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. In Chile, collective bargaining is decentralised, taking place mainly at the 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 which limits the potential for broader sector-wide agreements and synchronised bargaining targets.
The system is also characterised by low union density (16% in 2023) and low collective bargaining coverage (19.3% in 2023). Little information on employers’ affiliation with business organisations is available, reducing visibility into the strength and representativeness of the other key player in the bargaining process. Labour relations in Chile are marked by a lack of trust between unions and employers, coupled with a low level of collaboration in addressing workplace or sectoral issues.
Other challenges include structural constraints, such as the high level of informality in employment and the resulting weak enforcement of labour laws which further undermine the potential for effective and inclusive collective bargaining.
Multi-level bargaining can strengthen workers’ bargaining power by enabling negotiations at the sectoral or national level, reducing disparities and empowering workers to advocate for fair conditions. It can also promote fair competition by ensuring a level playing field of working conditions. When well-designed, i.e. when promoting inclusiveness (broad representation) and flexibility (adaptation at firm level to local conditions), multi-level bargaining systems can enhance labour market outcomes, such as labour market inclusiveness, reduced wage inequality or labour market resilience.
While each collective bargaining system is embedded in its national institutional framework and cannot as such be exported to another country, existing practices and recent initiatives in OECD countries, such as the introduction of the Fair Pay agreements (FPAs) in New Zealand, the reform of extension of collective agreements in France or the role of mediation institutions in Sweden can offer some insights and lessons for introducing sectoral bargaining in Chile.
However, since Chile lacks experience with multi-level bargaining, it is essential to gradually introduce sectoral bargaining, building the case for change, and avoiding overcomplicated initial frameworks to gain stakeholder trust and engagement.
Capacity building is also key: both unions and employers must be supported to act as credible and effective sector-wide representatives. This includes training, resources, and institutional support to strengthen negotiation capacities.
Further points of attention include the introduction of well-designed, targeted and temporary incentivisation mechanisms through balanced tax benefits or subsidies for employers who engage in sectoral bargaining and employers buy-in to build political consensus around the benefits of multi-level bargaining, such as fair competition and industrial stability.