Chile’s Mining Strike at La Escondida has Ended
But the Nation’s Labor Struggle Continues
By Makiko Kurosaki
Guyana Journal, October 2006
After twenty-five days of the strike, the 2,052-member union of the world’s largest copper mine, La Escondida of Chile, and the Anglo-Australian owners BHP Billiton mining company finally reached a settlement on August 31, of a 5 percent wage increase along with a $17,000 (USD) bonus for the workers. The long-drawn-out strike began with a union movement demanding increased wages and a share in the substantial profit amassed by the mining company, and was prolonged by the protesters’ frustration with limited role that government officials had played in the negotiation process, and criticism of the Bachelet administration’s resistance to modifying archaic labor laws, some of which date back to the Pinochet dictatorship. The La Escondida strike and the small gains the union has achieved demonstrate the potential power of Chilean labor unions as they define their role in the new, more globalized post-Pinochet economy.
Development and Stagnation of Union Movements
The current momentum gathered by the Chilean labor movement stems from labor actions in the 1970’s. In 1971, Yarur textile mill workers seized the state-owned factory, marking a significant change in the manner in which Chilean workers were mobilized to action. Although the mill workers and the socialist Allende government backed the leftist faction of the Chilean labor movement, La Moneda stymied the workers’ efforts because it was not consulted and preferred any serious social change to be implemented from above rather than below. Despite the government’s reaction, the solidarity of the mill workers awakened the nation’s laborers to the many class struggles of the time. This then led to a significant increase in labor unions throughout the nation.
Following General Augusto Pinochet’s violent golpe de estado in 1973, the labor union movement was all but crushed. Perceived as a major enemy of the state, its leadership was brutally and systematically hunted down. Furthermore, Pinochet quickly implemented a harsh neo-liberal economic model, privatizing most of the country’s industrial sectors. During this period, trade unions faced considerable hardships as a result of the government’s radical market liberalization reforms and repression of social movements. Considering this complex history of Chile’s trade union movement, the strike at the La Escondida mine represents one of the nation’s most democratic manifestations of labor.
Mining for Excuses
Considering the current record-high price of copper, at $3.50 per pound, the workers’ demands for increased wages were legitimate. Nonetheless, BHP Billiton had written them off as too expensive, claiming that an increase in pay would cost $640 million. However, a consultant firm hired by the La Escondida union stated that such an increase in wages would only cost about half of what the company claims. The Boston Globe reported that since the union signed its current contract in 2003, the price of copper has increased $2.03. This profits bonanza, however, is enjoyed by the senior managements and stockholders among the several partner corporations. The 25-day strike ensued when the La Escondida union miners demanded their share.
Dancing Around Demand
During the strike BHP Billiton, owner of the largest mine in Chile, obstinately stuck to its four percent offer, claiming that the workers’ demands were not only excessive, but also economically unfeasible since the price of copper is expected to decrease. However, many analysts have disputed this claim, arguing that the demand from the Chinese market alone will sustain international price levels. Moreover, if China’s current level of production continues, a dramatic dip in the international price of copper is not likely. As such, while the company argued that the Chinese industry is a direct threat to its profits, it is probable that Chile will remain at the copper forefront while Beijing develops a sustainable mining infrastructure.
Another challenge to BHP’s claims came last May from the Chilean-based Lomas Bayas copper mine, owned by Canada's Falconbridge Ltd. The company agreed to a three-year contract, which stipulated a reasonable 14 percent salary increase and a $4,400 bonus, demands similar to those sought after by the La Escondida union. Therefore, it is evident that BHP Billiton’s financial fears were merely rhetorical gambits used to legitimize a typical profit-maximizing strategy.
BHP Billiton’s Tactics: Substituting Workers
The company hastily declared a “force majeure” when the strike began. This measure is only evoked in times of an unexpected event beyond the control of the involved parties, such as a natural disaster or strike. Under force majeure, the company is immune from legal responsibility for temporary delays and shortages of products. Furthermore, the company recently hired 300 substitute workers to cover any loss of labor. The legislation allowing for such measures by a company was introduced during the Pinochet era, when maintaining foreign investment took precedent over settling domestic disputes. Union secretary Pedro Marín furiously protested, “We are defenseless against this [tactic] because the law says it's legal for the company to hire more sub-contractors and replace workers.” In an attempt to restrict new workers from accessing the mine, the union members built blockades on the roads leading to the site. In response, BHP Billiton closed the mine stating, “We will not negotiate with the union while they are carrying out this illegal activity.” Many union workers condemned the company’s attitude by claiming that BHP Billiton “has transformed this action into a union-breaking fight by not negotiating with us.” These obstacles to fair negotiation were indirectly sanctioned by the inactivity of the Chilean government, and only led to revved-up hostilities between BHP Billiton and the union.
