CHILE: SOCIO-ECONOMIC TRANSFORMATION AND STATE STRATEGIES ALONG A CENTURY

Manuel Riesco - Sonia Draibe

Vs: miércoles 3 de septiembre de 2008

Presented at the seminar

RC19 Stockholm 2008

The Future of Social Citizenship: Politics, Institutions and Outcomes

4-6 September 2008

Abtsract

The paper argues that the State presided over a tectonic socio-economic shift through two successive strategies. It presents ample empirical evidence which includes a comparison between the results of both period based in an original ordering of multiple long term data series.

It postulates that the second period presents clear symptoms of exhaustion, which reaches the point of crisis with respect to social policies. It suggests the emergence of a new model, in which the State once again reassumes the responsibility of leading economic development in the new socio-economic conditions, while offering at the same time a new deal to the population through the construction of a modern welfare state. It suggests that the new model will evolve over the wider space of an increasingly integrated Latin America.

1. Changes in socio-economic structures and State role

During the last century, Chile has changed quite completely in a unique process led by the State. However, the successive strategies that guided its action divide the century in two clear-cut periods.

In September 11 1924, a rather progressive military movement inaugurates the strategy that later on was to be know as developmentalism. Almost exactly half a century after, on September 11 1973, a counter-revolutionary military coup imposed the second model, which decades later was to be generalised across LA and the underdeveloped world under the name of “Washington consensus.”

The first consolidates and extends in the wake of the 1930 crisis, presided by democratic governments of diverse signs that adopt the banner of progress in its two dimensions, economic and social. The particularity of the Chilean case seems to be the radical manner in which this period climaxes, in the backdrop of an extended social mobilisation that reaches the dimensions of a full blown revolution, which nonetheless kept on with the tradition of democracy and legality. Between 1964 and 1973, the State completes the basic economic and institutional infrastructure, carries out agrarian reform and fully recovers the ground rent of natural resources up to then mostly in foreign hands. At the same time it achieves rather spectacular results in nutrition, health, education and income distribution. All these seem to conform the base of the subsequent dynamism of the Chilean economy (Illanes-Riesco 2007).

The next period is divided as well in two very different phases. Only during Pinochet’s dictatorship his advisors made ostentation of their adherence to the neoliberal economic school. Instead, the economists of the ensuing democratic governments have been rather critical of such ideas. On the other hand, it is a well known fact that they influenced to maintain the strategic lineage of the period as a whole. Namely, the unilateral emphasis in creating the best short term conditions for business in the context of indiscriminate opening to foreign trade and investment. With the highly distorting additional bias of considering necessary and convenient to keep both State influence and social demands as contained as possible.

However, this bias was certainly diminished when compared with the extremism of the “Chicago Boys.” In this manner, during this phase, the second grand State strategy has acquired in Chile the more moderate contours that were characteristic in other LA countries. However, this orientation has continued in general, being also significant in the sphere of social policies.

The change from one strategy to the other was extraordinarily violent. However, the phenomenon that was taking place in the background all along gives both significant aspects of continuity as well. Traditional peasants, who represented half of the population in the 1930 census, have been extinguished for the most part. Their painful transformation into precarious salaried urban workers has been the dominant epic of the century.

Overall population multiplied by four since 1929 to reach 16.4 million in 2006. Rural population, however, remained stagnant in the same 2.2 million of hence, while its proportion was reduced to less than 13% in 2006. Meanwhile, inhabitants of the five main cities multiplied over six times and those of Santiago by more than seven (table 1 in appendix). Additionally, those living in the countryside today are quite different to their parents. The old inquilinos disappeared completely, together with the traditional haciendas and, as will be seen, most peasants today hold precarious salaried jobs at least part of the time.

As measured from 1929 to 1971 to 2006, each of them a year of peak in the respective economic cycle, manufacturing production increased rapidly during developmentalism (4.3% a year on the average from 1929 to 1971) and at a lesser pace during the following period (2.5% a year on the average from 1971 to 2006). As would be expected, foreign trade grew more during the Washington consensus that with the previous strategy, which has received the name of import substitution model. Exports represented 40% of GDP in 2006; however, the main items continue to be scarcely processed raw materials (copper, fruit, wine, fish, forestry), which is appreciated as an important weakness (BC 2008, CENDA 2007, Ffrench-Davis et al 2007).

