REPRESENTATION (article 24) - CHILE - C001, C002, C024, C029, C030, C035, C037, C038, C111 - 1986

1. The National Trade Union Co-ordinating Council (CNS)

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Report of the Committee set up to examine the representation submitted by the National Trade Union Co-ordinating Council (CNS) of Chile under article 24 of the ILO Constitution, alleging non-observance by Chile of international labour Conventions Nos. 1, 2, 24, 29, 30, 35, 37, 38 and 111

Report of the Committee set up to examine the representation submitted by the National Trade Union Co-ordinating Council (CNS) of Chile under article 24 of the ILO Constitution, alleging non-observance by Chile of international labour Conventions Nos. 1, 2, 24, 29, 30, 35, 37, 38 and 111

Decision

The Governing Body adopted the report of the tripartite committee. Procedure closed.

Complaint Procedure

I. Introduction
1. By a letter of 23 May 1985, the National Trade Union Co-ordinating Council of Chile, referring to article 24 of the Constitution of the International Labour Organisation, made a representation alleging non-observance by the Government of Chile of the Hours of Work (Industry) Convention, 1919 (No. 1), the Unemployment Convention, 1919 (No. 2), the Sickness Insurance (Industry) Convention, 1927 (No. 24), the Forced Labour Convention, 1930 (No. 29), the Hours of Work (Commerce and Offices) Convention, 1930 (No. 30), the Old Age Insurance (Industry, etc.) Convention, 1933 (No. 35), the Invalidity Insurance (Industry, etc.) Convention, 1933 (No. 37), the Invalidity Insurance (Agriculture) Convention, 1933 (No. 38), and the Discrimination (Employment and Occupation) Convention, 1958 (No. 111). (Endnote 1)
2. The Conventions which are alleged not to have been observed have been ratified by Chile and are in force for that country. (Endnote 2)
3. The provisions of the Constitution of the International Labour Organisation concerning the submission of representations are as follows:
Article 24
In the event of any representation being made to the International Labour Office by an industrial association of employers or of workers that any of the Members has failed to secure in any respect the effective observance within its jurisdiction of any Convention to which it is a party, the Governing Body may communicate this representation to the government against which it is made, and may invite that government to make such statement on the subject as it may think fit.
Article 25
If no statement is received within a reasonable time from the government in question, or if the statement when received is not deemed to be satisfactory by the Governing Body, the latter shall have the right to publish the representation and the statement, if any, made in reply to it.
4. The procedure to be followed in the event of a representation is governed by the revised Standing Orders adopted by the Governing Body at its 212th Session in March 1980. (Endnote 3)
5. In accordance with articles 1 and 2, paragraph 1, of the Standing Orders, the Director-General acknowledged receipt of the representation, informed the Government of Chile and brought the representation before the Officers of the Governing Body.
6. At its 230th Session, the Governing Body, on the recommendation of its officers, decided that the representation was receivable and set up a Committee to examine it, consisting of Mr. H. Heldal (Government member, Norway, Chairman), Mr. José María Lacasa Aso (Employer member, Spain) and Mr. John Svenningsen (Worker member, Denmark). (Endnote 4)
7. The Committee invited the Government of Chile to make a statement on the representation before 30 September 1985.
8. It also invited the National Trade Union Co-ordinating Council of Chile to communicate any additional information before 15 August 1985.
9. On 18 October 1985 a statement was received from the Government in which it replied to the representation and expressed its desire of supplying further information through a representative who would appear in person.
10. The National Trade Union Co-ordinating Council of Chile supplied no supplementary information.
11. The Committee met for the first time in November 1985. It met again in February 1986 to prepare for the hearing of the Government representative, and on 7 March 1986 for the hearing itself. Finally, the Committee met in November 1986 for the discussion and adoption of the present report.
12. On 7 March 1986 the Committee heard the representative of the Government of Chile, Mr. Guillermo Arthur Errázuriz, Under-Secretary for Labour. Following his statement, the representative of the Government replied to questions by the members of the Committee, (Endnote 5) subject to the dispatch of supplementary information before 15 April 1986, a date which was fixed by the Committee. The supplementary information communicated by the Government was received on 30 April. Further statistics concerning the PEM and POJH were communicated by the Government on 6 October 1986. The Committee wished to stress in this respect that it has received from the Government information on almost all the questions raised.
II. Preliminary questions relating to procedure
1. The Government's observations
13. The Government requests that the representation of the CNS be declared irreceivable for the following reasons:
(a) Lack of legal capacity of the organisation making the representation
14. The CNS lacks the legal capacity to make the representation, since it is merely a de facto body, notwithstanding the existence of legislation permitting full and free exercise of the right to organise (articles 19 and 20 of the Political Constitution of the Republic of Chile and sections 1 and 13(2) of Legislative Decree No. 2756 of 1979). Article 2, paragraph 2, of the Standing Orders concerning the Procedure for the Examination of Representations under Articles 24 and 25 of the Constitution of the ILO states that their receivability is subject to the condition that they "emanate from an industrial association of employers or workers". Moreover, according to Convention No. 87 and the jurisprudence of the Committee on Freedom of Association, workers and employers must respect the law of the land in exercising their right to set up their respective organisations.
15. The simple and limited formalities laid down by Chilean legislation could be fully complied with by the CNS if the latter so wished. In failing to do so it is departing from the law and hence from the principles of freedom of association, and thus does not constitute an industrial association of workers.
(b) Questions which have already been examined and resolved
16. On the occasion of the representation made in 1983, matters were dealt with which have once again been raised by the same organisation: the present representation stresses the alleged non-observance by Chile of Conventions Nos. 1 and 30 concerning hours of work; moreover, the matters the subject of the representation are raised in connection with the same Articles of these Conventions and their analysis adduces no new facts to warrant an examination of the representation as regards these points. In respect of Conventions Nos. 2, 29 and 111, the same arguments are repeated regarding the situation of the persons registered with the PEM and POJH programmes, all of which were answered by Chile at the time.
17. In the light of the foregoing, the Government of Chile, concerned that the precise purpose of the supervisory procedures established by the ILO should be to ensure the proper observance of ratified Conventions by member States and that they should not be used to whip up interminable debates over matters that have already been dealt with, requests that the Committee decline to examine those aspects of the representation that have already been discussed and settled. In doing so, the Government wishes to recall that Act No. 18372 of December 1984 introduced major amendments in the provisions relating to hours of work, taking account of the observations of the Committee of Experts, the Conference Committee and the Tripartite Committee set up by the Governing Body to examine the earlier representation made by the CNS. It is also recalled that Act No. 18391 of the same date set up workers' and employers' committees which are to be consulted as regards the operation of the free placement offices; this has ensured full observance of Convention No. 2.
18. The enactment of two legal instruments with a view to bringing the national legislation into conformity with the Conventions ratified by Chile is an eloquent demonstration of Chile's respect for the international obligations which it has undertaken. This attitude contrasts with the constant attempts to harass the Government by means of unfounded allegations, which in the case under examination, moreover, refer to matters that have already been settled.
(c) Dual supervisory procedure
19. The Government is concerned at the existence of parallel and simultaneous supervisory procedures for dealing with the same subjects. In fact, both the Committee of Experts and the Conference Committee on the Application of Standards examined at length the matters which are the subject of this representation on the occasion of the 71st Session of the International Labour Conference. Both committees explicitly recognised the considerable progress made in the legislation of Chile and at the same time observed that the Government was examining its legislation in order to bring it fully into conformity with the international standards which it had ratified. It would therefore seem untimely, to say the least, for a further representation to be made on the same subjects, particularly since those making the representation have made no new contribution; on the contrary, the only demonstrable progress has been made by the Government of Chile, progress that has been duly recorded by the Committee of Experts and the Conference Committee on the Application of Standards.
20. Furthermore, the risk of different ILO bodies reaching contradictory conclusions obliges the Government of Chile to express its concern at this dual supervisory procedure.
21. Finally, the Government observes that, in its opinion, the purpose of the procedure laid down in article 24 of the ILO Constitution is to ensure the participation of the non-governmental constituents in the supervision of compliance with international standards. Since this supervision has been exercised through the normal channels, the presentation of representations under article 24 of the ILO Constitution is not justified.
2. The Committee's observations
22. In accordance with the Standing Orders concerning the Procedure for the Examination of Representations, it is for the Governing Body to decide as to the receivability of a representation (article 2). At its 23Oth (June 1985) Session, the Governing Body decided to declare the present representation receivable; it is not for the committee appointed to examine a representation to re-examine its receivability. A representative of the Government of Chile took part in the discussion on this item of the agenda and made basically the same objections as those to which the Government now refers.
23. The Committee, for its part, nevertheless wishes to make the following comments in connection with the arguments put forward by the Government.
24. It should be recalled that the representation initiated in May 1983 was also presented by the CNS and that, as in the present case, the fact that it did not possess legal personality did not constitute an obstacle to the receivability of its representation. Moreover, the Committee on Freedom of Association has allowed complaints presented by the CNS (see 241st Report of the Committee on Freedom of Association, document GB.231/10/13, paras. 156-215).
25. As regards the possible identical nature of certain matters covered in the two representations, it will be for the present Committee to refer to the conclusions of its predecessor in those cases where no new facts have been submitted for consideration. This aspect will be dealt with in the examination of the substance of the representation.
26. As regards the risk that a dual supervisory procedure might result in the adoption of contradictory conclusions - a situation which rightly gives the Government of Chile cause for concern - it should be pointed out that the bodies entrusted with the regular supervision of the application of ratified Conventions - namely the Committee of Experts and the Conference Committee on the Application of Standards - suspend the examination of matters which are the subject of special proceedings under article 24 or article 26 of the Constitution until these special proceedings have yielded definitive conclusions. In practice, this procedure has enabled all possibility of contradictory decisions to be avoided.
III. Examination of the representation
27. The questions raised in the representation concerning the Conventions listed hereafter will be dealt with in turn: hours of work (Conventions Nos. 1 and 30); employment (Convention No. 2); forced labour (Convention No. 29); social security (Conventions Nos. 24, 35, 37 and 38); equality of opportunity and treatment (Convention No. 111).
28. The representation refers to an annual report concerning the situation with respect to a number of labour and trade union rights in Chile, drawn up by the CNS. At the same time copies were enclosed of the main report of the First National Conference of Working Women (Santiago, 17 to 19 May 1985); the agreement of the National Workers' Commando with Chile and its People (undated); the public statement made by the National Workers' Commando, dated 13 May 1985; the public statement made by the CNS in May 1985; and the public statement of the CNS, dated 13 May 1985. All these documents were communicated to the Government for consideration and eventual observations.
Section 1
Questions concerning hours of work
Hours of Work (Industry) Convention, 1919 (No. 1); Hours of Work (Commerce and Offices) Convention, 1930 (No. 30)
1. Allegations made by the CNS
29. The amendment, by Act No. 18372 of 1984, of Legislative Decree No. 2200 of 1978, has not brought the national laws and regulations fully into line with the above Conventions in the following respects:
(a) As regards the distribution of hours of work in industrial and commercial enterprises
30. New section 39 provides that: "The maximum weekly hours established in the first subsection of section 34 (Endnote 6) may not be distributed over more than six or fewer than five days. Normal daily hours of work may in no case exceed ten, without prejudice as to what is provided in the last subsection of section 49 (Endnote 7)"
31. Thus, in limiting the duration of the working week to five days and that of the working day to ten hours, maintaining the limit of 48 hours a week, this section would be in harmony with Article 4 of Convention No. 30. Nevertheless there remains the question of the infringement of Article 2(b) of Convention No. 1, which fixes nine hours as the maximum limit for normal daily hours of work in public or private industrial undertakings in cases where the 48-hour week is divided unequally.
(b) As regards overtime worked by persons employed in commerce
32. Section 36 of Legislative Decree No. 2200, as amended by Act No. 18372, provides that: "The employer may extend the normal hours of work of persons employed in commerce by up to two hours per day during periods immediately preceding Christmas, national festivals and other public holidays; in this case any hours in excess of the maximum indicated in the first subsection of section 34, or in excess of the agreed working day if this is shorter, shall be paid as overtime. When the employer avails himself of the power provided for in the preceding subsection, no agreement on overtime shall be made."
33. In the opinion of the CNS, this extension of the daily hours of work of persons employed in commerce, authorised by the law in force, constitutes an infringement of the following Articles of Convention No. 30: (Endnote 8) (i) it exceeds the daily and weekly hours established in Articles 3 and 4 taken together; (ii) it does not correspond to the circumstances and conditions prescribed for "making up the hours of work which have been lost" in Article 5; (iii) it does not correspond to the exceptional cases covered by Article 6 concerning the calculation of average hours of work over a period longer than a week; (iv) it does not comply with what is stipulated in Articles 7 and 8, according to which regulations must be made by the public authority, after consultation with the workers' and employers' organisations, determining the number of additional hours of work which may be allowed in the day and in the year.
(c) As regards overtime in industrial enterprises (manufacturing construction, mines and quarries, transport, etc.)
34. Under section 42 of Legislative Decree No. 2200, agreement may be reached on the performance of up to two hours' overtime a day on any task which, by its nature, is not prejudicial to the worker's health. This provision, in leaving it to the parties to agree on overtime, allows for abuses, leading to a permanent extension of the normal daily hours of work.
35. This constitutes an infringement of Article 6 of Convention No. 1, which specifies that temporary exceptions to normal daily hours of work must be determined in regulations made by the public authority in each case after consultation with the organisations of employers and workers concerned. These exceptions are permitted only to enable enterprises to deal with exceptional cases of pressure of work.
2. The Government's observations
36. In general, the Government refers to its statements in reply to the representation made by the CNS in 1983 (replies of 20 October 1983 and 30 March 1984) and to the statements made before the Committee which examined that representation. It also reiterates its statements to the Committee of Experts on the Application of Conventions and Recommendations and the Conference Committee on the Application of Standards on the occasion of the examination of Conventions No. 1 and 30. In particular, the Government sets forth the following considerations.