Government Failure: The Issue of Labor Law Reform
Although the government mediated a series of talks between BHP Billiton and the union, Santiago was passive in the ongoing crisis. Before the strike started, Chilean President Michelle Bachelet announced that “this is a negotiation between the company and its workers and the only thing I hope for is that this comes to a resolution as soon as possible, hopefully with good results for both sides.” Following the union’s blockade and the company’s withdrawal from the negotiations, President Bachelet declared, “undoubtedly the government, if there is room to help [the negotiations] reach fruition, will do it.” The added strength of governmental intervention was absent from the resolution of the strike; clearly Santiago should have taken a more vigorous role in the negotiations from the very beginning in order to prevent the crisis from further escalating.
Not only was Santiago passive in its attitude toward the labor contract negotiations, but also the Bachelet government, like its post-Pinochet predecessors, has failed to entirely address anti-labor edicts issued by the dictator, despite a more open political climate in Chile. Following the Pinochet era, there were several unsuccessful attempts to reform labor law legislation, particularly under Presidents Aylwin and Frei, two Christian Democrats who had opposed the dictator’s repressive style of government since its inception. Both leaders were not prepared to do much about it, however, buckling to the interests of big business and failing to effectively represent a pro-labor agenda in Chile’s Congreso Nacional. Moreover, it was difficult to sway important leaders who had benefited from Pinochet’s so-called “economic miracle” of the 1980’s. Even under President Lagos’ more socialist policies no major changes to labor laws took place. In fact, Ricardo Solari, former labor minister during the Lagos regime, had given up on the matter, stating, “Chile had strikes and even though the law today allows for the replacement of strikers, this has actually never happened, so I am not going to enter into a theoretical discussion simply because a few employers represent that idea.” However, BHP Billiton capitalized on this legal loophole forcing Santiago to deal with the anti-union tradition of its predecessors. Unfortunately, the theoretical has become an uncomfortable reality.
Agreement Could Dictate Future of Chile’s Mining Unions
Whether the La Escondida union workers won the strike is uncertain, considering the fact that the union had to bend their demands immensely to the mining company, which clearly had the upper hand at the end of the negotiation. However, the strike at La Escondida has set an important precedent for the future of Chilean labor as it is likely that demands for more equitable contracts will expand beyond La Escondida. Workers at other BHP mines in Chuiquicamata will soon renegotiate their contracts. Moreover, several mines owned by the state copper company Codelco are also waiting in the wings. However, the government’s almost evasive response to union demands indicated that several remnants from Pinochet’s measures, notorious for disregarding the rights of workers and preventing unions from engaging in joint action, persist. The struggle of union workers in Chile will not end and more disruptive strikes will inevitably arise until the Chilean authorities undertake serious reform of these backward labor laws, one of the last vestiges of the Pinochet dictatorship. Chile as a nation, has resolved the current labor conflict at a considerable cost to the national copper industry, an integral part of the Chilean economy. President Bachelet must lead a reform effort to purge all lingering residue of the Pinochet edicts which were patently unfair to workers, and clear a space for the growing Chilean labor movement to share in the economy.
References
Paul Harris and Hal Weitsman, “Escondida miners camp down in desert for long struggle,” Financial Times, August 26/ August 27, 2006
Manuel Farias, Reuters
The Australian Business
The Sydney Morning Herald
Guillermo Campero, “Trade Union Responses to Globalization: Chile” International Institute for Labour Studies.