GDP has multiplied almost 14 times between 1929 and 2006. This is due in part to increased worker productivity, which has tripled. However, the main factor has been the increase in the number of workers, which has almost quintupled. In this way, the number of persons in disposition to be hired grew far more than the population, mainly because women workers grew more than eight times (table 2 in appendix).

However, the behaviour of these factors is very different in the two strategic periods. It is rather surprising to confirm that economic growth during developmentalism (3.1% a year on the average) stems mainly from intensive growth in worker productivity (1.6% a year), meanwhile this rhythm slows down considerably during the following period (1.2% a year). On the contrary, the slightly faster GDP growth during the Washington consensus (3.8% a year) is explained mainly by the growth of the labour force. Moderate during developmentalism (1.5% a year), it explodes during the second period (2.6% a year), mainly because women move massively into the labour force (3.9% a year) (table 2 in appendix).

This phenomenon is of great significance. In part it may be explained because peasant migration takes place during the first period for the most part, meanwhile women participation accelerates during the second (tables 1 and 2 in appendix). While the former remained in their traditional condition their number was accounted for in the labour force, but their product was destined largely to consumption by themselves or the landowner. Only a little trickled out of their land and the haciendas and into the market, so the most part was not accounted for in GDP. When they migrated into the cities and towns, the number of workers remained unchanged, meanwhile most of their work was now dedicated to produce goods and services to be sold in the marketplace and consequently accounted for in GDP. In this way, average worker productivity grows considerably. On the contrary, when housewives join the workforce the number of workers and GDP increase at the same time, although not necessarily in the same magnitude. Both the numerator and the denominator of the productivity equation augment at the same time and its value does not increase significantly.

Additionally, as is well know from economic theory, the increase in productivity depends mainly on the qualification of the labour force that in turn depends on the sanitary and educational level of the population. In this way, the fast increase in productivity during developmentalism may be explained as well by the quite extraordinary achievements of the State regarding the improvement of health and education of Chileans. This effort was significantly reduced during the following period as will be seen, especially during the dictatorship.

These changes in the underlying social structure in the course of historically determined successive development strategies, seem to provide important clues to understand the evolution of the country along the past century. These seem more suggestive than alternative explanations provided by abstract formulations a la mode in recent times. A closer look at them may help to understand the present situation and its projection to the future.

2. Changes in the labour market

The modern Chilean labour market presents no few surprises on its own, which rather turns on its head current knowledge about it. It seems to be conformed mainly by urban workers which hold extremely precarious formal salaried jobs which they constantly rotate with informal work “on their own.” Additionally, in the case of women, they constantly move in and out of the workforce as such. It has been conformed as such through a painful saga in which economic and political upheavals have been determinant. The numbers also show that the workers’ share of the riches they have produced has changed accordingly with their influence in society. Both varied dramatically along the past century.

2.1. The paradoxes of the labour market

The private Administradoras de Fondos de Pensiones (AFP) may be highly questionable as a social protection system, however, nobody may deny that they have produced excellent labour statistics. Every Chilean opens an account in an AFP when they are hired for the first time, which will accompany them until retirement. These will record each time they work as formal salaried employees or contribute voluntary to the pension system as “independent.” Each person is identified by his or her rol único tributario (RUT) number, so repetitions are not possible. Accounts are closed when they retire by age, inability or death. Once a month, the computers at he Superintendencia de AFP (SAFP) will check through over seven million individual accounts, providing a picture of extraordinary dense grain - over 7 mega pixeles - of the labour force. It has revealed are plenty major surprises.

A first finding is that the number of individual accounts is significantly larger than the workforce as estimated by Instituto Nacional de Estadísticas (INE), and the difference affects only women. The total number of affiliates to the pension systems^[i] exceeds the INE estimates of the workforce in about 15%. However, male affiliates coincide almost exactly with the INE estimate of the number of male members of the workforce. On the contrary, women holders of AFP accounts exceed the INE estimate of the female workforce by almost 40%. On the other hand, AFP statistics show that over 80% of women and 90% of men have contributed to their AFP during the past 5 years (see following table, INP-CENDA 2005b). Does this mean that INE underestimates the female workforce? However paradoxical it may seem, both statistics are probably quite precise.

Table 2

Source: INP-CENDA 2005a, en base a Superintendencia AFP (SAFP), Instituto Nacional de Estadísticas (INE), CELADE.