(a) Distribution of hours of work in industrial and commercial enterprises
37. On 17 December 1984 Act No. 18372 was promulgated for the purpose of bringing the laws and regulations into line with the international Conventions ratified by Chile, and with a view to providing fair guarantees for the fulfilment of their objectives.
38. From a mere reading of the provision stipulated in the new section 39 of Legislative Decree No. 2200, it may be concluded that the working day is eight hours, distributed over six days. Only if the parties so agree may working hours be distributed over five days, in which case the daily working time is nine hours 36 minutes. The worker is entitled to an extra day's rest in compensation for this arrangement.
39. In effect, if weekly hours of work are distributed as indicated, this results in a rest period longer than that provided for in section 46 of Legislative Decree No. 2200, from which the worker liberally benefits; it is even better than that resulting from the application of the Weekly Rest (Industry) Convention, 1921 (No. 14), which Chile has also ratified.
40. The above-mentioned reform, the special purpose of which was to secure conformity with the provisions of Conventions Nos. 1 and 30, was later contested by the trade union organisations which preferred longer working days and longer weekly rest.
41. In this connection the CNS argues that the lengthening of the working day of persons employed in commerce, provided for by section 36 of Legislative Decree No. 2200, as amended by Act No. 18372, constitutes a violation of Convention No. 30 (Articles 3, 4, 5, 6, 7 and 8). In this respect the Government points out that, since the working day is eight hours, the extension referred to in section 36 above does not exceed the maximum limit of ten hours' work provided for by Convention No. 30.
42. The Government considers it necessary to make it clear that the daily and weekly limits on hours of work provided for in Articles 3 and 4 of the Convention refer to normal hours of work, whereas the extension provided for in section 36 of Legislative Decree No. 2200 was regarded by the legislator as involving overtime, so that the hours worked in virtue of that section do not infringe the provisions of the Convention, particularly when it is considered that, once the working hours have been extended as described in that section, it is not permissible to work longer under any circumstances.
43. As regards the alleged violation of Article 5 of the Convention, it should be borne in mind that the situation regulated by this standard is completely different from that envisaged by section 36 of Legislative Decree No. 2200, since the former refers to the manner of making up hours of work which have been lost in the event of a general interruption of work due to local holidays, accidents or force majeure, whereas the latter regulates an extension of the normal working hours of persons employed in commerce during periods immediately preceding Christmas, national festivals and other public holidays. There is therefore no possibility of contradiction between the two standards.
44. As for the alleged violation of Article 6 of the instrument, since this standard refers to the procedure to be followed in cases where the provisions of Articles 3 and 4 of the Convention (provisions concerning normal weekly and daily hours of work) are inapplicable, and since section 36 of Legislative Decree No. 2200 regulates the number of hours during which persons employed in commerce may work at certain times of the year, it is not clear how Article 6 can be regarded as violated by the application of the provisions of section 36 of Legislative Decree No. 2200.
45. As concerns the alleged violation of Articles 7 and 8 of the Convention, which require the public authority to make regulations, following consultation with employers' and workers' organisations, to determine the number of additional hours of work which may be allowed in the day and in the year, the Government states that such regulations would be inappropriate in the present case since the legislator himself has specifically determined the expediency of extending the working day, the period by which it is to be extended and the manner of implementation. In any case, the agreement of the worker is always necessary for the fixing of an extended working day.
46. The Government also feels it necessary to point out that, by virtue of the second subsection of section 36, added by section 1, subsection 16, of Act No. 18372, when the employer avails himself of the power to extend the working day by two hours, no agreement on overtime work in excess of this extension may be made.
(b) Overtime in industrial enterprises (manufacturing, construction, mines and quarries, transport, etc.)
47. Under section 42 of Legislative Decree No. 2200 agreement may only be reached on the performance of up to two hours' overtime a day on any task which, by its nature, is not prejudicial to the worker's health. This overtime must in any case be remunerated with a supplement of 50 per cent, as stipulated in section 43 of the same Legislative Decree; this does not violate the principles of the Convention.
48. On the contrary, this provision is more appropriate and more flexible than that laid down in the Convention, since in practice undertakings only work overtime in exceptional cases of pressure of work and not consistently or habitually; moreover, overtime hours are freely agreed on between the employer and worker, in other words they are the result of a consensus between the parties concerned.
49. For further clarification, the Government recalls that, in conformity with the second subsection of section 42 of Legislative Decree No. 2200, the appropriate labour inspection service, acting on its own initiative or at the request of any party concerned, is to prohibit the performance of overtime in the case of jobs prejudicial to the worker's health, which implies closer supervision of this type of work.
3. The Committee's conclusions
50. The Committee recalls that the application of Conventions Nos. 1 and 30 was the subject of a representation made by the CNS in 1983; the report of the Committee appointed by the Governing Body was adopted by the latter at its 228th Session (November 1984). The provisions referred to by the CNS have already been either called in question (sections 36 and 39 of Legislative Decree No. 2200) or mentioned by the previous Committee (section 42 of the same Legislative Decree).
51. As regards sections 36 and 39, the Committee recalls that the provisions as amended in 1984 were communicated to the previous Committee, at the draft stage, and the said Committee concluded that:
(a) the proposed amendment to section 36 would not ensure compliance with Article 7, paragraph 3, and Article 8 of Convention No. 30 (paragraph 26 of the Committee's report; GB. 228/8/3);
(b) the proposed amendment to section 39 would not ensure compliance with Article 2(b) of Convention No. 1 (paragraph 22 of the Committee's report).
52. The Committee noted that at its meeting in March 1985, the Committee of Experts formulated observations along the same lines with regard to the amendments which had been adopted, unchanged, in 1984.
53. The Committee wishes to remark that, although the CNS did not expressly call into question section 42 of Legislative Decree No. 2200 in its first representation, the previous Committee referred to it (see note 2 in paragraph 26 of its report), recalling the observations made in 1981 by the Committee of Experts, and repeated by the latter in 1985, to the effect that the provision in question does not comply with Articles 7 and 8 of Convention No. 30. As regards the reference made again in the present representation to Articles 3, 4, 5 and 6 of Convention No. 30 (paragraph 33 above), the previous committee observed (paragraph 23 of its report) that the extension of hours of work permitted by section 36 of Legislative Decree No. 2200 as amended does not fall within the exceptions permitted by the above provisions of the Convention.
54. The Committee therefore considers that the questions raised by the CNS, as well as the impugned legislative provisions, have already been examined in detail both by the previous committee and by the Committee of Experts. The additional information supplied by the Government does not change the situation in any way. Therefore, the Committee shares the conclusions and observations of these two bodies.
Section 2
Questions concerning employment
Unemployment Convention, 1919 (No. 2)
1. Allegations made by the CNS
55. Non-compliance with Convention No. 2 is alleged in connection with the Minimum Employment Programme (PEM) and the Employment Programme for Heads of Households (POJH), but no other particulars are given (see page 33 of the Annual Report of the CNS).
2. The Government's observations
See under Convention No. 29 (paragraphs 61 to 75 below).
3. The Committee's conclusions
56. The Committee recalls that non-compliance with Article 2 of Convention No. 2 (appointment of committees which must include representatives of employers and of workers to advise on all matters concerning the operation of employment agencies) was the subject of the representation made in 1983 and concluded in November 1984.
57. The Committee notes that this question, raised by the Committee of Experts over many years, has already been resolved. At its meeting in March 1985, the Committee of Experts noted with satisfaction the adoption of Act No. 18391 dated 8 January 1985, whose sole section provides (in subsection 17) that in order to supervise the running of municipal placement offices, the National Training and Employment Service must take into account information provided by committees made up of representatives of workers and employers.
58. The Committee has noted with interest the information supplied by the representative of the Government in reply to a question put during the hearing of 7 March 1986, according to which new draft regulations have been prepared under Legislative Decree No. 1446 of 1976, which will determine the organisation and operation of regional committees consisting of workers' and employers' representatives. It has also noted with interest that, on 24 October 1985, the Ministry of Labour sent instructions to all regional governors of the country informing them of the establishment of these committees and arranging for them to operate informally until the new regulations enter into force. The Committee hopes that the new regulations will shortly be adopted and that the Government will continue to supply information on national practice in this matter within the framework of the regular supervision of the application of Convention No. 2.
59. The Committee notes that in the present representation, the CNS refers to the PEM and POJH employment programmes without giving any other particulars. The report communicated by the CNS (pages 27-33) takes up and elaborates on various aspects dealt with by the previous committee and by the Committee of Experts under Convention No. 122. The aspects considered are not relevant to Convention No. 2 except in so far as Article 1 of the latter Convention provides that information concerning unemployment and measures taken to combat unemployment is to be communicated to the ILO. As regards the substance of the matter, the relevant aspects were dealt with under Convention No. 122 in the examination of the representation presented in 1983. The Committee therefore considers that, in the absence of other elements of information, it is inappropriate to reopen the examination of this question in the context of the present representation.
Section 3
Questions concerning forced or compulsory labour
Forced Labour Convention, 1930 (No. 29)
1. Allegations made by the CNS
60. According to the CNS, the Government of Chile has not adopted any of the recommendations made by the previous Governing Body Committee in respect of the adoption of adequate measures to improve the conditions of work and especially remuneration under official employment programmes and to place persons taking part in these programmes under the protection of the labour and social security legislation so as to avoid situations of pressure to accept employment, which might give rise to doubts concerning compliance with Convention No. 29 (page 32 of the Annual Report of the CNS).
2. The Government's observations
61. The CNS once again calls on the Government of Chile to end the PEM and POJH programmes, which it considers are an affront to human rights and to the personal dignity of the workers; it does not put forward any new arguments, but repeats the observations presented to the 69th and 7Oth Sessions of the International Labour Conference in 1983 and 1984 respectively, to which the Government of Chile furnished corresponding replies. The Government therefore refers to its earlier observations, namely:
(a) Subsidiary and temporary nature of the PEM and POJH programmes
62. These programmes are of a subsidiary nature; the State uses them as a form of intervention when it sees no better alternatives for the solution or the alleviation of the problem of joblessness. The Government is the first to regret the existence of the phenomenon of unemployment in the world, with all its social and moral consequences, but it is not blind to the fact that the seriousness of the problem demands measures which, even though they might be considered insufficient, are genuinely helpful in the field under consideration.
63. The economic position of Latin America in general and Chile in particular has given rise to a situation which has already lasted for a number of years and which must be faced up to squarely. The price of Chile's main export product, copper, has been very low for many years. To this must be added the very costly servicing of a large external debt; creditors have been somewhat insensitive to the repercussions which its cost generates. Furthermore, the serious international recession, which has affected the entire planet, has reduced the country's export potential and brought about a lowering of production and employment generation.
64. The Minimum Employment Programme (PEM) is open on request to the members of any family who fulfil the minimum requirements as regards age and employment situation. A complementary programme has also been developed, the Employment Programme for Heads of Households (POJH), which offers a higher allowance (5,OOO pesos per month and up to 3O,OOO pesos for highly skilled workers) to assist in better alleviating the situation in the household.
65. These programmes make no claim to be sources of employment properly speaking, but seek to use the participants' time and work in order to train them; moreover, the programmes are an effective way of stimulating the search for an independent occupation and preventing the repeated payment of allowances to participants. In other words, the money is paid as a benefit and not as adequate remuneration for work governed by a contract of employment.
66. The statistics show that in August 1983 62.8 per cent of persons registered with the PEM remained within the programme for less than 12 months, which underlines the temporary nature of this programme; in June 1982, 55.4 per cent had been in the PEM for less than 12 months. (Endnote 9)
67. In the case of the POJH (Metropolitan Area) in August 1984 48.2 per cent of persons registered with the programme had been there for less than 12 months. (Endnote 10)
(b) Many of the participants do not form part of the labour force
68. This is apparent from the Survey on the Minimum Employment Programme, which appeared in the Revista de Economía, No. 19, published by the Faculty of Economic and Administrative Sciences of the University of Chile in December 1983, mentioned in the reply to the earlier representation on this subject. The study points out that the percentage of persons registered with the PEM who did not belong to the labour force amounted to 38.9 in June 1982 and 39.9 in August 1983. This high percentage indicates the existence of certain administrative shortcomings which are now being remedied.
69. An evaluation of the POJH made by the Administration of the Metropolitan Area reveals that in August 1984 13.4 per cent of persons registered with the programme were not part of the labour force; these were persons who took advantage of the liberality with which the allowances were granted.
(c) The PEM and POJH are programmes which seek to absorb unemployment
70. Statistical studies show that in July 1982 51.3 per cent of PEM participants were unemployed before they entered the programme. This percentage rose to 60 in August 1983. In August 1984 86.6 per cent of POJH participants were unemployed before joining the programme.
(d) Work schedule
71. As regards the fulfilment of a work schedule by persons registered with the PEM, it is pointed out that the work required is minimal and its sole purpose is to avoid applications for this benefit from those who already have work. This shows that it is in no case possible to describe the programme as one of "super-exploitation of manpower". It also indicates the subsidiary nature of the programme and the fact that payment does not constitute a wage.
72. Although it is true that something is required in exchange for the benefit, the higher cost to the State of paying a minimum wage of 8,OOO pesos a month to all participants for the first quarter of 1985 alone would amount to 4,337 million pesos (some 17,347 million pesos a year, over 2 per cent of the national budget), and would raise the present cost of the programmes by 70 per cent or, to put it differently, would cover the costs of only 20 per cent of present participants.
73. The Government is devoting its full attention to studying solutions to the problem of unemployment. It has set up the National Executive Secretariat for Employment, whose main objective, in accordance with its regulations, is to promote full, productive and freely chosen employment. It must determine policies to this end in consultation with employers' and workers' organisations (Convention No. 122). Through this Secretariat, in association with a number of other projects which are under study or development, a pilot training project for very small undertakings is being launched. As a result of this project, in which the National Training and Employment Service is responsible for the administration and financing of the training process, it is hoped that beneficiaries of the POJH programme will in an initial stage be enabled to become small entrepreneurs in activities to be determined by a market study which is part of the project. The project consists of the market study, the training of POJH participants, financial assistance in the setting up of each very small undertaking, and technical assistance in the development and subsequent stages.
