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Big miners fear effects of Chile’s new labour bill

Published by MAC on 2014-12-28

BHP, Rio, Anglo fear effects of Chile’s new labour bill

Cecilia Jamasmie

23 December 2014

BHP Billiton, Rio Tinto and Anglo American are among the miners that would be affected by Chile’s new labour bill, aimed at reducing the nation's huge income inequality, as it may limit mining companies’ ability to replace workers during strikes.

The bill, to be delivered to Congress next week, will require companies to engage in talks with just one union — the one considered to be the "most representative"—, which will increase workers’ influence and negotiation powers.

What worries miners, Reuters reports, is that President Michelle Bachelet's ambitious social reforms will end up raising labour costs and increasing the chance of strikes in a country where they are still relatively uncommon.

"It's not the moment to implement a radical labour reform because we have had too many changes and each change creates uncertainty," Antofagasta Minerals’ president Diego Hernandez told Reuters.

Miners in Chile are also dealing with other major problems. One is the slump in metal prices. The other one, the country’s chronic shortage of fuel, which has led to skyrocketing costs for both companies and households. Currently, Chile’s copper mines, which account for 20% of GDP and 60% of exports, are paying twice as much for their electricity as their neighbouring Peruvian mines.

Mind the gap

The first major change under Bachelet's centre-left government was a tax reform, which included tax increases and the elimination of some loopholes, to fund an overhaul of education in the world's top copper producing nation.

She is also trying to close the massive income gap in a nation that has become extremely “top heavy” in terms of wealth.

According to data from the World Bank, the richest 10% of Chileans capture $42 out of every $100 worth of disposable income, far in excess of the industrial countries the copper-rich country would like to see as its peers. In Spain, where the median income is roughly 30% higher than in Chile, the comparable figure is $25. In the United States it is $30.

Chile is a “plantation economy,” writes analyst Robert Hunziker from UK Progressive:

“…The moniker “slave” has been changed to “worker,” and rather than provide room and board like 19th century slave owners did, they now provide a stipend of $500 per month for the workers to provide their own room and board. Thus, removing the stigma of slave ownership. It is estimated that one-half of all Chileans make less than $500 per month. Thus, the slave market is rather sizeable, measurably more so than in the United States of America in 1850.

Chile’s wealth is so top heavy in favour of so few that it resembles the Leaning Tower of Pisa, ready to topple at any moment."

Chile expects around $105 billion in mining investment though the next decade.


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