A second surprise is that almost every affiliate declares being a salaried employee and contributes as such. With the exception of 3.5% who declare themselves “independent contributors,” the remaining 96.4% are affiliated as dependent employees (see table 2). INE surveys, instead, estimate that approximately two thirds of the occupied are formal salaried workers and the remaining third works informally “on their own.” This proportion has been remarkably consistent along many decades, although it varies with the seasons and the phases of the economic cycle and shows a slight tendency to grow in favour of salaried workers in the long run (INP-CENDA 2005a). The same is confirmed by the number of contributors to the AFP in any given month, which is almost the exact equivalent of salaried workers measured by INE during the same month, Are all affiliates dependent salaried workers as they declare and contribute in the AFP? Only two thirds as measured by INE and the number of monthly contributors to the AFP? Paradoxically again both statistics seem to be quite accurate. The solution to these dilemmas may be found in the following chart.

Gráfico 1

Fuente: INP-CENDA 2005b en base a SAFP

The red bars represent the average density of contributions of AFP affiliates throughout their labour lives. As may be seen, more than one fifth of affiliates have contributed less than one month out of ten, or less. One third have contributed less than one month in five, and ¡two thirds have contributed less than one month in three! On the other end, only 11.39% of affiliates have contributed regularly every month along their labour lives.

The blue bars, on their part, show the density of payments of the contributors of the last month. It must be underlined that they represent a subset of the former, whose members change every month for the most part. As may be appreciated, their distribution tends to show more regularity in their contributions. That is to say, the probability that a contributor in any given month has contributed regularly in the previous months is higher than the average affiliate along its labour life.[ii] This may be showing that participation in the labour market is not regular along active life, and presents agglomerations in determined periods. Seen from another angle, the probability of holding his job during the following month is greater for an occupied worker than the chances to find one for an unemployed or a woman that in that moment declares herself a housewife. However, even in the first case this probability is lower than 22%, which is the proportion of contributors of any given month that have contributed regularly during the previous months. That is to say, the most likely outcome for those who hold a job in any given month is that they will lose it the next.

The picture coming out of these numbers is that of a workforce that almost entirely moves in and out constantly of different and very short term formal jobs. [iii] That is to say, it is conformed mainly by workers with highly precarious salaried jobs, who work informally “on their own” in between. When they are not unemployed outright.

Probably, the weekly INE employment statistics accurately reflects the composition of the occupied workforce in any given moment. The day of the survey approximately 2/3 hold formal salaried jobs meanwhile the remaining 1/3 are working informally “on their own.” In addition, those who are unemployed are normally around one in every ten. All the above proportions are subject to the usual seasonal and cyclical fluctuations. However, the INE statistics does not reflect the fact that those who appear as informal workers one week may find a formal job during the next. Vice-versa those with formal jobs may lose them the following day. After being unemployed during weeks or months they may assume an informal occupation - usually in retail, construction and agriculture (Bertranou 2007) - and so on.

There is certainly a nucleus of stable salaried workers, among whom the largest group are public employees and command line employees in medium and large private companies. There is another stable group of workers “on their own,” conformed by independent peasants, independent transport workers such as taxi drivers, small retailers, liberal professionals, and he like. Many times, they work together with close colleagues and family members. Many of these are affiliated as “independent” in the AFP and contribute with remarkable regularity. However, their proportion is very small and close to the 3.5% of independent AFP affiliates.

A similar phenomenon seems to affect the female workforce. The INE survey records that many women answer negatively to the question “Did you search for work during the past week?” and are consequently classified as inactive. However, the AFP statistics are even more precise when they record that almost every one of them has a pension account and that an overwhelming majority have contributed to it during recent years, almost every time as formal salaried workers. The latter show that 70% of women in active age are considerably active salaried workers. In the case of men, this proportion reaches 84% (see table 2).[iv]

The enigmas have been solved. The answer to both riddles seems to be that the same persons constantly change their condition. One day they are formal workers and contribute to the AFP. The next they are informal and do not contribute. In the meantime they are unemployed. If they are men, they generally continue looking for a job and remain as active members of the workforce, albeit unemployed. If they are women, soon they will give up looking for a job and INE reclassifies them as “inactive.” When the economic cycle improves they may find a job and contribute again. Other times it is simply harvest season, because many women work as temporary fruit pickers and packers.