74. The Government of Chile is convinced that these programmes will have to be maintained for as long as the conditions which made them necessary remain substantially unchanged. However, it has been claimed that these programmes are Chile's only means of combating unemployment; this is a malicious falsehood. In effect, it has been possible to demonstrate to various supervisory bodies the way in which fiscal, monetary, credit, customs, tax, public investment and exchange policies have been wielded to achieve an improvement in levels of employment.
75. It would take too long to relate in detail all of the measures being taken by the Government to tackle this problem, which, as is well known, afflicts the whole world, not only Chile.
3. Additional questions put by the Committee
76. During the hearing of the representative of the Government on 7 March 1986 the Committee put a number of additional questions related to the matters raised by the CNS, to which the Government replied as follows in its communication of 30 April 1986.
(a) Definition of the "labour force" and ways in which it may differ from international definitions
77. The Government states that the National Statistical Institute (INE), the official technical body responsible for collecting and processing the national statistics, defines the "labour force" as consisting of persons aged 12 years and over who are employed or unemployed. (a) The employed are those who during the reference week of a survey: (a)(1) have worked for remuneration (salary, wages, daily pay, commission, payment in kind, etc.) for one hour or more; or as employers or own-account workers (farmers, shopkeepers, independent workers and other professional workers) for profit or gain; or as unpaid family workers normally working 15 hours or more a week. (a)(2) have an employment (or a business) but not having worked at all during the reference week owing to temporary absence from employment on holiday, as a result of sickness of short duration, on leave or for other reasons. (b) The unemployed are those who were not employed during the reference week because: (b)(1) they were out of a job ("cesantes"), namely they wished to work and had actively sought to obtain work during the two months preceding the date of the interview and had previously been in regular employment (with work experience); (b)(2) they were seeking work for the first time: this category comprises all persons who wished to work and made definite efforts to obtain work during the two months preceding the date of the survey, but who had no work experience, in other words who had never before been in regular employment.
78. The Government considers that this definition of the "labour force" (currently active population) used by the INE corresponds strictly to the definitions given both by the Eighth International Conference of Labour Statisticians in 1954 and by the Thirteenth Confernce, held from 18-29 October 1982. In particular, and for purposes of including unpaid family workers in the labour force, a lower limit is set of 15 hours of work in the reference week.
(b) Possible loss of unemployment benefit in the event of refusal to participate in the PEM or the POJH
79. The Government states that unemployment benefit is a social insurance benefit payable to those who have paid contributions to the various social insurance institutions and who lose their jobs, provided that they fulfil the requirements laid down by law. The benefit consists of a sum of money paid to the unemployed worker each month, without the obligation for him to perform any service in exchange or to return the sums he has received during periods of unemployment. During periods when the worker is in receipt of unemployment benefit he retains the rights to social insurance benefits in respect of health, family allowances and pensions for himself, his spouse and his dependants. The unemployment benefit is a fixed, degressive benefit, which is subject to the previous payment of contributions, whether continuous or with interruptions, during the last two years. It ensures an income for a period of one year and may be interrupted, so that if the worker finds casual work he may again apply for benefit later. For the first 90 days of unemployment the benefit is 6,000 pesos a month; from the 91st to the 180th day, 4,000 pesos; and from the 181st to the 360th day, 3,000 pesos. Benefits granted under the PEM and POJH programmes, on the other hand, are paid to persons who can prove that they are unemployed. They are not required to have been affiliated with social insurance institutions, but merely to be without work. Persons participating in the PEM and the POJH, which are temporary social programmes, cannot receive unemployment benefit, which is a different form of benefit. Unemployed workers who do not wish to join the PEM and POJH programmes are entitled to unemployment benefit.
(c) Statistics of persons registered with the PEM and the POJH, and duration of registration in these programmes, since August 1984
80. In reply to this request for information the Government remarks that since 1985 the number of persons employed has risen by 269,400; this has been obtained through the creation of 371,000 productive jobs and a drop of about 101,600 in the numbers employed under social programmes (PEM and POJH). Trends in employment and unemployment indicators during 1985 show that the drop in the unemployment rate was achieved simultaneously with a drop in employment in social programmes, which indicates that many persons registered in the latter have transferred to productive employment. This may be deduced when the unemployment rate (including PEM and POJH) is compared with the heading "social programmes for the labour force"; both experienced a drop during 1985, of 5 per cent and 2.9 per cent respectively, from which it may be concluded that about 60 per cent of the 5 per cent drop in the unemployment rate (including PEM and POJH) results from absorption into productive employment from the social programmes. The attached statistical table (Endnote 11) showing the labour force, unemployment and employment in the PEM and POJH programmes, records the persons registered with these programmes from January 1984 to December 1985. In January 1984 the number of PEM participants reached 250,600, whereas in December 1985 there were only 105,600 of them. As for POJH participants, there were 201,600 of them in January 1984, and by December 1985 their numbers had dropped to 171,400 (Endnote 12). As for the time spent by participants in these programmes, in August 1983, 62.8 per cent of PEM participants had been in the programme for less than 12 months, and in August 1984, 48.2 per cent of POJH participants had been in the programme for less than 12 months. (Endnote 13)
81. The Government repeats that the PEM and the POJH are of a subsidiary and temporary nature and are not sources of employment properly speaking; on the one hand the aim is to train participants by requiring them to devote some of their time to working in the programme, and on the other, this is an effective incentive to the search for an independent occupation and avoids the repeated payment of benefits to the same participant. In other words, what is paid is an allowance and not adequate remuneration for work governed by an employment contract.
(d) Extent to which authorised trade unions look after the interests of persons employed in PEM and POJH programmes
82. The Government states that the conditions of the persons benefiting from the PEM and POJH social programmes are the constant concern of the Chilean trade union organisations. Requests have been made to the authorities for an increase in the benefits and the granting of food aid to participants, and it has been recommended that the programmes be continued.
(e) Possibility for persons employed in the PEM and POJH programmes to set up their own organisations to act as trade unions
83. In this respect the Government states that workers registered in the PEM and POJH programmes have formed their own organisations. Three were set up during 1985, all of them independent, with 215, 102 and 30 members respectively. The Government feels it necessary to recall that a large number of the beneficiaries are not part of the labour force.
(f) Participation of occupational organisations of employers and workers in the present legislative reforms
84. As regards the participation of organisations of employers and workers in reforms which have been carried out, the Government states that it has received many requests for the amendment of the labour legislation from trade union leaders. It has therefore publicly appealed to all occupational organisations of employers and workers in the country to give their views on current labour legislation. More than 800 written proposals, containing observations and suggestions, were received in response to this appeal. A systematic compilation of these proposals was submitted for the consideration of 450 trade union leaders from all sectors of the country and 100 employers' associations, who met for several days to analyse the labour legislation and split into four committees to examine the various proposals. All of these activities resulted in the drafting of a number of Bills, some of which have already become law, such as Act No. 18372 to amend the regulations concerning contracts of employment; Act No. 18391 to amend the provisions respecting training and employment; Act No. 18462 to amend the regulations respecting work in ports; and Act No. 18464 to amend the organisation of trade unions. A Bill respecting the re-establishment of the labour courts is shortly to become law, a Bill has been drafted to amend the standards respecting collective bargaining, etc. The Government encloses three volumes of observations and suggestions on the labour legislation; these cover individual labour relations, collective labour relations and special and social insurance standards. Each volume contains the text of the legal instrument, the observations or proposals made and the name of the trade union which formulated them.
85. As regards participation in the current reforms the Government indicates that the following channels are used: (a) Council of State: this is an advisory body to the President of the Republic on any matters of national interest submitted to it by him, especially Bills; a representative of the workers, who is a high-level trade union leader, sits on this advisory body on an equal footing with the other members. (b) Economic and Social Council: this was set up in 1984 for the purpose of perfecting systems for the participation of intermediate organisations. It advises the President of the Republic on specific questions and consists of 98 advisers, 35 of whom are employers' representatives, 35 workers' representatives and 25 representatives of the public sector and specialists of recognised competence. Its membership is renewed annually. The Council works through committees chaired by a co-ordinator, which maintain permanent consultations with employers and trade unions. In general, the Council advises, consults and promotes action. (c) ILO Tripartite Committee: this Committee is composed of representatives of the Government, employers and workers who attended the last session of the International Labour Conference in Geneva. Its purpose is to advise the Government on ILO questions, participation in the Conference and legislation related to ratified Conventions and Recommendations. (d) Consultations with workers organisations: These take place at least once a year to enable workers' organisations to propose candidates to represent the workers of the country at the annual session of the International Conference in Geneva. Similar consultations of all the trade union organisations in the country are conducted when regional meetings or meetings of industrial committees are to be held. (e) Advisory committees on employment: following an amendment to the Training and Employment Statute advisory committees were set up in January 1985. These are composed of representatives of employers and workers, and their purpose is to assess the operation of the municipal placement or employment offices. These committees are regional and consist of two employers' and two workers' representatives appointed on the proposal of the most representative employers' associations and workers' organisations in each region. Their membership is renewed every two years and they must meet at least once in three months with the assistance of two government representatives.
4. The Committee's conclusions
86. The Committee deems it necessary to recall that the questions raised by the application of Convention No. 29 in connection with the official employment programmes (PEM and POJH) were examined in detail by the Committee set up by the Governing Body to examine the representation made by the CNS in 1983. In particular, that Committee reached the conclusion (paragraphs 60 and 62 of its report) that "persons registered under these programmes cannot be considered to enjoy freely chosen employment", and that "work carried out by many persons paid for with excessively low wages, and not offering the protection of the labour and social security legislation, can give rise to doubts concerning its voluntary nature, particularly when it involves not a temporary or emergency solution but a solution that tends to last". The present Committee considers that these conclusions remain entirely valid and that it has received no evidence as to the voluntary nature of the work in question. Moreover, it wishes to make certain remarks on specific points referred to at the hearing of the representative of the Government on 7 March 1986.
87. The Committee notes that the definition of "labour force" used by the National Statistical Institute of Chile corresponds, according to the information communicated by the Government, to the definition proposed by the Thirteenth Conference of Labour Statisticians in 1982 (paragraphs 8, 9 and 10). The Committee notes that the proportion of persons who are not part of the labour force and who are registered with the POJH (13.4 per cent in August 1984), and especially with the PEM (39.9 per cent in August 1983), is therefore particularly high in relation to workers out of a job ("cesantes") and that these programmes, according to the Government's statement, aim to absorb and help.
88. The Committee notes that, according to the statistics supplied by the Government, the number of persons registered with the PEM dropped by 48.63 per cent (from 205,600 to 105,600) and those registered with the POJH by 41.98 per cent, between January 1984 and December 1986. These numbers have dropped even further according to quarterly statistics concerning the first half of 1986 (see paragraph 80 above).
89. As regards the time spent by participants in the PEM and POJH, the Committee notes with regret that the Government has not communicated statistics on either of these programmes for the period after August 1984. In these circumstances it is not possible for the Committee to note the existence of a trend towards a reduction of the time spent by participants in these programmes, although according to the figures communicated in the reply to the representation and later repeated (see paragraphs 66 and 80 above), the percentage of persons registered with the PEM who spent less than 12 months in the programme rose from 55.4 per cent in June 1982 to 62.8 per cent in 1983. Statistics for the POJH are available only for 1984 (see paragraphs 67 and 80).
90. The Committee notes the Government's reply to the effect that the conditions of the beneficiaries of the PEM and POJH programmes are a matter of permanent concern to the Chilean trade union organisations and that the requests made to the authorities include a request for an increase in the benefit and the granting of food aid to these persons, as well as a recommendation that the programmes should be continued. The Committee also notes that the workers registered with the PEM and the POJH have formed their own organisations and that three, all of them independent, were set up in 1985 with 215, 102 and 30 members respectively. It notes, however, that the Government has not indicated whether these organisations may act as trade unions.
91. In connection with this matter the Committee recalls that the Committee on Freedom of Association recently examined (document GB.231/10/13, 11-15 November 1985, Case No. 1285, paragraph 213) the question of denial of the right of the workers of the PEM and the POJH to organise and to present their demands. The Committee pointed out that, in virtue of the principles of freedom of association, all workers - with the sole exception of members of the armed forces and police - should have the right to establish and join organisations of their own choosing. On this occasion the Committee on Freedom of Association stressed that the criterion for determining the persons covered by that right was not based on the existence of an employment relationship with an employer, which was often non-existent (for example in the case of agricultural workers, self-employed workers in general or those who practised liberal professions) and that such persons should nevertheless enjoy the right to organise; consequently, the Committee on Freedom of Association requested the Government to take measures with a view to recognising the right of the workers of the PEM and the POJH to organise. The present Committee wishes to draw the attention of the Government to the fact that full respect for the freedom of association of the workers registered with the PEM and the POJH constitutes the best protection against any compulsion to perform work which they have not chosen freely in conformity with the provisions of Convention No. 29.
92. Concerning the participation of employers and workers in the legislative reforms, the Committee notes that the Government has communicated three volumes containing the results of consultations with occupational organisations regarding amendments to the labour legislation in respect of individual labour relations (Legislative Decree No. 2200 of 1978), collective labour relations (Legislative Decree No. 2756 of 1979 and Legislative Decree No. 2758 of 1979 respecting trade unions and collective bargaining respectively), and on special standards and insurance standards (Labour Code; Civil Code; laws, legislative decrees and decrees with the force of law; regulations; ILO Conventions; and provisional suggestions). Four hundred and fifty trade union leaders and 100 employers' associations took part in the consultation, which resulted in the adoption of Acts Nos. 18372 (employment contracts); 18391 (training and employment); 18462 (work in ports); 18464 (organisation of trade unions); and in the preparation of a number of Bills (labour courts; collective bargaining). The Committee notes that employers and workers are participating in the preparation of new reforms within the following machinery: Council of State; Economic and Social Council; ILO Tripartite Committee; consultation of workers' organisations (for the proposal of candidates for the annual session of the International Labour Conference); advisory committees on employment.
