Enhancing sectoral collective bargaining in Chile

2. How does Chile compare?

Collective bargaining systems are based on a complex set of rules and practices, partly written in national laws and based on longstanding traditions. To characterise them, it is important to understand their functioning and the role of their different building blocks, as well as have quantitative information on the strength and representativeness of trade unions and employers’ organisations (Figure 1).

In Chile, collective bargaining is decentralised and only takes place at company level, in a context of strong union fragmentation. No co‑ordination mechanisms − within and between social partners – are in place, producing thus independent and atomised negotiations and preventing synchronisation of different bargaining units when setting their strategy and targets.

Figure 1. The main building blocks of collective bargaining systems

Source: OECD. (2019[1]), Negotiating Our Way Up: Collective Bargaining in a Changing World of Work, https://doi.org/10.1787/1fd2da34-en.

Trade union density (the share of employees who are union members) accounted in Chile for only 16% of the employees in 2023 (Figure 2, Panel A), slightly above the OECD average at 15.1%. It was concentrated in big firms and certain sectors, particularly mining (42% of employees are unionised). Moreover, data on the number of unions by workers show a great fragmentation of trade unions, notably in sectors such as mining, transport and communications, and more recently social services (COES, Pablo Ahumada, 2024).

While trade union density has been generally declining in most OECD countries over the last four decades – from about 35% in 1975 to 15% in 2023 on average for the OECD, important cross-country variations exist in terms of initial unionisation levels, the actual direction of trends, and, in countries where it happened, the pace, intensity and timing of the decline. Hence, while union density declined in a majority of countries, it increased in a few of them, such as Chile or Costa Rica and was relatively stable in others.

Figure 2. Trends in trade union density

Percentage of employees

Note: The latest year available refers to 2023 for Brazil, Chile, Germany, and Sweden; and to 2018 for the private sector in New Zealand. 2009 refers to 2011 for the private sector for Costa Rica and Germany. Trade union densities in the private sector for Germany and New Zealand are estimates based on the German Socio-Economic Panel (SOEP) and on union returns, respectively.

Source: OECD/AIAS ICTWSS version 2.0 (provisional data).

Employers, business and employer organisations are the other key actors of collective bargaining. In most OECD countries outside Europe, employer associations represent the interests of business (i.e. lobby and voice) but do not bargain collective agreements, with most – if not all – bargaining taking place at the firm level. However, the role of employer organisations in wage bargaining processes is institutionalised in many European countries.

Compared with union density, much less is known about the membership and representativeness of these organisations across OECD countries. Representativeness, in particular, is very difficult to assess: official and up-to-date statistics on the number of workers covered, as distinct from the number of affiliated firms, are very limited, partial and often based only on self-reported data. Further difficulty in providing a precise assessment arises also from the possibility for firms to belong to several employer associations.

Using available information, Figure 3 shows the share of employees in the private sector working in firms affiliated to an employer organisation. On average, employer organisation density in the 25 OECD countries for which data are available is close to 60%. Like trade union density, employer organisation density varies considerably across OECD countries: it is very low in Central and Eastern European countries, but up to about 80% in Belgium, Luxembourg, the Netherlands, and Sweden (and at 100% in Austria due to compulsory affiliation for all firms). Unfortunately, no data available for Chile.

In most OECD countries, the share of employees working for a firm that is part of an employer organisation is larger in the good-producing sector compared with the service sector. Employer organisations also tend to be more representative of medium and large firms.

Figure 3. Employer organisation density in selected OECD countries

Percentage of employees in the private sector, 2000 or closest1 and 2023/24 or latest2

1. 1997 for Australia, 2002 for Belgium, Czechia, Estonia, Finland, France, Hungary, Ireland, Latvia, Luxembourg, Poland, Portugal, and the Slovak Republic. No data available for Greece, Spain, and Türkiye.

2. 2012 for Hungary; 2014 for Belgium; 2016 for Slovenia; 2017 for France, Greece, and the United Kingdom; 2018 for Australia, Germany, Ireland, Italy, Latvia, the Netherlands, and Türkiye; and 2022 for Finland, Luxembourg, and Poland.

Source: OECD/AIAS ICTWSS database (provisional data).

Collective bargaining coverage rates (the share of employees covered by collective agreements) are key indicators of the scope of the bargaining systems: they vary widely across OECD countries, from almost 100% in France due to the administrative extensions to 5‑10% to Costa Rica or Mexico. In Chile, coverage rate is rather low, with 19.3% of workers covered by a collective agreement in 2023 (Figure 4). This is below the OECD average at about 30% in 2023.

Contrary to the majority of OECD countries, where coverage shrunk over the last decades, coverage rate slightly increased in Chile from 14.8% in 2009 to 19.3% in 2023.

Figure 4. Trends in collective bargaining coverage rate

Percentage of employees with the right to collectively bargain

Note: The latest year available refers to 2023 for Australia, Chile, Germany, and Sweden. 2009 refers to 2008 for Australia and New Zealand, and to 2011 for Costa Rica.