In this manner, AFP statistics have buried the old notion of a Chinese wall standing in between formal and informal workers and separating active women from housewives. It seems that what divides these categories is rather a tenuous and porous veil, through which all of them constantly step across in one or the other sense. However, especially during recessive phases of the economic cycle, it may constitute a barrier as formidable as the transparent atmosphere that surrounds earth. The immense anguish of facing family obligations without being able to find a job is aggravated then by the fragility of social protection systems. The dismantling and privatisation that the Chilean style Washington Consensus has inferred to the developmentalist welfare state have worsened them considerably.

2.2. Labour regime and salaries

The modern Chilean workforce has not appeared in scene from the stroke of a magician or out of the pot of simplistic recipes of neoliberal economics. Its has been a long road since 1930, when the population census measured that for the first time urban dwellers equalled the number of peasants. In that moment, the dominant labour relation was inquilinaje, a certain form of which was reproduced in mining enclaves where peasants were more or less forcibly sent by “enganche” and where the hacienda system was more or less reproduced.

The 1930 crisis was the first great earthquake affecting the traditional labour regime. In two or three years it expelled five of every six nitrate miners, who were the largest worker concentration by far (Illanes-Riesco 2007). At the same time, peasant migration accelerated to reach the peak by mid century, and maintained a fast rate that would decline only by the late 1980s (table 1 in appendix). The second great earthquake was the massive expulsion of peasants in the wake of the 1973 coup. The dictatorship forcefully expelled all hose peasants considered suspect of actively supporting agrarian reform. They numbered over one hundred thousand including their families. Hundreds were simply murdered in the days following the coup. Their names are the majority in the list engraved in stone at the monument to those killed and disappeared. However, other peasants who were considered “loyal” to the old landowners received around 40% of the expropriated lands, much in accordance to the agrarian reform law. About 30% was restored to the landowners or their sons rather, under the also legal form of quite small reservas, and the rest was auctioned to forestry companies. All of the latter also proceeded immediately to expel most of the peasants who lived there.

On the other hand, the privatisation and dismantling of public service in general and social services in particular had a significant incidence in the conformation of the present labour structure. ECLAC statistics show that the proportion of State employees decreased from 20% to 10% of the workforce, approximately. These phenomena were compounded by the severe economic crisis of 1981-1985, when unemployment reached one out of every three members of the workforce, including emergency public employment programs, and provoked huge displacements of workers (Illanes-Riesco 2007).

The institutional labour framework also suffered brusque transformations. As is well known, the Chilean labour movement was a remarkable social and political actor along good part of the 20th century. It climaxed assuming a leading role during the revolutionary agitation of the end of the 1960s and early 1970s. This made possible the gigantic progressive reforms implemented in a very short time by Presidents Frei Montalva and especially Salvador Allende. However, it was reduced to a minimum expression in the wake of the coup by the brutal repression of the Pinochet dictatorship. Multiple restrictions were imposed as state of siege dispositions during the 1970s, and later legalised by the so called Plan Laboral of 1981. The right to unionise and strike were severely restricted, prohibiting industry-wide collective negotiations and permitting replacement of workers in legal strike among many other dispositions (Volker 2002).

Workers reassumed a protagonist role towards the mid 1980s. Under the impact of a huge economic crisis organised workers led the widespread protests which in the created the conditions to end the dictatorship. Their rank and file carried the weight of this struggle, however, they fought mostly in the streets and poblaciones. Significantly, not many took place in the workplace. National protests managed to paralyse the country, many times for days in a row. They were convened by large worker organisations such as the copper miners’ unions and the Central Unitaria de Trabajadores, CUT, which was reorganised in those days; in replacement of Central Unica de Trabajadores CUT, founded in 1952 and dissolved by Pinochet in 1973. However, CUT has not been able to call a national workers’ strike since before the coup.

After the end of the dictatorship, the labour movement assumed a notably moderate role. It concurred to a tripartite framework agreement with employers and the government, promoted by the latter, and its wage demands have been notably restrictive including the acceptance of regular wage increases below productivity gains (Murillo 2005). It has consistently voted for the governing coalition in successive elections and supported the democratic governments. Albeit in an increasingly disaffected mode.

The rate of union affiliation had been increasing rapidly along the 20th century, especially since the mid 1960s when the Ley de Sindicalización Campesina made it extensive to the peasantry. In the years before the coup it had topped 20% of the workforce. During the following decades it feel drastically (Illanes-Riesco 2007). It recovers towards the end of the dictatorship and grows rapidly during the first democratic government to reach 15.1% of the workforce in 1992. It then falls again continuously to reach 11% in 1999, level in which it stabilised until 2006. The coverage of collective negotiation fell even lower, reaching a minimum of 7.8% of salaried employment in 2004. After two years of slight increase, it reached 8.6% in 2006 (figure 2).