Section 4
Questions concerning social security
A. Sickness Insurance (Industry), Convention, 1927 (No. 24)
1. Allegations made by the CNS
93. The CNS refers to the non-observance of Convention No. 24 in connection with the PEM and POJH employment programmes; according to the CNS, the workers registered with these programmes are not covered by the Chilean social security system.
2. The Government's observations
94. The Government remarks that the national legislation provides for compulsory sickness insurance for workers and apprentices in undertakings in industry, commerce and domestic service, offering preventive and curative services, medical and dental care, cash benefits (allowances) and the supply of medicines and therapeutic appliances.
95. The structure of this insurance system is set forth in the following legislation: Act No. 6174 to establish a common scheme of preventive medical care applicable to all workers, whatever the nature of their work; Act No. lO383 respecting compulsory sickness insurance; Act No. 16781 to grant medical and dental care and a cash allowance in the event of suspension of income due to sickness; Legislative Decree No. 2575 of 1979 to extend to the statutory beneficiaries of the former National Health Service medical care as established by Act No. 16781; and Legislative Decree No. 3500 of 1980 which applies the health benefits prescribed by Acts Nos. 10383, 16781 and 6174 to the workers affiliated to the new pension scheme.
96. As regards the granting of a cash benefit for at least the first 26 weeks of incapacity (Article 3 of the Convention), this is done by granting workers a rest allowance for preventive purposes and another one for incapacity to work due to common diseases, the amount of which is determined with reference to general and uniform standards for all workers in conformity with Decree No. 44 of 1978 having the force of law. This allowance is paid from the first day of sick leave with medical certificate, if the period is longer than ten days, or from the fourth day if it is ten days or less. The benefit is paid until the end of sick leave, even if the contract of employment has been terminated. In order to qualify for the benefit a minimum of six months of affiliation is required, plus three months of payment of contributions within the six months preceding the starting date of the period covered by the medical certificate.
97. As regards the insured persons' right to obtain free treatment by a fully qualified medical man and to the supply of medicines from the commencement of the illness until its end (Article 4 of the Convention), both Act No. 6174 and Acts Nos. 10383 and 16781 provide for medical care from the onset of sickness and while its effects persist. Medical and pharmaceutical assistance for members of the Social Security Service who are covered by Act No. 10383 is entirely free of charge. This is also the case for beneficiaries under Act No. 6174 respecting preventive medicine, whose provisions cover those who are subject to Acts Nos. 10383 and 16781.
98. Section 4 of Act No. 16781 provides that the persons concerned shall participate in the costs occasioned by these benefits, paying the difference between the amount provided by the National Health Fund, which is charged to the State, and the total value of the benefit. The Government stresses that the obligation to finance these differences only applies in respect of higher-income workers. In this sense Chile makes full use of the provision of paragraph 2 of Article 4 of Convention No. 24.
99. As regards the medical benefit for members of an insured person's family living in his household and dependent upon him (Article 5 of the Convention), Acts Nos. 6174, 10383 and 16781 extend the medical benefit to the members of an insured person's family if they are his dependants or hold entitlement to widows' or orphans' pensions.
100. As regards the administration of insurance by self-governing institutions under the administrative and financial supervision of the public authorities with the participation of the insured persons in the administration and not carried on with a view to profit (Article 6 of the Convention), the sickness insurance scheme, in both its preventive and its curative stage, is administered by the relevant welfare institutions, the Health Services and the National Health Fund, which depend on the Ministry of Health, and by the Health and Welfare Institutions (ISAPRES). These institutions are self-governing bodies with legal personality and their own assets. The Health Services are state bodies which are functionally decentralised, possess legal personality and their own assets and are under the control of the Ministry of Health. The National Health Fund is also a public service with decentralised functions, with legal personality and its own assets.
101. The Health and Welfare Institutions are private-law legal entities whose social purpose is the granting of health benefits either directly or by financing them on behalf of users who are voluntarily affiliated to them by contract. These Institutions are supervised by the National Health Fund under the conditions laid down in Ministry of Health Decree No. 3 of 1981, having the force of law.
102. As regards the contribution made by insured persons and their employers in providing the financial resources of the sickness insurance system (Article 7 of the Convention), section 1 of Legislative Decree No. 3051 stipulates that the employees to whom Convention No. 24 refers shall contribute to the financing of health benefits at a rate varying between 3.15 and 6.55 per cent of their taxable remuneration depending on the scheme to which they are affiliated.
3. The Committee's conclusions
103. The Committee notes that the CNS has alleged non-observance of Convention No. 24 in connection with the PEM and POJH employment programmes, referring generally to conclusions reached by the ILO's supervisory bodies according to which the persons registered under these programmes are not covered by the social security system (pages 27 and 28 of the report appended to the representation). The Committee which dealt with the representation made in 1983 reached the conclusion - in connection with Convention No. 29 - that "work carried out by many persons paid for with excessively low wages, and not offering the protection of the labour and social security legislation, can give rise to doubts concerning its voluntary nature, particularly when it involves not a temporary or an emergency solution but a situation that tends to last" (paragraph 62 of its report).
104. The Committee notes that the information supplied by the Government does not indicate that the national provisions mentioned apply to workers of the PEM and the POJH. Since the situation does not appear to have changed since the proceedings of the 1983 representation were concluded, the Committee considers that the conclusions and recommendations presented at the time of this representation should be reiterated, in general, and urges the Government of Chile to take the necessary steps to enable the workers of the PEM and the POJH to benefit from social security coverage and sickness insurance in general, and under the conditions laid down in Convention No. 24, in particular.
B. Old-Age Insurance (Industry, etc.) Convention, 1933 (No. 35); Invalidity Insurance (Industry, etc.) Convention, 1933 (No. 37); Invalidity Insurance (Agriculture) Convention, 1933 (No. 38)
1. Allegations made by the CNS
105. According to the CNS the pensions system in force in Chile is not based on the principles of solidarity, sharing and tripartite responsibility, since the role of the State is reduced merely to guaranteeing a supplementary payment if the contributions by the insured person afford a pension lower than the minimum. The State does not participate directly in the setting up of social security funds and the employers even less so, since under Legislative Decree No. 3500 they were allowed to transform their social security contribution into a wage increase. As time has gone by, this increase has been largely absorbed by inflation and in any case could only be considered to be a social security contribution for those workers who belonged to the scheme at the time the increase was made and in no case for those who have just begun to make contributions. In fact, therefore, the Social Security Fund is made up solely of the savings the employees are obliged to make and is far from fulfilling the objective of income redistribution on which the above-mentioned principle of solidarity is presumed to be based.
106. Furthermore, the practical experience of the Administration of Pension Funds (AFPs) casts doubt on the claim that the system is more advantageous for the workers. If one analyses the official bulletin of the Office of the Superintendent of the AFPs (No. 37, dated 29 October 1984), a comparison of the most expensive administration (Summa) and the cheapest (Habitat) reveals that the amount the workers are required to pay in operating commission is extremely high. A worker who pays a contribution on an income of 10,000 pesos, which is the case of the majority of the employees in the scheme (474,551), must pay 1,360 pesos (10 per cent for the pension fund and 3.6 per cent as an additional contribution to the invalidity and survivors' insurance). Of this figure the actual deposit credited to the individual account of each worker fluctuates between 734 pesos in the case of the most expensive fund and 828 pesos in the cheapest one. Furthermore, as the same fixed commission is paid by all, workers who earn less end up paying proportionately more.
107. Opinions diverge widely concerning the productivity of the funds deposited with the AFPs. The complainant considers that this has become negative and that on an income of 10,000 pesos there would only be an old-age pension that would never exceed 4,000 pesos. The figure is significant since, in 1984, 41.4 per cent of the members of the social security scheme declared incomes of less than 10,000 pesos.
108. The AFPs have replied that the new system guarantees very high pensions for their members. In any case, whatever the outcome, it is clear that a system which maintains and amplifies privilege, instead of lessening it, is retrogressive in character. In the report of the Office of the Superintendent of the AFPs on average monthly earnings on investment in 1984, the highest figure reached 2.74 per cent and the lowest 1.90 per cent. According to the same report the larger figure corresponded to earnings in the 60,000 peso tax bracket, while the lower figure corresponded to those in the 10,000 peso bracket.
109. This means that the objective of redistribution, on which modern social security is based, is totally disregarded. On top of this is the fact that the workers contribute 3.6 per cent of their monthly earnings to finance the invalidity and survivors' insurance. The AFPs pass on only 2.5 per cent of this to the insurance companies as premiums, keeping the difference which is added to their capital. The trade unions belonging to the Committee for the Defence of Social Security Rights denounced this situation in a letter to the Minister of Labour dated 27 March 1985. The AFPs replied that the difference was retained in order to offset any possible insolvency of the insurance company. This is not a valid argument since, if such were the case, a special fund should be set up for this purpose or a "preventive" deposit in the contributor's name.
110. According to the law the only sums that can be retained by the Administrations are for commissions. The contributors were informed that the operating costs they had to pay corresponded to the deposit of periodic contributions; the handling of individual accounts; transferring the balance of such accounts from another Administration; and partial withdrawals in accordance with section 66 of Decree No. 3500 (which authorises the member to withdraw a certain sum each year as an old-age or survivors' pension in the event of his not having opted to take out a life annuity with an insurance company). The trade union leaders requested an investigation into this appropriation of funds.
111. This situation illustrates the profit-making motive of the AFPs which in fact are one of the forms of private business in Chile. The profit-making nature of the institutions administering social security constitutes a further infringement of international standards.
112. The foregoing has been confirmed by the promulgation in 1985 of Act No. 18398 to amend Decree No. 3500 setting up the personal capital formation scheme. This Act authorises the AFPs to invest the social security funds in the shares of state enterprises and, after a certain period, in the shares of companies quoted on the open market. It endangers the social security assets of the workers by allowing for the investment of these assets in private firms in whose management the contributors have no say at all and over which they have no control whatsoever. Furthermore, negotiations concerning the investments are undertaken by the individual AFPs, and there is no workers' participation in any of them. In fact, the relationship of the workers to the AFPs is more like that of mere clients of a financial institution. The CNS is disturbed at this further change in the social security system, since the Chilean workers have already witnessed and been victims of the collapse of financial institutions which until then had appeared perfectly sound.
113. In short, the CNS considers that the workers are obliged to accept a pension system which is administered by private institutions, and set up and run without their participation; that these institutions are run on a clearly profit-making basis; that the employers have been released from the obligation of contributing; that state participation serves only to spare the private administrations expense; and that the social security funds are being used to reactivate business in the country. For all these reasons, the CNS considers that the pension system at present in force in Chile infringes the following provisions of international labour Conventions ratified by Chile: Article 9, paragraphs 1 and 4, and Article 10, paragraphs 1 and 2, of Convention No. 35; and Article 10, paragraphs 1 and 4, and Article 11, paragraphs 1 and 4, of Convention No. 37 and Convention No. 38.
2. The Government's observations
114. In its reply of October 1985, and subsequently in its additional reply of November of the same year, the Government refers successively, and in very detailed terms, both to the general matters raised by the CNS and to the specific questions relating to the application of Conventions Nos. 35, 37 and 38.
(i) Absence of the principle of solidarity
115. The representation claims that the new pension system is not compatible with the principle of solidarity. One of the ways in which this principle is applied, it is maintained, is by allocating responsibility on a tripartite basis among the State, employers and workers for the setting up of a fund to provide the necessary resources for financing benefits. Moreover, it is asserted that the distributive scheme which was abolished enabled income to be transferred from employers to wage earners and permitted the latter to contribute to the benefits granted to non-active wage earners.
116. The fact that the cost of contributions is partially or entirely borne by the employer does not permit, and never has permitted, the transfer of income from employers to wage earners since, when he hires a worker, the employer compares the total monthly cost to be incurred by him with the value of the worker's contribution to the undertaking. Thus, the employer takes account not of the worker's cash income but of his gross income, since this is the sum total of the costs which he would incur. The worker, on the other hand, is interested by his cash income, since this is the amount which he will have at his disposal to cover his monthly expenses. The difference between the gross remuneration and the cash remuneration is determined by the rates of taxes and contributions, and this money is paid by the employer and only received by the worker in the form of the right to a pension or deferred wage in the future. It is thus irrelevant to specify by whom the cost of contributions is to be borne, since when the employer and a worker negotiate a wage the employer is always thinking of the gross wage and the worker of the cash wage. From this point of view, the fact that contributions are borne by the worker or by the employer does not affect either the worker's cash wage or his pension, nor does it change the cost to the employer. Only a change in the rate of taxation or contribution can affect these variables.
117. Legislative Decree No. 3500 stipulated that the contributions in the possession of the AFPs would be the property of the worker concerned, in the same way as any money held by him in a savings account in a bank. The purpose of this provision was to establish that pensions were an acquired right and that they could not be diminished or frozen by the State in the event of the latter having a budgetary deficit. In order to strengthen the concept of ownership of the funds it was provided that the contributions should be borne by the worker, and all taxable gross remuneration was increased in order to keep the net remuneration unchanged. There is no validity whatsoever in the argument that this increase has been largely absorbed by inflation and that in any case it could only be regarded as a contribution for those workers who were subject to it at the time of its application and in no case for those who entered employment - and thus became subject to contributions - at a later date, inasmuch as the wage increases and adjustments granted following the reform were applied on the basis of the increased wage and the increase in the taxable wage was accordingly maintained.
118. As regards new contributors to the scheme, it makes no difference to the employer whether he pays a given cash wage plus the corresponding contributions or a higher gross wage equivalent to the sum of both these items. If an employer was prepared to hire a worker at a given cash wage before the reform of the scheme, he will be prepared to pay exactly the same cash wage after the reform.