Source: OECD/AIAS ICTWSS version 2.0 (provisional data).

There are no comparable indicators on the level of enforcement of collective agreements across countries. However, capacity of enforcement of each system is likely to be related to the functioning of collective bargaining, historical developments and overall trust among social partners. The enforceability of agreements can also be fostered by regulating industrial actions with “peace clauses” ruling that unions which have signed an agreement, and their members, cannot lawfully strike on issues regulated in the agreement (Table 1). In Chile peace clauses are not or rarely used because strikes are highly regulated and limited to collective bargaining. In other countries (e.g. Italy and Spain), peace clauses are common but given that the strike is an individual right, workers can always strike as the agreement is binding only for the collective signatory parties. Therefore, even a small group of workers is enough to limit the enforcement of the agreement undermining the governability of the system. In other countries (typically the Nordic countries) peace clauses are used and enforced thanks to the strong role of unions and relatively high level of trust between and in social partners.

Mediation and arbitration procedures can also play a significant role in smoothing conflicts and helping to find an agreement within the framework of collective bargaining and therefore contribute to strengthen the overall governability of the system (see below the case of Sweden).

Table 1. The enforceability of collective agreements

		Sector-level agreements
		Nothing or not applicable	Peace clause	Mediation	Both
Firm-level agreements	Nothing	Canada (AB) Korea Slovak Republic		Austria* Slovenia	Denmark* Latvia*
	Peace clause	Japan	Iceland Luxembourg Norway		Estonia Greece* Lithuania* Netherlands Switzerland
	Mediation	Australia Chile Colombia* Portugal United Kingdom		Czechia France Hungary Mexico
	Both	Canada (BC*, ON* and QC*) Costa Rica New Zealand Türkiye United States*		Ireland*	Austria Belgium* Finland Germany Israel* Italy* Spain* Sweden*

*: Compulsory mediation.

Note: AB: Alberta; BC: British Columbia; ON: Ontario; QC: Québec.

Source: OECD Policy Questionnaires, 2015.

Figure 5 shows the trends in industrial disputes (strikes and lock-outs) in selected OECD countries. Data should be interpreted however with caution as the number of strikes is likely to be affected by how they are regulated at national level and may thus not reflect the actual level of strife on the workplace. Furthermore, existing statistics are plagued by considerable differences in definitions and measurement which severely limit the comparability of the data. Notwithstanding these caveats, Figure 5 shows that industrial disputes as well as the degree of variation across countries have gone down considerably since the 1990s, in many OECD countries including Chile. Notable exceptions are Canada, United-Kingdom and the United States, where days lost because of strikes have particularly increased in 2023.

Since Blanchard and Philippon (2004[2]) tried to establish a link between conflictual labour relations and high unemployment, there has been an increasing focus on the quality of labour relations and trust among social partners. Blanchard et al. (2004[2]) argued that “trust appears to be just as important in bringing macro flexibility as the structure of collective bargaining” as the effectiveness of co‑ordination, in particular, is likely to be closely linked to relatively peaceful and co‑operative industrial relations. IMF (2016[3]) shows that unemployment rose less following the global financial crisis in those countries where trust was high.

Figure 5. Recent trends in industrial disputes in selected OECD countries

Annual averages of workdays lost per 1 000 salaried employees

Note: International comparability of data on strikes is affected by differences in definitions and measurement. Belgium: Strikes in the public sector are excluded until 2002. Since 2003 strikes in the public sector are included except for strikes in the local and county administration and similar institutions and for sailors in the merchant marine and shipping industry. Since 2013 strikes in the local and country administration and similar institutions are also included. Chile: Figures refer to the so-called “terminated strikes”. Mexico: The statistics concern strikes at establishments and enterprises covered by federal jurisdiction. As a result, strikes at enterprises under local jurisdiction are not included. The latest year available refers to 2022 for France, Mexico, and Portugal. 1990s and 2010s refer to the unweighted averages of workdays lost per 1 000 employees in 1990‑99 and 2010‑19, respectively.

Source: ILOSTAT and national statistical offices for working days not worked and OECD Annual National Accounts Statistics Database and national statistical offices for total number of employees.

Figure 6 shows the degree of co‑operation in labour relations as assessed by senior business executives in a survey published by the World Economic Forum. Among OECD countries, managers consider labour relations most co‑operative in Switzerland and least co‑operative in Korea, with Chile standing below the OECD average in 2019.

These data need of course to be interpreted with cautious as being deeply rooted into broader societal and cultural factors, as well as affected by decades of history. However, they bring complementary information on the quality of labour relations, one of the most difficult aspects of collective bargaining to document.

Figure 6. Quality of labour relations in selected OECD countries

Co‑operation in labour-employer relations as assessed by senior executives

Note: Average weighted national score based on a scale from 1 (“generally confrontational”) to 7 (“generally co‑operative”) to the following question: “In your country, how would you characterise labour-employer relations?”. OECD is the unweighted average of the 38 OECD countries.

Source: World Economic Forum Global Competitiveness Index.