et al.:254--275.