119. The fact that the benefits granted to non-active members under the distributive scheme were contributed to out of wages did not imply solidarity; on the contrary, it was the basic reason for the totally retrogressive distribution of income existing under the former system. In the distributive system there is not a one-to-one ratio between the sums paid in in the form of contributions and those received in the form of pensions. Some people call this solidarity. The word solidarity means "circumstantial adherence to the cause or the venture of another"; however, in the sense in which it is customarily used in social security, it is assumed to mean support for the cause of the weakest and the most dispossessed, of those who have no power to exert pressure. In the former distributive system exactly the contrary occurred: the poorest financed the privileges of the richest or the strongest. Evidence of this is as follows: (i) The different welfare funds: there was a fund for manual workers, another for employees and still others for special groups, such as bank officials, workers in the merchant marine, etc. This did not achieve any "distribution" of money between the poorest workers, who belonged to the Social Security Service, and the more powerful workers, who had their own funds; (ii) The number of minimum pensions: if one looks at the number of minimum pensions granted by the different funds in proportion to the total number of pensions, one reaches the conclusion that the former distributive system punished the poor and rewarded the rich; (Endnote 14) (iii) Different requirements for entitlement to a retirement pension: whereas the workers affiliated to the Social Security Service, which had limited resources and was often in deficit, had to wait until the age of 65 before retiring, other workers, who belonged to privileged funds, were able to retire in some cases with only 15 years of service and with pensions far higher than those corresponding to the contributions which they had made; (iv) Different arrangements for the adjustment of pensions: whereas manual workers had to wait until the state of the national budget made it possible to enact legislation for the adjustment of pensions, other workers enjoyed automatic readjustment following trends in the cost of living, which not only maintained the purchasing power of pensions but increased them whenever workers in active employment received an increase in remuneration.
120. The situations described above arise from the fact that, with a distributive system, the resources do not belong to the workers who contributed them and that the benefits granted are not directly related to the amount of the contribution; this enables certain groups which have the power to exert pressure to obtain special treatment to the prejudice of other workers.
121. In the new pension system, on the other hand, all workers belong to the same private institutions - which are known as Administrations of Pension Funds (AFPs) - irrespective of their social status or the nature of their work, and without discrimination of any kind as regards affiliation or the benefits granted. The requirements for retirement are uniform, and there are no special privileges for anyone. All are entitled to pensions which are adjusted each month, with the exception of minimum pensions, which are guaranteed by the State and which must be adjusted by law. Finally, the social security capital of each worker which is deposited with an AFP is his own and may in no way be used to grant undeserved benefits to politically powerful groups. This is the feature of the scheme to which exception is taken by those who have been accustomed to receiving higher benefits, financed out of the resources of the weakest, and who now clamour for a return to the old system.
122. If a pension scheme which expresses true solidarity were desired, then a system would undoubtedly be designed in which all workers would contribute a percentage of their income in return for a universal pension of a fixed amount, which would be equal for all, on reaching a certain age. In this sense there would not even be any justification for the existence of a special social security body or for social security contributions, since all that would be needed would be a paymaster and a progressive system for the collection of taxes to finance these pensions.
123. Even though there are systems with these characteristics in some countries (e.g. Iceland), they are not the general rule. It has been felt that pensions should bear some relationship to the incomes earned by workers during their active life in order to avoid sharp changes in living standards at the time of retirement. The ideal system would thus be one which established a basic pension, equal for all, as in the case of Iceland, plus an additional pension related to the remuneration received by the worker during his active life.
124. In Chile the standard basic pension exists in the form of a minimum pension; this is a feature of both the old and the new social security systems, its amount being the same. Minimum pensions are granted in respect of old age, invalidity, widows and orphans. These are characterised by true solidarity, since they are financed out of the general resources of the nation from taxation, in which those who earn more pay more.
125. Nevertheless, the standard pension does not fully solve the problem of social security, since a supplementary pension is required for this purpose, a pension related to the remuneration received by the worker during his active life. Most countries have opted for systems involving compulsory contributions administered by specialised institutions, whose purpose is to provide the workers with "fair" pensions in this sense. Thus, it may be observed that both distributive systems and ones which resort to individual capital formation are designed for the granting of pensions based on the level of remuneration of the worker and the number of years during which he has contributed.
126. From the analytical point of view, therefore, it is highly important to distinguish between the concepts of standard minimum pension and pension proportional to the contributions made. The first is redistributive by its very principle and should aim at meeting as satisfactorily as possible the objective of ensuring minimum levels of income to the non-active population. The supplementary pension, on the other hand, should provide resources related to the worker's income for the purpose of meeting the second objective, that of avoiding sharp changes in family living standards at the time the pension is granted.
127. From the foregoing it may be concluded that the mechanism for meeting the objective of "solidarity" already exists in the Chilean pension system, and that if it is wished to increase its redistributive effect, the most appropriate means of doing so would be to increase the amount of minimum and social assistance pensions. Moreover, if the former distributive system is compared with the new provident system, it is completely irrelevant to raise the question of solidarity, since the amount of the minimum pension is equal under both systems.
128. Lastly, the representation confuses the terms "social security" with "pension system". Social security comprises measures to ensure at least the conditions necessary for the subsistence of all citizens and is based on the principles of solidarity and redistribution of income, since it aims precisely at assisting those who are unable to maintain themselves out of their own resources. The benefits enabling these principles to be met are family allowances, unemployment benefit, social assistance pensions, lump-sum family subsidies, maternity benefits, food supplements or nursing benefits, etc. They are financed out of the general resources of the nation and are in full conformity with the objective of redistributing income.
129. A pension system, on the other hand, is a programme which is designed to replace the remuneration received by the worker during his active life with a pension during his non-active life. In the same way as the State fixes a minimum wage enabling workers to meet their responsibilities, it guarantees a minimum pension which is essentially redistributive.
(ii) Appropriateness of the new system of administration and financing of pensions for the workers
130. The representation asserts that it is doubtful whether the new system is more beneficial to the workers, since the operating commissions collected by the AFPs are allegedly very high; the commission system is said to be retrogressive and the productivity of the funds negative; and it is claimed that pensions are low and the productivity of individual accounts on the decline. In this respect it is maintained that "for an income of 10,000 pesos the charges are 1,360 pesos (10 per cent for the Pensions Fund and 3.6 per cent in respect of the additional contribution for invalidity and survivors' insurance)" and that only 828 pesos are credited to the individual's account. It is also affirmed that the pensions of workers with an income of 10,000 pesos will never be higher than 4,000 pesos.
131. In this connection the Government observes that it is incorrect to state that commissions under the system are high (532 pesos), taking as a basis the contribution of 1,360 pesos, since to regard the cost of the additional contribution used for financing invalidity and survivors' insurance (360 pesos) as the operating commission is to confuse two different ideas. Moreover, the commission is applied on the basis of the accumulated balance in the individual account and not on the basis of the contribution, since the amount which is administered each month and which generates income for the member is the balance as a whole, not just the contribution for that month.
132. The cost for the month of December 1984 was thus 172 pesos, representing 0.2 per cent of the accumulated balance, which amounted to 79,801 pesos in the case of a worker having contributed 10,000 pesos since June 1981. This represents in total less than 3 per cent a year on the capital administered.
133. Like banks, public undertakings and other bodies, the Administrations of Pension Funds incur costs. These costs, in the case of the AFPs, result from the collection of contributions, assigning them to the appropriate accounts, keeping the necessary information on each insured person, sending balance-sheets and account books to members, keeping up offices, investing funds, etc.
134. As may be appreciated, these costs are the same whether the amount contributed by members is large or small. Consequently, the fixed commissions reflect the cost of administering the funds of each member.
135. The Government has decided not to introduce subsidies for each item, but to redistribute income by taxing high incomes more heavily on the one hand, and by spending the income gained from taxation on social plans for the benefit of the poorest on the other. This has been considered the best way of redistributing income. If, for example, it were desired to redistribute income by obliging the AFPs to collect only percentage commissions, the workers with high taxable remuneration would not only be subsidising workers with low incomes, but would also be subsidising those with high incomes but low taxable remuneration; this would be extremely unjust.
136. Although the fixed commission weighs more heavily on workers with low taxable remuneration who have recently begun to contribute, to the extent that they have accumulated a number of contributions and the balance in their provident savings account increases, they are less and less affected by the fixed commission. This can be seen from the productivity of the account of each insured person, which corresponds to the combined effect of the productivity secured by each AFP and the commissions on these accounts.
137. If one compares the difference in the productivity of the accounts obtained by members having different levels of taxable income after six months of contribution, with the difference in the productivity obtained after 43 months of contribution, it will be seen that the impact of the fixed commissions on the accounts of workers with low taxable income diminishes rapidly as the accumulated balance increases (the difference in the productivity obtained decreases from 306 per cent to 8 per cent in only 37 months and approaches zero after a few years). (Endnote 15)
138. The productivity of the funds deposited in the individual accounts is positive. As proof of this, a worker with 10,000 pesos' remuneration had accumulated 79,801 pesos by December 1984, which is the equivalent of having invested 1,000 pesos a month in development units (UF) at an annual rate of interest of 11.5 per cent. This compares favourably with the average real interest of 8 per cent per annum, the alternative in the form of savings closest to that of the provident fund type.
139. The pensions obtainable by workers depend essentially on the rate of interest prevailing at any given time. Thus, for example, if the productivity achieved so far were maintained, a worker could retire on a pension equal to his income with only 23 years of contributions. With a real annual rate of productivity of 6 per cent the pension of a worker with an income of 10,000 pesos would be 11,500 pesos, and with a rate of 3 per cent it would be roughly equal to half of taxable income.
140. The foregoing shows that the affirmation that the pensions of workers with incomes of 10,000 pesos will in no case exceed 4,000 pesos is completely devoid of foundation.
141. Moreover, it should be mentioned that the individual account of a worker insured under the new system is capitalised at a rate of contribution of 5 to 6 per cent less per month than under the old system, which represents an additional benefit. A contribution of 5 per cent less a month means that each worker receives per month the equivalent of half of what is paid into the Pensions Fund. In other words, the worker could use this money to build up a second pension fund equivalent to half of that of the AFP, which would enable him to increase his pension by 50 per cent or to take early retirement.
142. It is true that the profitability of the individual accounts of workers with larger incomes is greater than that of workers with lower incomes. This is due to the fact that the accumulated balances are still low, which means that the fixed commission weighs proportionately more heavily on accounts with lower balances. This effect is diluted to the extent that the balances grow, since the fixed commission becomes marginal for both high-income and low-income accounts.
143. To sum up, the arguments put forward to show that the system is not beneficial to the workers are unfounded and suffer from conceptual errors, in particular the consideration of the additional contribution as part of the cost of managing individual accounts. The purpose of the additional contribution is to finance the invalidity and survivors' pensions; it has nothing to do with capital formation with a view to obtaining old-age pensions.
(iii) Illicit appropriation of funds
144. The representation claims that the workers contribute 3.6 per cent of their monthly remuneration to finance invalidity and survivors' insurance, and that the AFPs pass on only 2.5 per cent to the insurance companies in the form of premiums, the remainder going to increase the assets of the AFPs. This, it is alleged, constitutes an unlawful and illicit appropriation of funds. The explanation given by the AFPs, namely that the amount retained is designed to offset any future insolvency of the company with which the insurance contract is concluded, is not a valid argument in the opinion of the CNS, since, if such were the case, a special fund should be set up for this purpose or a "preventive" deposit made in the contributor's name.
145. In this connection the Government points out that section 18 of Legislative Decree No. 3500 stipulates that workers are obliged to make an additional contribution "to finance the invalidity and survivors' pension scheme". The pension scheme involves other activities (collection of the additional contribution, processing of applications for invalidity pensions, record-keeping, payment of pensions, etc.), which make it necessary for the Administrations to own or rent premises. The costs of these activities are independent of the premium paid to the insurance companies and have to be settled monthly by the AFPs. Accordingly, when the law establishes that the extra contribution is designed to finance the invalidity and survivors' pension scheme, it is obvious that this must cover the costs of the system as a whole. The view that the commissions prescribed by section 29 of Legislative Decree No. 35OO are "the only sums that can be retained by the administrations" again demonstrates the conceptual error into which the CNS has fallen, since it confuses the system of individual capital formation, which is designed to finance old-age pensions, with the system which covers the contingencies of invalidity and death and makes provision for pensions in respect of these contingencies. The commissions charged on individual accounts are for the operating costs of the individual capital formation system, and the difference between the additional contribution and the premium paid is not related in any way to the cost of managing individual accounts, but to the cost of operating the invalidity and survivors' pensions scheme, which includes group insurance.
146. As regards the affirmation that the Administrations should set up a special fund to offset possible future insolvency, the Government states that these bodies are subject to the laws and regulations governing the system and to the specific standards and instructions issued by the Office of the Superintendent of the AFPs. This supervisory body has ordered all the AFPs to include in their balance-sheets a written undertaking stating their obligations in the event of insolvency of the insurance company with which they have concluded the contract referred to in section 58 of Legislative Decree No. 3500 of 1980. This obligation is to be determined on the assumption that none of the investments held by the insurance companies are recovered; accordingly, the written undertaking, which is an integral part of the financial statements, obliges the AFPs to make provision for the worst situation they are likely to encounter.
147. In specific cases where the insurance company has not paid the pensions in due time, the Office of the Superintendent has ordered the AFPs involved to constitute reserves. Thus, the San Cristóbal AFP, faced with the imminent bankruptcy of the BHC life insurance company, and in accordance with Official Note No. 1244 of 12 March 1984, had to make provision to cover the amounts not covered by the state guarantee referred to in section 82 of Legislative Decree No. 3500. Following the bankruptcy of the insurance company, the AFP paid its pensioners the portion for which it was liable out of its own resources.
148. The Invierta and Planvital AFPs, for their part, owing to a refusal by the Diego de Almagro life insurance company to acknowledge its liability, were obliged to advance a sum equivalent to the capital necessary for the payment of all the pensions under dispute by Official Notes Nos. 7211 and 7212, both dated 23 October 1984. The pensions which were refused or suspended by the insurance company are being paid in their entirety by these AFPs.
