Chile: government and CUT union agree historic minimum wage increase

On 26 April, Chile’s government announced it had reached an agreement with the leading trade union confederation the Central Unitaria de Trabajadores (CUT, Workers United Center of Chile), to increase the minimum wage by an historic amount. On 01 May, the minimum wage will rise from 350,000 pesos (€393 euros) to 380,000 pesos (€420) and then on 01 August it will rise to 400,000 pesos (€440), before potentially rising again to reach 410,000 pesos (€470) in early 2023 if inflation in 2022 exceeds 7%. This potential 17 per cent increase is the highest in 30 years and comes at a time when in March left-wing President Gabriel Boric’s acceded to office and has warmed previously frosty relations between the government and the unions. “In the past four years, not only has no agreement been secured, but there has been virtually no negotiation or consultation with workers’ organizations. We however in contrast believed it is necessary to recognize the importance of the trade union movement and the CUT, the most representative workers organization in Chile,” said Economy Minister Mario Marcel. The new president is not expected to stop there, having reiterated his promise to raise the minimum wage to 500,000 pesos (€560) by the end of his term, in 2026. The state will support small and medium-sized businesses with ‘transitional compensation’ to cushion the costs caused by these increases. The government also promises to promote ‘decent work’ by reducing the working week to 40 hours and by strengthening the place for and scope of collective bargaining. The agreement now has to secure national Congress approval in bill form by the end of the week.