Figure 2

Source: Elaboración OIT 2007 con base en datos de la Dirección del Trabajo y del INE.

Nota: La tasa de sindicalización se calcula como número de afiliados a sindicatos como porcentaje del empleo total. La cobertura de la negociación colectiva se calcula como los trabajadores cubiertos – suponiendo una duración de los convenios y contratos de 2 años – como porcentaje del empleo asalariado.

Strike activity, which had been growing steadily during developmentalism reached its maximum during the 1960s and early 1970s, when one out of every five workers participated yearly in strikes, on the average. On the contrary, practically there were no strikes during the decade following the coup. From 1973 to 1981 less than one in every two hundred workers went on strike each year, on the average, situation that persisted more or less until the end of the dictatorship. Strike activity rebounded slightly during the 1990s, to reach an average of one in every one hundred workers every year (CENDA 2007).

In this way, the military coup was a violent disruption in the power and influence of workers. The results of the mentioned shifts in the system of labour relations and employment structure are rather impressive regarding to real wages, participation of labour in GDP and consequently in income distribution.

From 1929 to 2006 real wages multiplied more than four times over. However, the improvement took place almost entirely during the developmentalist period. On the contrary, wages were slashed brutally in the wake of the coup and remained very low throughout the dictatorship. After recovering since 1990 they have slightly surpassed their pre-coup levels only recently.

The democratic governments have been very conservative regarding wages. They have formulated the explicit principle to contain the real wage increases below the increases in worker productivity, which necessarily implies a reduction in the share of labour in GDP. Significant exceptions to this norm have been the wages in the public sector, as well as the minimum wage. Both had been slashed even lower after the coup - in real terms they were reduced to one third of their pre coup levels meanwhile average wages fell by one half - and remained very low until 1990. In both cases wage increases were significant, averaging 10% a year during the 1990s. Even so, the wages of important segments of public employees, as teachers for example, still do not recover their pre-coup levels. The general wage average of all Chilean workers recovered this level in December 1999. The real wage index in 2006 is only 20% over the level attained before the coup that took place over three decades ago (table 2 in appendix) (CENDA 2006b).

The remuneration of labour as a whole increased over 20 times since 1929 to 2006 - measured as the increase in average real wages times the increase in the number of workers. During developmentalism this was achieved mainly by the fast increase of real wages, which multiplied 3.5 times from 1929 to 1971, and in a lesser scale by the increase in the number of workers which multiplied 1.9 times. During the Washington consensus it grew (less) although the workforce expanded very rapidly 2.5 times, which compensated in part the depression of real wages during the dictatorship, insufficiently compensated by their post 1990 recovery. The stagnation of wages, which expanded just 1.2 times from 1971 to 2006 was so severe that the remuneration of labour as a whole grew less than GDP in spite of the fast increase in the number of workers (see following figure and table 2 in appendix).

Gráfico3

The increase in the remuneration of labour as a whole vis a vis the growth of GDP is the factor which determines income distribution the most, by far. In this manner, the numbers shown prove that income distribution in Chile has experimented huge fluctuations along the century. Summarising, from 1929 to 2006 GDP multiplied almost fourteen times meanwhile the remuneration of labour multiplies by more than twenty. That is, there is a substantial improvement in workers’ share of GDP along the whole period.

However, this improvement takes place entirely during developmentalism, when GDP multiplies by 3.7 times from 1929 to 1971, meanwhile the remuneration of labour as a whole multiplies 6.8 times in the same period. This means their share of GDP almost doubles in the period. On the contrary, during the Washington consensus meanwhile GDP again multiplies 3.7 times from 1971 to 2006, the remuneration of labour as a whole multiplies only by 3.0, which implies a significant reduction in their share (table 2 in appendix).

These numbers contradict a recent study by he World bank (de Ferranti et al 2004), which argues that income distribution in LA would be a secular problem without significant changes since colonial times, and that it has not been affected significantly by the Bank-sponsored “structural reforms.” At least in Chile it was not like that.