(iv) Compliance with international labour Conventions ratified by Chile
149. The representation claims that the new pensions system violates provisions of Conventions ratified by Chile, namely:
(a) "The insured persons and their employers shall contribute to the financial resources of the insurance scheme" (Article 9, paragraph 1, of Convention No. 35; Article 10, paragraph 1, of Convention No. 37; Article 10, paragraph 1, of Convention No. 38). There is no violation of this provision, since Article 9, paragraph 3, of Convention No. 35 and Article 10, paragraph 3, of Conventions Nos. 37 and 38 stipulate that contributions from employers may be dispensed with under laws or regulations concerning schemes of national insurance not restricted in scope to employed persons. The new pension system offers all natural persons the possibility of affiliating with an administration, whether or not they are in the service of an employer. Accordingly, Chilean legislation (section 89 of Legislative Decree No. 3500 of 1980), in not limiting insurance to employed persons, is in full compliance with this provision of the Conventions.
(b) "The public authorities shall contribute to the financial resources or to the benefits of insurance schemes covering employed persons in general or manual workers" (Article 9, paragraph 4, of Convention No. 35; Article 10, paragraph 4, of Conventions Nos. 37 and 38). The new pension system, set up by Legislative Decree No. 3500 of 1980, fully complies with this provision, since Chile contributes to the resources for the payment of pensions of insured persons or beneficiaries fulfilling the statutory requirements, whose pensions are less than the minimum guaranteed by the State, as provided for in section 73 of Legislative Decree No. 3500 of 1980. The State also participates in the financing of pensions in the event that an insurance company fails to fulfil its obligations owing to bankruptcy, as laid down in section 82 of the Legislative Decree. Consequently, the State will always act as a security and guarantor for the payment of old-age, invalidity and survivors' pensions, either by guaranteeing minimum pensions or by paying pensions in the event of insolvency of an insurance company. It should be stressed that the action of the State is directed at those persons and sectors that are the most in need of it.
(c) "The insurance scheme shall be administered by institutions founded by the public authorities and not conducted with a view to profit, or by state insurance funds. Provided that national laws or regulations may also entrust its administration to institutions founded on the initiative of the parties concerned or of their organisations and duly approved by the public authorities" (Article 10, paragraphs 1 and 2, of Convention No. 35; Article 11, paragraphs 1 and 2, of Convention Nos. 37 and 38). The national laws and regulations allow insured persons to organise their own AFPs in the manner prescribed in section 130 et seq. of the Limited Liability Companies Act, No. 18046. This guarantees the fullest participation of insured persons in the administration of these companies. There are at present three AFPs organised by such groups; one for schoolteachers (Magister), another for supervisors in the copper industry (Cuprum) and a third for construction workers (Habitat).
150. Consequently, the Government considers that the new pension system is in line with the provisions of Article 10, paragraph 2, of Convention No. 35, and Article 11, paragraph 2, of Conventions Nos. 37 and 38, and that the situation provided for in paragraph 1 of these Articles does not apply to it.
151. Notwithstanding the foregoing, the Government points out that the state guarantee provided for by Chilean legislation is applicable to the branches of insurance dealt with by the Conventions; this is administered by an autonomous public body connected with the Government through the Ministry of Labour and Social Welfare, known as the Office of the Superintendent of Administrations of Pension Funds, the body entrusted with payment being the General Treasury of the Republic. The procedure for obtaining the state guarantee consists in the approval of applications by the Office of the Superintendent, which issues a resolution for each beneficiary; these are then sent to the Treasury. This resolution is the document justifying the application for payment.
3. Additional questions put by the Committee
152. At the hearing of the representative of the Government on 7 March 1986 the Committee requested the Government to inform it of the number of Administrations of Pension Funds (AFPs) existing at present and of the possibilities open to trade union organisations to set up such administrations. The Government sent the following information in a communication of 30 April 1986.
153. There are at present 12 Administrations of Pension Funds (AFPs). The structure of ownership of these administrations is as follows: (a) trade union AFPs: AFP Magister is 32 per cent owned by the Colegio de Profesores de Chile, AG; AFP Protección is 70 per cent owned by the Health and Welfare Foundation of the Workers of the State Bank and 30 per cent by various workers of the bank; AFP Cuprum: approximately 30 per cent of shares are owned by the National Association of Copper Supervisors (ANSCO), which draws its membership from supervisory staff in CODELCO-Chile, the remaining 70 per cent being in the hands of natural persons most of whom are connected with ANSCO or CODELCO-Chile; AFP Habitat is 53 per cent owned by the Building Investment and Rent Society, set up in conjunction with the Chilean Construction Chamber, which draws its membership from construction employers and undertaking; the remaining shares belong to undertakings or persons connected with the sector. (b) AFPs with shares held under the smallsavers' capital investment plan: the two largest administrations have a mixed ownership structure, in which a percentage of the shares has been purchased by natural persons under the smallsavers' capital investment plan, under which credits are granted with an implicit subsidy of approximately 50 per cent of the total value of the purchase, with only 5 per cent of the total value being paid cash down, subject to a limitation on the shares purchased by each person. The purpose of the Act instituting the smallsavers' capital investment plan was to distribute the shares held by banks and AFPs which were in the hands of the State among a large number of persons, granting facilities to enable even workers with little ready cash to acquire them. In the case of AFP Provida, 60 per cent of the shares were sold to about 8,200 persons under the plan, with an average of 93 development units (279,000 pesos) per person. In AFP Santa María, 49 per cent of the shares were sold under the smallsavers' investment plan to 6,166 persons, about 39 per cent of whom are earning less than 55,000 pesos a month. (c) AFPs of undertakings: the remaining six AFPs (Concordia, El Libertador, Invierta, Planvital, Summa y Unión) are limited liability companies owned by undertakings or natural persons who do not represent the workers. These administrations account for 36.7 per cent of the total number of members.
154. As regards the possibilities open to trade union organisations to set up AFPs, the Government points out that the capital necessary to constitute an administration is relatively small, since it amounts to 20,000 development units, or 60 million pesos. Nevertheless, studies are being carried out with a view to proposing a legislative reform to permit the creation of small AFPs with less capital, in order to promote the creation of more trade union AFPs. In addition, the law allows administrations to conclude agreements with specialised undertakings for the subcontracting of some services in order to reduce fixed operating costs, thereby permitting the setting up and operation of small AFPs. It is possible to conclude agreements for the collection of insurance contributions, the computer handling of individual savings accounts, rental of offices for service to the public, handling of investments, etc. It is considered highly probable that trade union AFPs will spread in the future. This is because joining an AFP is a choice which each worker makes as an individual; accordingly, any AFP which is not formed in association with a specific workers' organisation will find it difficult to attract enough members to meet its administrative costs. Under the measures envisaged by current legislation, it is hoped to enable trade unions to set up small AFPs for the sector from which they draw their membership, as is the case with the State Bank Workers' Union, AFP Protección. A Bill has been drafted which resolves the doubts that have arisen regarding the activities of unions in the administrations of pensions funds.
4. Analysis of the documents communicated by the Government
155. The Government has communicated a number of documents, requested by the Committee, relating to the new pensions system, which the Committee feels it necessary to analyse before presenting its conclusions.
156. The Limited Liability Act No. 18046, dated 21 October 1981, stipulates (in section 130) that administrations of pensions funds "shall be formed as special limited liability companies". In principle, these companies are governed by the provisions applicable to "open" limited liability companies (section 131), in other words those which offer their shares on the open market in conformity with the Act respecting the stock market, which have 500 or more shareholders and at least 10 per cent of whose subscribed capital belongs to a minimum of 100 shareholders (section 2). The limited liability company is always commercial (section 1) and may engage in any lucrative activity compatible with the law, with morality, with public order or with the security of the State (section 9). The purpose of limited liability companies is thus evidently to make profits.
157. A limited liability company is managed by a board of directors (section 1) elected by the general meeting of shareholders (section 31). Shareholders are deemed to be persons who own or who have subscribed to shares (section 17). Persons insured by a limited liability company which administers a pension fund are not as such deemed to be shareholders of the company; they therefore have no right to participate in its management as insured persons.
158. The statutes of the Magister Administration of Pension Funds show that the main shareholders are the Colegio de Profesores de Chile AG (525,000 shares); the Prefruta Limitada Food Processing Company (344,998 shares); Inversiones San Felipe, a limited liability company (300,000 shares); Inversiones Viña del Mar Limitada (150,000 shares) and the Valparaíso Development Bank, a limited liability banking enterprise (140,000 shares) (transitional provision). The Administration has issued a total of 1.5 million shares of authorised capital. Each year a balance-sheet must be drawn up and the profits are to be distributed as dividends among the shareholders in proportion to the number of shares they hold, setting aside a quota for reserve capital and a quota for special funds (article 20). The Administration is managed by a board of directors consisting of 11 titular and 11 deputy members (article 6) elected by the ordinary board of shareholders (article 9). The statutes do not mention the insured persons; the fact that they are members of the administration obviously does not entitle them to become shareholders. No provision has been made for the participation of insured persons in the management of the administration. It is possible that this may be done through the Colegio de Profesores de Chile, which appears to be the only principal shareholder of a trade union nature.
159. From the information communicated on the Cuprum Administration of Pension Funds, it can be seen that before the new issue of capital decided on in 1983, the principal shareholders were Inversiones Inmobiliaria Teruel Limitada (16,282 shares), the National Association of Supervisory Staff in the Copper Industry (16,027 shares), Mr. Virgilio Perreta Paiva (1,931 shares in 1982 and 1,700 shares in 1983; Chairman of the Board); Inversiones Inmobiliaria Albacete Limitada (1,650 shares), Inversiones e Inmobiliaria Belmonte Limitada (1,500 shares), and Inversiones Inmobiliaria Terranova Limitada (1,456 shares). This Administration had issued 34,580 shares of authorised capital before the new issue of capital in 1983; no information is available on the breakdown of holdings since that time. Each year a balance-sheet must be drawn up and profits must be distributed in the form of dividends among the shareholders in proportion to the number of shares they hold, setting aside a quota for reserve capital and a quota for special funds (articles 16 to 18 of the statutes). The management of the Administration is in the hands of a board of directors consisting of nine members elected by the general meeting of shareholders (article 6). Like those of Magister, the statutes of Cuprum do not mention insured persons who, as such, do not participate in the management of the administration. They might, however, participate as shareholders, since the National Association of Supervisors in the Copper Industry is one of the principal shareholders.
160. The statutes of the Habitat Administration of Pensions Funds show that there is a majority shareholder, Sociedad de Inversiones y Rentas de la Construcción Sociedad Anónima (652,679 shares) plus a large number of relatively minor shareholders, for instance Inversiones Mardonal Limitada (109,250 shares), the construction enterprise Loewe Maldiny Compañía Limitada (12,250 shares), Germán Molina Morel (11,250 shares), Devís, Valdés y Compañía Limitada (7,750 shares), and the construction enterprise Raúl Varela Sociedad Anónima (7,500 shares). The Administration has issued a total of 1 million shares of authorised capital. Each year a balance-sheet must be drawn up and the profits distributed in the form of dividends among shareholders in proportion to the number of shares they hold, setting aside a quota for the reserve fund and a quota for special funds (articles 15, 16 and 17 of the statutes). The Administration is managed by a board of directors consisting of nine members, elected by the general meeting of shareholders (article 6). Like those of Magister and Cuprum, the statutes do not recognise any right of participation of insured persons as such in the administration of the company.
161. According to the copy of the relevant notarial deed the Protección Administration of Pension Funds was set up on 16 January 1986. The share capital is 90 million pesos, divided into 60,000 shares without nominal value. This capital is fully subscribed by Mr. Lamberto Pérez Navarro (18,000 shares) as the unofficial agent for the employees of the State Bank of Chile, and by Mr. Hernán Arze de Souza Ferreira (42,000 shares) as the representative of the Health and Welfare Foundation of the Workers of the State Bank. Mr. Lamberto Pérez Navarro is the President of the Union of Workers of the State Bank. Mr. Hernán Arze de Souza Ferreira is the President of the State Bank and President of the Health and Welfare Foundation; the management of the Foundation is composed of four titular representatives of the State Bank, three titular trade union representatives and one deputy trade union representative. The company is managed by a board of directors composed of seven members. According to press cuttings communicated by the Government, Mr. Hernán Arze de Souza Ferreira was appointed Chairman, and Mr. Lamberto Pérez Navarro Vice-Chairman, of the temporary board. Like those of the other administrations whose statutes have been examined, the statutes of Protección do not mention insured persons. It is obvious, however, that they participate directly in the management of the administration through their trade union representative, and indirectly, through their representatives who are members of the board of the Health and Welfare Foundation of the Workers of the State Bank, which is the principal shareholder of Protección. Like the other administrations whose statutes have been examined, Protección is a limited liability company operated with a view to profit. Nevertheless, this is the only AFP whose share capital is exclusively owned by the workers of a sector - the banking sector - either through the representatives of an occupational association (the Union of Workers of the State Bank) or through a Foundation (the Health and Welfare Foundation of the Workers of the State Bank). Any profits which this Administration may distribute in conformity with article 13 of its statutes can in the long run only benefit the workers of the banking sector.
5. The Committee's conclusions
162. The Committee has taken due note of the detailed information communicated on the questions raised by the representation. In these conclusions, the Committee proposes itself to deal only with those aspects relevant to the application of the provisions of the Conventions concerned. The general comments made by the CNS and by the Government will be taken into account only to the extent that they affect the application of specific provisions of those Conventions.
163. It is necessary to distinguish between four different aspects: (a) the employer's contribution to the formation of the insurance fund; (b) the financial participation of the public authorities; (c) the administration of the insurance scheme; and (d) the participation of the contributors.
(a) Employer's contribution to the formation of the insurance fund
164. The Committee recalls that, in accordance with the provisions of Conventions Nos. 35 (Article 9, paragraph 1), 37 (Article 10, paragraph 1) and 38 (Article 10, paragraph 1), insured persons and their employers must contribute to the financial resources of the insurance scheme.
