Chile & Labour Relations
The country where neoliberal labour law was written at gunpoint — and is still being rewritten
Chile occupies a distinctive place in global labour relations history: it is the country where the neoliberal economic model, including its labour market components, was first implemented comprehensively — under the Pinochet dictatorship from 1973 onward. The Labour Plan of 1979, designed by the Chicago Boys, dismantled collective bargaining, restricted union rights to the enterprise level, and created a highly deregulated labour market. Four decades later, Chile is still working to rebuild collective bargaining rights that were dismantled in those years.
10 Things That Stand Out About Labour Relations in Chile
- Salvador Allende’s Popular Unity government (1970–1973) was deeply allied with the Chilean labour movement, pursuing policies of worker participation, nationalization, and wage increases that threatened powerful business interests. The military coup of September 11, 1973, led by Augusto Pinochet, was followed by violent repression of the labour movement: union leaders were killed, imprisoned, or exiled, and the Central Única de Trabajadores (CUT) was immediately banned.
- Pinochet’s Labour Plan of 1979, designed by economists trained at the University of Chicago, introduced one of the most comprehensive labour market deregulations in history. Enterprise-level unions replaced industry unions, collective bargaining was restricted to the workplace, strikes were strictly time-limited and easily broken by replacement workers, and multi-employer bargaining was prohibited.
- One of the most significant figures in Chilean labour history is Clotario Blest, founder and longtime president of the CUT, who led the Chilean labour movement through the tumultuous period from the 1950s to the Allende era. Blest was a Christian anarchist and labour radical who embodied a distinctly Chilean synthesis of social Catholic and revolutionary traditions.
- The labour movement played a significant role in the opposition to Pinochet, including the general strikes of 1983 and 1984 that were central to the democratic protest movement. The Coordinadora Nacional Sindical maintained union organizing under conditions of repression, and workers participated actively in the campaign for the 1988 plebiscite that ended Pinochet’s rule.
- The return to democracy in 1990 partially restored labour rights, including the reconstitution of the CUT, but the Concertación governments made only incremental changes to Pinochet’s labour framework. The core provisions of the 1979 Labour Plan — enterprise unionism, restricted collective bargaining, replacement workers — remained largely intact for two decades.
- The 2016 Labour Reform under President Bachelet was the most significant change to Chilean labour law in decades, introducing some extensions of bargaining scope, restricting the use of replacement workers during strikes, and improving information rights for unions. Employer organizations mounted fierce opposition, and some of the most significant proposals were rejected or diluted.
- Union density in Chile is approximately 14–18%, concentrated in large enterprises and the public sector. The enterprise union structure prevents the formation of industry-wide solidarity, and the legal framework still significantly favours employers in the bargaining relationship.
- Chile’s social uprising (estallido social) of October 2019, triggered by a metro fare increase but expressing deep frustration with inequality, privatized services, and poor working conditions, included the labour movement as a significant actor. The uprising led to the constitutional process that produced a draft constitution in 2022 — rejected in a referendum — and an alternative process that produced a second draft in 2023.
- Chile’s pension system — individual capitalization accounts managed by private AFPs — was another creation of the Pinochet era and has been central to debates about inequality and retirement security. The labour movement has been a persistent advocate for pension reform, arguing that the AFP system delivers inadequate retirement income for workers who spent their careers in low-wage or precarious employment.
- Chile’s ongoing constitutional process reflects a country still working through the legacy of the Pinochet era’s institutional design, including its labour law framework. The outcome of that process will shape Chilean collective bargaining rights for decades to come.