Winn Peter, Weaver of Revolution: The Yarur Workers and Chile’s Road to Socialism, Oxford University Press, NY, 1986
Volker Frank, “The Elusive Goal in Democratic Chile Reforming the Pinochet Labor Legislation,” JSTOR (JSTOR)
But the Nation’s Labor Struggle Continues
By Makiko Kurosaki
Guyana Journal, October 2006
After twenty-five days of the strike, the 2,052-member union of the world’s largest copper mine, La Escondida of Chile, and the Anglo-Australian owners BHP Billiton mining company finally reached a settlement on August 31, of a 5 percent wage increase along with a $17,000 (USD) bonus for the workers. The long-drawn-out strike began with a union movement demanding increased wages and a share in the substantial profit amassed by the mining company, and was prolonged by the protesters’ frustration with limited role that government officials had played in the negotiation process, and criticism of the Bachelet administration’s resistance to modifying archaic labor laws, some of which date back to the Pinochet dictatorship. The La Escondida strike and the small gains the union has achieved demonstrate the potential power of Chilean labor unions as they define their role in the new, more globalized post-Pinochet economy.
Development and Stagnation of Union Movements
The current momentum gathered by the Chilean labor movement stems from labor actions in the 1970’s. In 1971, Yarur textile mill workers seized the state-owned factory, marking a significant change in the manner in which Chilean workers were mobilized to action. Although the mill workers and the socialist Allende government backed the leftist faction of the Chilean labor movement, La Moneda stymied the workers’ efforts because it was not consulted and preferred any serious social change to be implemented from above rather than below. Despite the government’s reaction, the solidarity of the mill workers awakened the nation’s laborers to the many class struggles of the time. This then led to a significant increase in labor unions throughout the nation.
Following General Augusto Pinochet’s violent golpe de estado in 1973, the labor union movement was all but crushed. Perceived as a major enemy of the state, its leadership was brutally and systematically hunted down. Furthermore, Pinochet quickly implemented a harsh neo-liberal economic model, privatizing most of the country’s industrial sectors. During this period, trade unions faced considerable hardships as a result of the government’s radical market liberalization reforms and repression of social movements. Considering this complex history of Chile’s trade union movement, the strike at the La Escondida mine represents one of the nation’s most democratic manifestations of labor.
Mining for Excuses
Considering the current record-high price of copper, at $3.50 per pound, the workers’ demands for increased wages were legitimate. Nonetheless, BHP Billiton had written them off as too expensive, claiming that an increase in pay would cost $640 million. However, a consultant firm hired by the La Escondida union stated that such an increase in wages would only cost about half of what the company claims. The Boston Globe reported that since the union signed its current contract in 2003, the price of copper has increased $2.03. This profits bonanza, however, is enjoyed by the senior managements and stockholders among the several partner corporations. The 25-day strike ensued when the La Escondida union miners demanded their share.
Dancing Around Demand
During the strike BHP Billiton, owner of the largest mine in Chile, obstinately stuck to its four percent offer, claiming that the workers’ demands were not only excessive, but also economically unfeasible since the price of copper is expected to decrease. However, many analysts have disputed this claim, arguing that the demand from the Chinese market alone will sustain international price levels. Moreover, if China’s current level of production continues, a dramatic dip in the international price of copper is not likely. As such, while the company argued that the Chinese industry is a direct threat to its profits, it is probable that Chile will remain at the copper forefront while Beijing develops a sustainable mining infrastructure.
Another challenge to BHP’s claims came last May from the Chilean-based Lomas Bayas copper mine, owned by Canada's Falconbridge Ltd. The company agreed to a three-year contract, which stipulated a reasonable 14 percent salary increase and a $4,400 bonus, demands similar to those sought after by the La Escondida union. Therefore, it is evident that BHP Billiton’s financial fears were merely rhetorical gambits used to legitimize a typical profit-maximizing strategy.
BHP Billiton’s Tactics: Substituting Workers
The company hastily declared a “force majeure” when the strike began. This measure is only evoked in times of an unexpected event beyond the control of the involved parties, such as a natural disaster or strike. Under force majeure, the company is immune from legal responsibility for temporary delays and shortages of products. Furthermore, the company recently hired 300 substitute workers to cover any loss of labor. The legislation allowing for such measures by a company was introduced during the Pinochet era, when maintaining foreign investment took precedent over settling domestic disputes. Union secretary Pedro Marín furiously protested, “We are defenseless against this [tactic] because the law says it's legal for the company to hire more sub-contractors and replace workers.” In an attempt to restrict new workers from accessing the mine, the union members built blockades on the roads leading to the site. In response, BHP Billiton closed the mine stating, “We will not negotiate with the union while they are carrying out this illegal activity.” Many union workers condemned the company’s attitude by claiming that BHP Billiton “has transformed this action into a union-breaking fight by not negotiating with us.” These obstacles to fair negotiation were indirectly sanctioned by the inactivity of the Chilean government, and only led to revved-up hostilities between BHP Billiton and the union.