165. The Committee notes that, as is pointed out by the CNS, one of the main characteristics of the new pension scheme is the abolition of the employer's contributions (section 13 of Legislative Decree No. 3500 dated 4 November 1980, as updated).
166. For its part, the Government states that, although Article 9, paragraph 1, of Convention No. 35 (and Article 10, paragraph 1, of Conventions Nos. 37 and 38) prescribe that employers must contribute to the financial resources of the insurance scheme, paragraph 3 of these Articles stipulates that "contributions from employers may be dispensed with under laws or regulations concerning schemes of national insurance not restricted in scope to employed persons". Since section 89 of Legislative Decree No. 3500 offers any natural person the possibility of joining an administration, the Government contends that the new legislation is in complete conformity with the above-mentioned provisions of these Conventions.
167. The Committee observes that Article 9, paragraph 3, of Convention No. 35 (and Article 10, paragraph 3, of Conventions Nos. 37 and 38) in effect authorise a ratifying State to dispense with contributions from employers under national laws or regulations not limited in scope to employed persons. However, from the preparatory work for these Conventions it is clear that this flexibility clause was incorporated for the purpose of taking account of the situation of certain national insurance schemes compulsorily covering the entire population (ILC, 17th Session, 1933, Reports, Vol. II, pp. 370 to 371; idem, Record of Proceedings, p. 580, Article 9, paragraph 3). Bearing in mind that section 89 of Legislative Decree No. 3500 provides only for the optional inclusion of non-wage earners, the Committee is of the opinion that the employers should contribute to the formation of the compulsory insurance fund, if only for the benefit of wage earners protected by these Conventions, as prescribed by Article 9, paragraph 1, of Convention No. 35 and Article 10, paragraph 1, of Conventions Nos. 37 and 38.
(b) Financial participation by the public authorities
168. The Committee recalls that, in accordance with the provisions of Conventions Nos. 35 (Article 9, paragraph 4), 37 (Article 10, paragraph 4) and 38 (Article 10, paragraph 4), the public authorities shall contribute to the financial resources or to the benefits of insurance schemes covering employed persons in general or manual workers.
169. The Committee observes that legislative Decree No. 3500 provides only for a supplementary payment by the State in the event of the pension being or becoming less than the minimum pension (sections 13(b) and 73); this does not in principle constitute financial participation within the meaning of the Conventions in question. Nevertheless, and in view of the fact that section 74 of Legislative Decree No. 3500 provides for the adoption of regulations governing the operation and payment of the state guarantee, the Committee of Experts, which examined this case at its meeting in March 1983, requested the Government to send a copy of the regulations in question. The Government furnished a copy of Presidential Decree No. 50, dated 1 April 1981, sections 73 to 76 of which deal with the state guarantee. Under these provisions the General Treasury of the Republic is required each month to provide the Administrations or the insurance company, as the case may be, with the necessary funds to ensure that all the pensions can be paid - in the event of individual accounts having been exhausted - or to make up any pensions that do not come up to the minimum amount. The Committee therefore concludes that this is a state guarantee rather than a regular financial contribution by the public authority.
170. Although the present legislation provides for the possibility of some financial participation by the State in the form of a guarantee, this participation, given its conditional and thereby exceptional nature, does not strictly correspond to the contribution to the financial resources or benefits of insurance schemes prescribed in Conventions Nos. 35 (Article 9, paragraph 4), 37 (Article 10, paragraph 4) and 38 (Article 10, paragraph 4). (Endnote 16) In the light of the practice of the supervisory bodies on this point (Endnote 17) the Committee recommends that this matter be referred to the Committee of Experts for detailed examination and follow-up.
(c) Administration of the insurance scheme
171. The Committee recalls that, in accordance with the provisions of Conventions Nos. 35 (Article 10, paragraph 1), 37 (Article 11, paragraph 1) and 38 (Article 11, paragraph 1), the insurance scheme "shall be administered by institutions founded by the public authorities and not conducted with a view to profit, or by state insurance funds".
172. The Committee notes that legislative Decree No. 3500 entrusts the running of the pension funds to bodies known as Administrations of Pension Funds (AFPs). These Administrations have the status of limited liability companies coming under private law. The Administrations collect contributions, pay them into the members' personal capital formation accounts, and invest these resources in accordance with the law (sections 23 to 50 of Legislative Decree No. 3500). The Administrations come under the supervision of the Office of the Superintendent of Administrations of Pension Funds, an autonomous public body connected with the Government through the Ministry of Labour and Social Security (sections 93 to 97 of Legislative Decree No. 3500).
173. The Committee also notes that the Administrations of Pension Funds are private bodies operating on a profit-making basis, which have not been set up by the public authorities or by public insurance funds. The fact that they come under state control does not change their character though this control may lessen the risks inherent in the private running of a limited liability company acting in a market economy. Consequently, the Committee considers that the new legislation on pensions does not comply with Conventions Nos. 35 (Article 10, paragraph 1), 37 (Article 11, paragraph 1), and 38 (Article 11, paragraph 1).
174. The Committee nevertheless observes that, in the specific case of the AFP Protección (see paragraph 161), the share capital was fully subscribed by representatives of the insured persons. Although this AFP was legally set up as a limited liability company, any profits that may accrue to it can only benefit the workers, who are its sole owners, through their occupational associations. In these circumstances the Committee considers that in this specific case it may be considered that national practice is in conformity with the provisions of Article 10, paragraph 2, of Convention No. 35 (and Article 11, paragraph 2, of Conventions Nos. 37 and 38), according to which "national laws or regulations may also entrust (the) administration (of insurance) to institutions founded on the initiative of the parties concerned or of their organisations and duly approved by the public authorities".
175. In this connection the Committee notes with interest the information supplied by the Government regarding the possibilities for occupational organisations to set up AFPs (see paragraph 154) and, in particular, that a Bill has been drafted to resolve the doubts that have arisen regarding the activities of trade unions in the Administrations of Pension Funds, and that it is highly probable that trade union AFPs will spread in the future (see paragraph 157).
(d) Participation of the contributors
176. The Committee recalls that, in accordance with the provisions of Conventions Nos. 35 (Article 10, paragraph 4), 37 (Article 11, paragraph 4) and 38 (Article 11, paragraph 4), "representatives of the insured persons shall participate in the management of insurance institutions under conditions to be determined by national laws or regulations".
177. The Committee observes that the provisions of Legislative Decree No. 3500 concerning the setting up and running of the Administrations of Pension Funds (sections 23 to 50) make no provision at all for participation by the insured persons. It will be noted in this connection that an insured person is not considered to be a shareholder of the limited liability company administering his funds.
178. The Committee notes that national laws and regulations allow insured persons to organise their own Administrations in accordance with section 130 et seq. of Act No. 18406 respecting limited liability companies. This, the Government considers, guarantees the fullest participation of the members in the administration of the AFPs. At the present time, says the Government, there are four Administrations in the country organised by occupational groups: one by the teachers (Magister), another by supervisors in the copper industry (Cuprum), the third connected with the construction sector (Habitat), and the fourth, most recent one, set up by the workers of the State Bank (Protección). The Committee made a detailed analysis of the statutes of these Administrations (see paragraphs 158 to 164). As regards the AFPs Magister, Cuprum and Habitat, the Committee noted that insured persons as such have no right to participate in the management of these Administrations; this does not, however, rule out their active participation through one of the principal shareholders, as would appear to be the case in the AFPs Magister and Cuprum. As regards the AFP Protección the Committee is of the opinion that national practice may be considered to be in conformity with the relevant provisions of Conventions Nos. 35, 37 and 38, since the whole of the share capital belongs to representatives of the insured persons.
179. The Committee nevertheless wishes to point out that in the cases referred to in the foregoing paragraph the participation of insured persons in the management of the AFPs results neither from the current legislation nor from the statutes of these limited liability companies, which make no reference to them or to any occupational organisations by which they may be represented. Moreover, the Committee feels it necessary to point out that, even if insured persons do in fact participate to some extent in the management of some AFPs, there remains the question of the participation of insured persons in the management of the remaining Administrations of Pensions Funds. In these circumstances, and subject to the remarks made in connection with the AFP Protección and to a lesser extent in connection with the AFPs Magister and Cuprum, the Committee can only conclude that national law and practice do not guarantee the participation of representatives of insured persons in the administration of insurance institutions, as stipulated by Conventions Nos. 35 (Article 10, paragraph 4), 37 (Article 11, paragraph 4), and 38 (Article 11, paragraph 4).
Section 5
Questions concerning equality of opportunity and treatment
Discrimination (Employment and Occupation) Convention, 1958 (No. 111)
1. Allegations made by the CNS
180. The CNS alleges that the situation regarding conditions of work has not improved under the official employment programmes - PEM and POJH - but that these conditions have actually worsened in comparison with employment in the formal sector, even when the workers on the government employment programmes are performing similar work to that of employees in the private and public sectors. Since this situation does not represent a temporary or emergency solution but is tending to last, so as to create a new social category of the workers concerned, the CNS considers that the Government of Chile is discriminating in the field of employment and occupation, thus infringing Convention No. 111 (Article 1, paragraphs 1(b) and 3, and Articles 2 and 3(c)).
2. The Government's observations
See under Convention No. 29 (paragraphs 61-75 above).
3. The Committee's conclusions
181. The Committee reverts to its remarks on the PEM and the POJH in connection with Convention No. 29, and wishes to join the Committee of Experts, and the previous committee entrusted with the 1983 representation, in reiterating that persons registered with these programmes cannot be considered to have chosen their employment freely.
182. The Committee notes that the application of Convention No. 111 was not covered by the 1983 representation. For its part, the Committee of Experts examined this question at its meetings in March 1985 and 1986, when it formulated observations and direct requests, all of which were rather detailed. Furthermore, the question was discussed by the Conference Committee on the Application of Standards in June 1985 and again in June 1986. On neither of these occasions was the problem of discrimination, alleged by the CNS, raised.
183. The Committee considers that the differences in treatment between workers employed in the private and public sectors, on the one hand, and persons employed on the PEM and POJH employment programmes, on the other, for the performance of similar work, do not appear to be based on any of the forms of discrimination specifically listed in Article 1, paragraph 1(a), of Convention No. 111. The Committee feels obliged to recall that this Convention, as well as establishing a minimum standard with regard to the forms of discrimination listed in that provision, affords the Member concerned, in paragraph 1(b) of the same Article, the possibility of extending its anti-discrimination policy to any other distinction, exclusion or preference it may determine, after consultation with representative employers' and workers' organisations and with other appropriate bodies. The Government of Chile has not availed itself of this possibility of specifying other forms of discrimination that might be relevant in this case.
184. Consequently, the Committee has concluded that the differences in treatment and conditions of work reported by the CNS do not appear to include the required elements to permit the conclusion that discrimination exists within the meaning of Article 1, paragraph 1(a), of Convention No. 111.
IV. Recommendations of the Committee
185. The Committee recommends the Governing Body:
(a) to approve the present report, and in particular the following conclusions:
Questions concerning hours of work
(Conventions Nos. 1 and 30)
(i) Appropriate measures should be taken to amend further section 39 of Legislative Decree No. 2200 of 1978 (as amended by Act No. 18018 of 10 August 1981 and by Act No. 18372 of 12 December 1984) so that, in the event of an uneven distribution of weekly hours of work, the normal daily hours do not exceed nine, in accordance with paragraph (b) of Article 2 of Convention No. 1.
(ii) Appropriate measures should be taken to amend section 36 of Legislative Decree No. 2200, so that the overtime worked by employees in commerce is authorised only in accordance with regulations, drawn up after consultation with workers' and employers' organisations, determining the number of additional hours of work which may be allowed in the day and in the year, in accordance with Article 7, paragraph 3, and Article 8 of Convention No. 30.
(iii) Appropriate measures should be taken to amend section 42 of Legislative Decree No. 2200, so that in accordance with Article 6 of Convention No. 1 and Articles 7 and 8 of Convention No. 30, exceptions to normal hours of work are permitted only in the cases provided for in the Conventions (under Convention No. 30, the maximum number of hours of overtime authorised must be fixed not only by the day or by the week but also by the year), and so that these exceptions are decided after consultation with workers' and employers' organisations.
Questions concerning employment
(Convention No. 2)
(iv) The information submitted by the CNS regarding the PEM and POJH employment programmes refers mainly to Convention No. 122 and would have to continue to be examined under the regular supervision of the latter Convention.
Questions concerning forced or compulsory labour
(Convention No. 29)
(v) Appropriate measures should be taken to improve conditions of work and especially remuneration in the official employment programmes and to place the participants in these programmes under the protection of labour and social security legislation, including the legislation respecting the right to organise, in order to avoid situations of pressure to accept employment, which might give rise to doubts regarding the observance of Convention No. 29.
Questions concerning social security Sickness insurance
(Convention No. 24)
(vi) Appropriate measures should be taken to amend the PEM and POJH employment programmes so that the persons registered under them are covered by sickness insurance (see the conclusions in respect of Convention No. 29).
Pensions scheme
(Conventions Nos. 35, 37 and 38)
(vii) Appropriate measures should be taken to complete Legislative Decree No. 3500 of 4 November 1980, so as to ensure that employers contribute to the formation of the compulsory social security fund for employed persons, in conformity with Conventions Nos. 35 (Article 9, paragraph 1), 37 (Article 10, paragraph 1) and 38 (Article 10, paragraph 1).
(viii) Appropriate measures should be taken to ensure the contribution of the public authorities to the financial resources of, or the benefits provided by, the insurance scheme, as prescribed by Conventions Nos. 35 (Article 9, paragraph 4), 37 (Article 10, paragraph 4) and 38 (Article 10, paragraph 4), bearing in mind the practice of the supervisory bodies on this issue.
(ix) Appropriate measures should be adopted to amend Legislative Decree No. 3500 so that the pension scheme is administered by institutions not conducted with a view to profit, as prescribed by Conventions Nos. 35 (Article 10, paragraph 1), 37 (Article 11, paragraph 1) and 38 (Article 11, paragraph 1), with the exception of those cases in which the administration of insurance is entrusted to institutions founded on the initiative of the parties concerned or of their organisations and duly approved by the public authorities (Conventions No. 35, Article 10, paragraph 2; Nos. 37 and 38, Article 11, paragraph 2).
