Since the beginning of January this year, Chile — where labour laws are the least stringent of any country in Latin America — has been the terrain for a difficult process of labour law reform. It has recently reduced its mandatory working hours from 48 to 45 hours weekly. But trade unions are dealing with their own demons as well. From the south of Chile, a regular correspondent describes workplace changes taking place at a naval industry plant owned by Asenav, the nation’s leading ship-builder.

The shearing machine

We walk along a lengthy iron plank before arriving at the shearing machine, where huge metal pieces for boat fabrication are cut. With practiced ease, Luis grasps the extremity of the plank, and moves it slightly to the left. Tilting his hard-hat to dump its excess dust, the 25-year-old speaks above the clamour: “I have many dreams, but the one that comes to mind first is a better salary!” Then, thumb on the release, he clenches his teeth before applying pressure: “Bang!” The blade of the ageing machine cuts, as always, a piece of the perfect size.

Luis has worked for seven years at Asenav, a naval industry located 800 kilometres south of Santiago, on the outskirts of the quiet town of Valdivia. The company, which has gained world fame since 1973 with its versatile ship-building operations, is one of ten Chilean firms owned by the Kossmanns, an émigré family of German descent. “What makes Asenav a success is our capacity to adjust to the demands of the market,” says company general manager Gonzalo Cruz, leaning forward in his seat at the boardroom table. From luxury yachts to tug boats, fishing vessels to ferries and cruise ships, Asenav competes on a global level.

A market driven workforce

With sixteen million inhabitants spread along thousands of kilometres between the Andes and the Pacific, Chile changed rapidly in the 1980s, becoming a Latin-American champion of World Bank style economic growth. Under the heavy-handed regime of General Augusto Pinochet, a radical economic shift took place, marked by rapid privatization of the entire government. Universities, state-operated companies and the national health system all fell into the hands of powerful industrialists, while foreign financial capital was given unrestricted leeway to create an export-based economy.

Since the decline of the dictatorship, multiple free trade agreements have been signed in the guise of market access for consumers. Bilateral agreements with Canada (July 1997), the United States and China have had a decisive impact on increasing the volume of foreign investments in key sectors of the Chilean economy.

The constant quest for foreign capital, and the transformation of the country’s economic structure to favour massive export of raw materials and manufactured goods, will doubtless be seen as a successful chapter in the growth of the Chilean economy. However, the availability of cheap labour has also been widely credited for the country’s new distinct competitive edge. Today, market driven society leaves little room for human development, and most Chileans have been force fed a double dose of disrespect: deep cuts to social services and serious undermining of their rights as workers.

Pinochet instigated a wave of “flexibility” in the labour market especially for the benefit of giant private consortia, and since the end of the dictatorship, Chile’s subsequent democratic governments have not stepped in to rectify the situation. This continued injustice has allowed an ongoing neglect of social groups, and caused inceasing discrimination and uncertainty in the lives of workers. Even if discrimination in Chile is no longer manifested through assassinations of trade unionists, the dictatorshipâe(TM)s constitutional and labour-law inheritance has not evolved in substance, weakening the workers’ attempts to organize.

Today in Valdivia, Asenav’s two factories operate to full capacity with 500 semi-skilled and auxiliary workers. By the year’s end, the company must deliver a tug boat for drilling platforms to Maersk Canada, a subsidiary of Danish giant A.P. Moller (Maersk Group).

This ship building project is being carried out in parallel with the construction of another massive vessel for use in the icy waters off Chile’s deep South. In the books, Asenav’s financial standing is good. It holds its own with the heavyweights of shipbuilding, competing with Norwegian firms at the top of the industry. However, Asenav’s envious situation is not reflected in the workers’ daily grind.

Small disagreements or open conflict?

After listening patiently to GM Cruz flaunt the Company’s merits, Juan Carlos Milanca, Asenav’s trade union president, grows visibly impatient. The subject of work is his specialty. After a casual swivel in his armchair, Milanca sits straight up and interjects plainly: “There is no stability for workers here.” Cruz, rolling up his white cuffs, speaks another language: “We’ve had differences,” he says, “but they were not conflicts, because we always worked out an agreement.” These two protagonists have clashed over the working conditions of Asenav’s unionized employees for months. At the centre of the dispute lies a work week reform that came into effect on January first, imposed by the Ricardo Lagos government.

For the last 20 years, the company has operated on a 48 hour work schedule, which, in the case of unionized workers, included three paid hours for lunch. The Labour Ministryâe(TM)s reform forces the reduction of 48 working hours to 45, which doesnâe(TM)t change anything for contracted workers, who remain with a 48 hour schedule, and 45 hours of paid work. Unionized workers, however, preserve their previous three hours of paid lunch in their schedules, reducing their working hours to 42 a week.

As the company had no intention of accepting a reduction of productive hours, it adopted a confrontational attitude towards the union in July 2004. “Because of demands for boat construction, it was necessary to incorporate a great quantity of new workers in the factory who, within the limits of the law, incorporated themselves into a 45-hour work week, excluding breaks,” explains Cruz. The massive recruitment of newer contract employees inflated their numbers to 340; more than 60 per cent of Asenav’s workforce.

Fidel, an accomplished electrician, works two steps away from Luis; near the shearing machine and outside his field of specialization, polishing metal surfaces all day long. New to the factory floor, he must deal with a limited duration contract. It forces him to work overtime to compensate for the difference between his monthly salary of 171,000 pesos ($470 CDN) and Luis’ 300,000 pesos ($650 CDN). With the introduction of the reform, as well as the salary gap, Luis reaches his wages in 42 hours, and Fidel must work almost twice as many hours to achieve the same salary.

Cruz avoids addressing this imbalance, asserting that “the conflict is obvious. We remained with two working days inside the factory — one 42 hours, and the other of 45.” The disagreement lies with the source of the conflict: what’s the problem? Stubborn unionists or hundreds of contract workers ready to work for less remuneration?

Milanca points back to the surge of contract workers. Furthermore, he says, “there is still bad faith on the part of the company because it continues to threaten [the union] with the reduction of collective gains, wage freezes, and so on, doing so until such time as the 152 trade unionists who work 42 hour weeks agree to sell their three hours for meals, and incorporate themselves into the non-unionized schedule.”

Repoliticizing a pluralist struggle

Another impediment to worker advancement is that Chilean law does not guarantee job security to unionized employees. Fidel, for example, would likely be fired if he tried to obtain the same working conditions as his colleague. In recent years, the only new additions to the Asenav union were older workers facing retirement with little to lose by joining, or highly specialized workers that the plant could not function without. Powerless, Milanca sadly observes the shrinking of his ageing union, the two factories full of young contracted workers, and the deteriorating relationship with employers dug deep in a discourse of economic constraints.

The lack of legal guarantees for organized workers — or for those who wish to be — plus the added burdens on unions due to free trade agreements, justifies the combative stance of Chile’s trade-union confederations. The CONSTRAMET (confederation of metal-workers) has subsequently implicated itself in Asenav conflict, as well as participating in demonstrations against the APEC summit last November in Santiago.

As the Asenav case illustrates, the situation requires a reactivation of struggles which must not be limited to trade unions, nor to improvements for unionized workers. Luis and Fidel must take a common stand against a model that increasingly creates a factory running at two speeds. Only a concerted mobilization of unionized and contract workers can bring workers out of a dead end which condemns them all to stagnating salaries in the shadow of increasing shareholder profits.