Government Failure: The Issue of Labor Law Reform
Although the government mediated a series of talks between BHP Billiton and the union, Santiago was passive in the ongoing crisis. Before the strike started, Chilean President Michelle Bachelet announced that “this is a negotiation between the company and its workers and the only thing I hope for is that this comes to a resolution as soon as possible, hopefully with good results for both sides.” Following the union’s blockade and the company’s withdrawal from the negotiations, President Bachelet declared, “undoubtedly the government, if there is room to help [the negotiations] reach fruition, will do it.” The added strength of governmental intervention was absent from the resolution of the strike; clearly Santiago should have taken a more vigorous role in the negotiations from the very beginning in order to prevent the crisis from further escalating.
Not only was Santiago passive in its attitude toward the labor contract negotiations, but also the Bachelet government, like its post-Pinochet predecessors, has failed to entirely address anti-labor edicts issued by the dictator, despite a more open political climate in Chile. Following the Pinochet era, there were several unsuccessful attempts to reform labor law legislation, particularly under Presidents Aylwin and Frei, two Christian Democrats who had opposed the dictator’s repressive style of government since its inception. Both leaders were not prepared to do much about it, however, buckling to the interests of big business and failing to effectively represent a pro-labor agenda in Chile’s Congreso Nacional. Moreover, it was difficult to sway important leaders who had benefited from Pinochet’s so-called “economic miracle” of the 1980’s. Even under President Lagos’ more socialist policies no major changes to labor laws took place. In fact, Ricardo Solari, former labor minister during the Lagos regime, had given up on the matter, stating, “Chile had strikes and even though the law today allows for the replacement of strikers, this has actually never happened, so I am not going to enter into a theoretical discussion simply because a few employers represent that idea.” However, BHP Billiton capitalized on this legal loophole forcing Santiago to deal with the anti-union tradition of its predecessors. Unfortunately, the theoretical has become an uncomfortable reality.
Agreement Could Dictate Future of Chile’s Mining Unions
Whether the La Escondida union workers won the strike is uncertain, considering the fact that the union had to bend their demands immensely to the mining company, which clearly had the upper hand at the end of the negotiation. However, the strike at La Escondida has set an important precedent for the future of Chilean labor as it is likely that demands for more equitable contracts will expand beyond La Escondida. Workers at other BHP mines in Chuiquicamata will soon renegotiate their contracts. Moreover, several mines owned by the state copper company Codelco are also waiting in the wings. However, the government’s almost evasive response to union demands indicated that several remnants from Pinochet’s measures, notorious for disregarding the rights of workers and preventing unions from engaging in joint action, persist. The struggle of union workers in Chile will not end and more disruptive strikes will inevitably arise until the Chilean authorities undertake serious reform of these backward labor laws, one of the last vestiges of the Pinochet dictatorship. Chile as a nation, has resolved the current labor conflict at a considerable cost to the national copper industry, an integral part of the Chilean economy. President Bachelet must lead a reform effort to purge all lingering residue of the Pinochet edicts which were patently unfair to workers, and clear a space for the growing Chilean labor movement to share in the economy.
References
Paul Harris and Hal Weitsman, “Escondida miners camp down in desert for long struggle,” Financial Times, August 26/ August 27, 2006
Manuel Farias, Reuters
The Australian Business
The Sydney Morning Herald
Guillermo Campero, “Trade Union Responses to Globalization: Chile” International Institute for Labour Studies.
Winn Peter, Weaver of Revolution: The Yarur Workers and Chile’s Road to Socialism, Oxford University Press, NY, 1986
Volker Frank, “The Elusive Goal in Democratic Chile Reforming the Pinochet Labor Legislation,” JSTOR (JSTOR)
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