Modernizing Chile

Eduardo Frei Ruiz-Tagle was president of Chile from 1994 to 2000. He is currently a Senator for the Los Ríos Region.

Chile is at a crucial point in its history. We face the real possibility of becoming a developed country in eight to ten years, as long as we are able to make the reforms that are currently. History shows us that many countries reached our present condition but then came to a standstill and were unable to continue progressing.  Nevertheless, I must recognize that it is not the first time we find ourselves in a position of such expectations and similar diagnosis. Towards the end of the nineteenth century we had the same opportunity and we lost it. The early political and economic consolidation attained after independence allowed us to advance with firm steps for several decades; however, the original drive subsequently weakened on account of incompetence, lack of vision, and bad decisions.

In the last twenty years, we have not only recovered our republican tradition but have also established the basic consensus that gives stability to our democracy and economy and permits social coexistence in our country. For the first time in many decades, we face the real possibility of eradicating poverty, significantly decreasing inequality, and finally joining the select club of developed countries.

These themes have been placed on our public agenda, and there is awareness of the historical moment we are living.  But the achievements made cannot lead us to live in an atmosphere of success. There are basic tasks we must face to make the dream of development a reality—which include improving economic opportunities, educational reforms, and developing the state apparatus.

Developing Labor Legislation and Jobs

Chile must increase the rate of labor participation and skill level of its labor force. There is no better investment than one, which enables people to train and increase their knowledge, allowing them to fend for themselves and have a real perception of being an active part of the economic system and of society.

This also implies making a greater effort in training. Currently employers direct worker training, since the resources for this type of benefit are channeled through a tax exemption on corporate profits. Additionally, evidence shows it is mostly the workers of large enterprises that are able to access this benefit, since the funds assigned to smaller enterprises are scant. Consequently, it is necessary to empower workers so that they may decide when and in what areas they desire training, so that they may increase their productivity inside and outside the workplace.

Another task pending is the modernization of our labor legislation. To give just a few examples, collective bargaining power is meager under present legislation, covering only a restricted number of issues. Unionization is not made easy and coverage of unemployment protection is sparse and entails a series of obstacles that mean a significant percentage of workers are left out of collective bargaining. 

It is therefore necessary to move toward a new Labor Code. The present Code goes back almost 30 years, but the world has changed since then and such legislation does not take current realities into account. Chile needs greater dialogue within enterprises and a more organized unionism that is more representative and broader, and better prepared to face the challenges of the modern economy. Increasing the coverage of unemployment benefits by integrating the two current mechanisms, unemployment insurance and indemnity for years of service, would be in our best interest. Likewise, it is necessary to improve protection for maternity, raise unionization rates, facilitate the formation of unions, increase their bargaining capacity, and foster trade union education, among others.

Special mention must be given to the need to create a Council for Economic and Social Dialogue. This institution –– that already exists in several European countries such as France, Italy, and Spain –– obliges political, economic, and social players to dialogue permanently about various issues of national significance. The aim is to agree on guidelines to help improve democracy, raise the country’s pace of growth, and its capacity to create jobs.

Improving the Quality of Education

It is impossible to create more and better jobs if we do not address in depth the problem of education quality. In the last twenty years we have trebled the budget for this sector, allowing us to increase education coverage significantly and modernize infrastructure in thousands of primary and secondary schools and colleges, in addition to building a great number of new facilities. But these advances have not gone hand-in-hand with an improvement in teaching quality and in the equity of these services for the entire population. We still observe a wide gap between the education received by higher-income sectors in comparison to the education available to children from lower socio-economic levels. The same asymmetry appears in the outcomes achieved by the one and the other.