Chile supports its workers: We are announcing an increase in the minimum wage and a benefit to offset the rise in food prices

A historic agreement was reached this Monday between the Government and the union federation Central Unitaria de Trabajadores (CUT) regarding a readjustment to the Monthly Minimum Wage (MMW). This will be the highest increase in the last 29 years, taking it to 400,000 Chilean pesos (US$480) per month in August of this year. This comes in addition to a series of concrete and responsible measures that will offset the rise in the cost of the basic food basket and allow the Government to make progress on the labor agenda towards “decent work”.

Labor Minister Jeannette Jara stated, “we’re very happy, because we’ve been able to reach a good agreement in which we have been able to put into effect one of the commitments of our government program, which brings together the wishes and the will of the people to, among other things, improve the wage level of Chilean workers.” She added, “it also takes steps to safeguard employment, especially among micro-, small- and medium-sized enterprises.”

Meanwhile, Treasury Minister Mario Marcel highlighted that “over the last four years, not only was no agreement reached, there were practically no negotiations or consultations with workers’ organizations. It seems that we’re making an important difference in recognizing unions, and recognizing the CUT as the organization that best represents the workers of Chile.”

What are the main measures in support of workers?

▶ Increase in the Monthly Minimum Wage (MMW):

The bill that will be submitted to Congress this week considers the following:

• The Monthly Minimum Wage will be readjusted for workers between 18 and 65 years of age. It is proposed that from May 1 the basic salary will be 380,000 Chilean pesos (US$456), which will increase to 400,000 from August 1.
• A special clause is also included, which states that if cumulative inflation in the 12 months to December 2022 exceeds 7%, the MMW will increase to 410,000 Chilean pesos (US$492) from January 2023.
• The Single Family Subsidy (SUF) and the Family Allowance will also be increased by the same ratio and on the same dates.
• The Chilean State will provide temporary compensation to small- and medium-sized enterprises to support them and make the minimum wage increase possible.
• The historic agreement reached yesterday between the government and the CUT is a step towards achieving a minimum wage of 500,000 Chilean pesos (US$600) by the end of President Gabriel Boric’s term in office.

▶ Protected Basic Food Basket:

To address inflation and safeguard the purchasing power of Chilean families, the bill includes a compensatory contribution that will be calculated monthly and awarded as a family benefit through the Single Family Subsidy (SUF) and the Family Allowance.

It should be noted that the basic food basket is calculated by the Social Development Ministry, and includes 80 products such as rice, bread, flour, oats, minced meat, chicken, etc. Over the past 12 months, the price of the basket has seen a cumulative increase of 13.4% (47,631 to 54,101 Chilean pesos / US$57 to US$65).

This support, called “Canasta Básica Protegida” (Protected Basic Basket), will benefit nearly 3.1 million SUF and Family Allowance beneficiaries. It will be paid between May and December 2022.

How will it be paid?

In the first month (May), it will be equivalent to 6,410 pesos (US$7.69) per dependent. For example, if a household with four beneficiaries currently receives a family benefit worth 62,388 Chilean pesos (US$74.87) per month, they will receive an extra 25,640 Chilean pesos (US$30.77) after readjustment. In total, the family will receive 88,028 Chilean pesos (US$105.64). The Basic Food Basket calculated monthly by the Social Development Ministry will be considered for this purpose.

The agreement also creates an observatory of the value to the public of the Basic Food Basket, which will be implemented by the Consumer Protection Agency (SERNAC). If the observatory detects anomalies in the price of these products, it will inform the National Economic Prosecutor’s Office (FNE).

▶ Work:

The third central component is the promotion of “decent work”, which includes sending a bill that makes the requirements for accessing unemployment insurance of Law No. 19.728 more flexible and increases the amount of the benefit.

Secondly, we’ve created a working group that includes all the stakeholders involved in reducing the working week to 40 hours, in order to consider its design and gradual implementation.

Thirdly, in 2023, we will send a bill to Congress to modify the regulations relating to collective labor law, particularly with regard to the scope and level of collective bargaining.

Furthermore, to move forward in creating spaces free from harassment and gender violence, including in the world of work, we are proposing the ratification of ILO Convention 190 (C190). The convention recognizes the right of everyone to a world of work free from violence and harassment, including gender-based violence and harassment.