Catherwood LibraryILR School

Labor reform legislation in Chile, expected to be approved next month, will likely boost labor costs in a country which has increasingly relied on outsourcing cheaper labor while battling decreasing productivity and low prices. The world’s largest exporter of copper contracted 74% of its workers in 2014 in order to produce 90% of its output, an increase of 24% since 2006. The legislation is expected to increase the bargaining power of unions affiliated with external contractors, possibly increasing strikes from outsourced workers. It will also allow unions from different contractors to cooperate, increase unionization in small companies, tighten collecting bargaining rules, and increase substandard pay. Due to the increasing labor unrest, and in preparation for the reform bill, miners are trying to hire employees as direct employees in order to have greater control over labor disputes. Replacing five percent of currently contracted workers would cost Chilean miners $370 million a year; currently payroll costs for contracted workers are 43% of those of in-house employees.