(x) Appropriate measures should be taken to amend Legislative Decree No. 3500 so that representatives of the insured persons participate in the management of all the insurance institutions, under conditions determined by national laws or regulations, as prescribed by Conventions Nos. 35 (Article 10, paragraph 4), 37 (Article 11, paragraph 4) and 38 (Article 11, paragraph 4).
Questions concerning equality of opportunity and treatment
(Convention No. 111)
(xi) The differences in treatment and conditions of work reported by the CNS in connection with the PEM and the POJH programmes do not appear to include the required elements to permit the conclusion that discrimination exists within the meaning of Article 1, paragraph 1(a), of Convention No. 111.
Supply of information and follow-up
(xii) The Government should provide complete information, under the reports due in virtue of article 22 of the Constitution, on the measures taken to apply the various recommendations of the Committee, in order to enable the Committee of Experts to pursue the examination of the points concerned.
(b) to declare closed the present proceedings before the Governing Body resulting from the representation submitted by the National Trade Union Co-ordinating Council of Chile respecting the observance by Chile of the following International Labour Conventions: Hours of Work (Industry) Convention, 1919 (No. 1); Unemployment Convention, 1919 (No. 2); Sickness Insurance (Industry) Convention, 1927 (No 24); Forced Labour Convention, 1930 (No. 29); Hours of Work (Commerce and Offices) Convention, 1930 (No. 30); Old-Age Insurance (Industry, etc.) Convention, 1933 (No. 35); Invalidity Insurance (Industry, etc.) Convention, 1933 (No. 37); Invalidity Insurance (Agriculture) Convention, 1933 (No. 38); Discrimination (Employment and Occupation) Convention, 1958, (No. 111).
Geneva, 12 November 1986. (signed) H. Heldal, Chairman,
José María Lacasa Aso,
John Svenningsen.
APPENDIX
EMPLOYMENT AND UNEMPLOYMENT
(Three-month moving averages ending in the month indicated)
Period Labour force Employed
('000) % var PEM % var POJH % var.
pre ('000) pre ('000) pre.
per per per.
1984
January 3.713,3 - 250,6 - 201,6 -
February 3.706,0 -0,2 175,8 -29,8 178,3 -11,6
March 3.703,7 -0,1 155,2 -11,7 159,3 10,7
April 3.691,0 -0,3 150,2 - 3,2 144,8 - 9,1
May 3.702,1 0,3 151,0 0,5 142,9 - 1,3
June 3.800,3 2,7 152,7 1,1 139,4 - 2,4
July 3.726,1 -2,0 154,0 0,9 142,8 2,4
August 3.737,7 0,3 156,1 1,4 166,1 16,3
September 3.751,5 0,4 158,1 1,3 165,8 - 0,2
October 3.759,3 0,2 166,4 5,2 179,5 8,3
November 3.779,1 0,5 170,0 2,2 196,2 9,3
December 3.798,4 0,5 171,0 0,6 207,6 5,8
1984 Employed Unemploy- Unemploy-
(Continuation) ment rate ment rate
including
% PEM &
Remainder % Var POJH
('000) pre. per
January 2.716,3 - 14,7 26,8
February 2.797,4 3,0 15,0 24,6
March 2.815,9 0,7 15,5 24,0
April 2.809,7 -0,2 15,9 23,9
May 2.822,0 0,4 15,8 23,8
June 2.891,3 2,5 16,2 23,9
July 2.831,3 -2,1 16,0 24,0
August 2.814,6 -0,6 16,1 27,7
September 2.837,7 0,8 15,7 24,4
October 2.838,5 0,0 15,3 24,5
November 2.861,8 0,8 14,6 24,3
December 2.889,4 1,0 14,0 23,9
EMPLOYMENT AND UNEMPLOYMENT
(Three-month moving averages ending in the month indicated)
Period Labour force Employed
('000) % var PEM % var POJH % var.
pre ('000) pre ('000) pre.
per per per.
1985
January 3.805,3 0,2 162,8 - 7,9 215,3 3,7
February 3.805,1 0,0 150,0 - 8,9 218,7 1,6
March 3.823,4 0,5 143,0 - 4,7 216,1 - 1,2
April 3.837,3 0,4 142,9 - 0,1 202,9 - 6,1
May 3.848,8 0,3 142,0 - 0,6 195,7 - 3,5
June 3.840,6 -0,2 143,1 0,8 190,2 - 2,8
July 3.841,4 0,0 135,9 - 5,0 184,4 - 3,0
August 3.822,4 -0,5 128,5 - 5,4 174,5 - 5,4
September 3.789,3 -0,9 126,3 - 1,7 170,2 2,5
October 3.983,2 5,1 117,0 - 7,4 170,5 0,2
November 4.004,2 5,3 114,5 - 2,1 170,4 - 0,1
December 4.018,7 0,4 105,6 - 7,8 171,4 0,6
1985 Employed Unemploy- Unemploy-
(Continuation) ment rate ment rate
including
% PEM &
Remainder % Var POJH
('000) pre. per
January 2.933,2 1,5 13,0 22,9
February 2.948,0 0,5 12,8 22,5
March 2.968,0 0,7 13,0 22,4
April 2.991,3 0,8 13,0 22,0
May 3.018,9 0,9 12,8 21,6
June 3.013,3 -0,2 12,9 21,5
July 3.018,5 0,2 13,1 21,4
August 3.008,5 -0,3 13,4 21,3
September 2.978,8 -1,0 13,6 21,4
October 3.153,2 5,6 13,6 20,8
November 3.199,3 1,5 12,9 20,1
December 3.260,4 1,9 11,9 18,9
Source: National Statistical Institute.
Endnote 1
The text of the representation is reproduced in doc. GB.230/19/25.
Endnote 2
Convention No. 1, ratified on 15.9.1925; Convention No. 2, ratified on 31.5.1933; Convention No. 24, ratified on 8.10.1931; Convention No. 29, ratified on 31.5.1933; Convention No. 30, ratified on 18.10.1935; Convention No. 35, ratified on 18.10.1935; Convention No. 37, ratified on 18.10.1935; Convention No. 38, ratified on 18.10.1935; Convention No. 111, ratified on 29.9.1971.
With respect to Conventions Nos. 1, 2, 29 and 30, it may be recalled that at its 228th Session (12-16 November 1984) the Governing Body approved the report of the Committee set up to examine the representation made in May 1983 by the National Trade Union Coordinating Council (CNS) of Chile alleging non-observance by Chile of Conventions Nos. 1, 2, 29, 30 and 122, and declared those proceedings closed (see doc. GB.228/8/3). Although the matters raised in the new representation are, with reference to Conventions Nos. 1, 2, 29 and 30, essentially the same as those examined within the framework of the representation made in 1983, new legislative provisions have been called into question regarding Conventions Nos. 1 and 30.
Endnote 3
See Official Bulletin, Vol. LXIV, 1982, Series A, No. 1, pp. 93-95.
Endnote 4
See doc. GB.230/19/25 and doc. GB.230/205, para. 127.
Endnote 5
Its questions dealt in particular with the definition of the "labour force" in Chile; whether refusal to participate in the PEM or the POJH resulted in loss of the right to unemployment benefit; statistics of persons registered in the PEM and POJH programmes since August 1984, and length of their employment in these programme; the extent to which authorised trade unions look after the interests of persons employed in the PEM and the POJH, and whether these persons may set up their own organisations to act as trade unions; the number of Administrations of Pension Funds (AFPs) and whether it is possible for trade union organisations to set them up; participation by employers' and workers' organisations in current legislative reforms; the present situation of the advisory committees set up in conformity with Convention No. 2.
Endnote 6
Section 34: "Normal working hours shall not exceed 48 per week."
Endnote 7
This subsection stipulates that the Director of Labour may authorise exceptions in the distribution of hours of work in specific cases; the grounds on which the decision is based must be stated.
Endnote 8
These Articles read as follows:
Article 3
The hours of work of persons to whom this Convention applies shall not exceed forty-eight hours in the week and eight hours in the day, except as hereafter otherwise provided.
Article 4
The maximum hours of work in the week laid down in Article 3 may be so arranged that hours of work in any day do not exceed ten hours.
Article 5
1. In case of a general interruption of work due to (a) local holidays, or (b) accidents or force majeure (accidents to plant, interruption of power, light, heating or water, or occurrences causing serious material damage to the establishments), hours of work in the day may be increased for the purpose of making up the hours of work which have been lost, provided that the following conditions are complied with:
(a) hours of work which have been lost shall not be allowed to be made up on more than thirty days in the year and shall be made up within a reasonable lapse of time;
(b) the increase in hours of work in the day shall not exceed one hour;
(c) hours of work in the day shall not exceed ten.
2. The competent authority shall be notified of the nature, cause and date of the general interruption of work, of the number of hours of work which have been lost, and of the temporary alterations provided for in the working time-table.
Article 6
In exceptional cases where the circumstances in which the work has to be carried on make the provisions of Articles 3 and 4 inapplicable, regulations made by public authority may permit hours of work to be distributed over a period longer than the week, provided that the average hours of work over the number of weeks included in the period do not exceed forty-eight hours in the week and that hours of work in any day do not exceed ten hours.
Article 7
Regulations made by public authority shall determine -
1. The permanent exceptions which may be allowed for -
(a) certain classes of persons whose work is inherently intermittent, such as caretakers and persons employed to look after working premises and warehouses;
(b) classes of persons directly engaged in preparatory or complementary work which must necessarily be carried on outside the limits laid down for the hours of work of the rest of the persons employed in the establishment;
(c) shops and other establishments where the nature of the work, the size of the population or the number of persons employed render inapplicable the working hours fixed in Articles 3 and 4.
2. The temporary exceptions which may be granted in the following cases:
(a) in case of accident, actual or threatened, force majeure, or urgent work to machinery or plant, but only so far as may be necessary to avoid serious interference with the ordinary working of the establishment;
(b) in order to prevent the loss of perishable goods or avoid endangering the technical results of the work;
(c) in order to allow for special work such as stocktaking and the preparation of balance sheets, settlement days, liquidations, and the balancing and closing of accounts;
(d) in order to enable establishments to deal with cases of abnormal pressure of work due to special circumstances, in so far as the employer cannot ordinarily be expected to resort to other measures.
3. Save as regards paragraph 2 (a), the regulations made under this Article shall determine the number of additional hours of work which may be allowed in the day and, in respect of temporary exceptions, in the year.
4. The rate of pay for the additional hours of work permitted under paragraph 2 (b), (c) and (d) of this Article shall not be less than one-and-a-quarter times the regular rate.
Article 8
The regulations provided for in Articles 6 and 7 shall be made after consultation with the workers' and employers' organisations concerned, special regard being paid to collective agreements, if any, existing between such workers' and employers' organisations.
Endnote 9
Distribution of persons registered with the PEM by length of time spent in the programme
Length of stay June 1982 August 1984
Months Per cent Per cent
0-6 37.2 27.2
7-12 18.2 35.6
13-14 17.7 16.2
25-36 8.9 7.3
37-48 4.8 5.3
48 and over 11.8 8.1
No date 1.4 0.3
Total 100.0 100.0
Endnote 10
Distribution of persons registered with the POJH by length of time spent in the programme
Length of stay August 1984
Months Per cent
0-6 21.2
7-12 27.0
13-18 19.2
19-24 26.7
Over 25 5.9
Total 100.0
Endnote 11
See appendix.
Endnote 12
Subsequently, the Government communicated quarterly statistics according to which 86,015 persons were registered with the PEM and 141,949 with the POJH, for the period April-June 1986.
Endnote 13
See tables on distribution of persons registered with the PEM and the POJH by length of time spent in the programme, under paras. 66 and 67 respectively.
Endnote 14
Old age and length Invalidity
of service
Fund No. of Total % No. of Total %
minimum No. of minimum No. of
pensions pensions pensions pensions
Social Security
Service 256 693 266 001 97 92 590 98 364 94
Private Employees'
Welfare Fund 13 908 52 018 27 7 141 17 485 41
National Fund for
Public Employees
and Journalists 193 4 632 4 145 423 34
National Fund for
Public Employees 2 760 52 416 5 2 406 13 261 18
Merchant Marine
Fund 210 4 064 5 82 1 009 8
Bank Pensions Fund 44 850 5 4 152 3
Note: These figures, which exclude social assistance pensions,
relate to August 1984.
Endnote 15
Period No. of Productivity Productivity of
months of contri- account Difference
of bution Taxable income (2)/(1)-1
contri- (simple (pesos)
bution average) 10 000 (1) 60 000 (2)
Sep. 1981
Nov. 1981 6 2.53 0.52% 2.11% 306%
Dec. 1984
Feb. 1985 43 3.58 3.11% 3.36% 8%
Source: Statistical Bulletins Nos. 5, 6 and 42 of the Office of the Superintendent of AFPs.
Endnote 16
The Committee considers it pertinent to recall that the different forms of financial participation of the public authorities which were taken into account during the preparation of Conventions Nos. 35 to 40 were total or partial payment of contributions, payment of a general increase in pensions, payment of an overall subsidy not assigned to a specific purpose, and participation in administrative costs (ILC, 16th Session, 1932, Reports, Vol. II, pp. 158 to 162; idem, Record of Proceedings, 16th Session, 1932, p. 718(4)).
Endnote 17
The Commitee was informed that this question was the subject of lengthy discussion in connection with the application of Convention No. 35 by France. In 1951 the Committee of Experts decided that it should no longer be posed. Since then it has not been raised with respect to French non-metropolitan territories and has been raised in very flexible terms in connection with other countries (for example Argentina and Peru). This practice of the supervisory bodies takes account, in particular, of the fact that workers compulsorily covered by national pension schemes are relatively better protected than the population as a whole, particularly in developing countries. Account has also been taken of the fact that the financial participation of the public authorities is not required in more recent and modern social security Conventions (in particular Nos. 102 and 128).