The recovery of wages and the strong increase in employment experimented since 1990 have been the decisive factors in the large reduction of poverty and indigence since then. The CASEN survey of 1987 measured that in the final years of Pinochet 45.1% of the population lived under the poverty line. In 1990, still 38.6% was in this situation, including 13% under the line of indigence. In 2006, these proportions had been reduced to 13.7% and 3.2%, respectively (MIDELAN 2007). The latter figures have been criticised because they are based on obsolete consumption patterns. In addition, the line of poverty has raised considerably in 2007 because of the agricultural products price boom during the current crisis.

The precariousness of employment in Chile is enhanced by the permissive existing “labour flexibility.” Current legislation permits that employers, for example, may hire workers for periods under four months practically without paying social security contributions. As Finance Minister Nicolás Eyzaguirre declared, most employees in supermarkets are in this situation. Until recently, an extended practice was that large firms subcontracted significant parts of their workforce with small so called “meat providers” which offered practically no labour rights. In 2007 the law regulating subcontracting was modified to forbid this practice except in qualified cases. The application of the new law has generated all kinds of legal confrontations between firms and Dirección del Trabajo, which has regulated that thousands of subcontracted workers should be hired by the “mother” firm. Even State owned CODELCO is confronted to the regulator for this reason.

On the other hand, President Bachelet has nominated a council with the mission to suggest new changes in labour legislation and the unemployment insurance. The latter was established in 2002, to replace an unemployment subsidy that existed since the 1930s and was enhanced successively by developmentalist governments, but whose mount had been reduced after the coup and later to reach almost ridiculous amounts. After 2002, all workers hired in Chile have the right to an unemployment insurance, which is obligatory for those hired after October 2002. The system functions on the base of individual capitalisation accounts, which are complemented by a solidarity fund. It is financed by contributions of 3% of salaries, of which the worker contributes 0.6% and the employer 1.6% to the individual account and 0.8% to the solidarity fund. The State contributes to the latter in an amount determined yearly by law and which has been very small until now [v].

The individual accounts are administered by a consortium formed by the AFP, which won a bid for proposal managed by the government with fees that are significantly lower than those charged for managing pension accounts. In addition, this fund has continued to accrue interest during the current world crisis even as the much larger AFP funds have lost billions of dollars. However, as of December 2007, when practically all current work contracts are in the system, less than one in every five unemployed workers have a right to receive payments form it and its monthly amount is less than the legal minimum wage.[vi] Because of this, the reforms that are currently being discussed include eliminating certain restrictions to receive the insurance, such as as the present requirement of one year in contributions, which hardly anyone satisfies, and a drastic increase in the solidarity fund.

However, 2007 has witnessed strike activity unprecedented since the coup. What seems more significant, the largest mobilisations have managed to break the labour legislation in place since the dictatorship which prohibited industry wide negotiations. In this occasion, thousands of workers hired by small and medium subcontractors have staged long and successive strikes which have culminated in favourable agreements negotiated directly with the “mother” companies. His has taken place in strategic sectors such as forestry mining and agro-industry.

It is possible that the reanimation of this massive and strategic actor, which many, declared dead and buried many times over, may in the end originate the conditions for a new block in power may lead from the State the country into the new development strategy that seems to be in the making in LA in the new century.

3. Changes in the welfare regime

As is well know, the literature on welfare regimes has flourished in the course of the last decades, much of it stemming from the now classic formulation by Esping-Andersen (1990) of the liberal, conservative and social-democratic regimes. Additional, historical considerations have been formulated by Therborn (1995), as well as regional and gender aspects, among many others. Intermediate categories have been another advance, such as the developmental welfare state introduced by Kwon (1999) for south east Asia. Following this line, the intermediate category of Latin American developmental welfare state has also been suggested to analyse a kind of State that was common in the region during the 20th century (Draibe-Riesco 2007).

The main determinations of this concept refer to the fact that the same appears over the backdrop of a predominantly agrarian social structure in accelerating transition. It takes place in conditions of underdevelopment, that is, at the same time already industrialised countries have completed their transitions and are building modern welfare states. In such conditions, the developmentalist State is forced to assume the double challenge of the economic functions that yet inexistent or very weak modern social actors cannot perform, and at the same time intervene actively in social transformation precisely to nurture them through their infancy. Social policies become its main tool of social transformation.

In the Chilean case, State action and especially its social policies achieve quite impressive results which remain until today, in spite of their severe dismantling by the extreme form assumed in this country by the so called Washington consensus. From 1929 to 2006, meanwhile GDP multiplied fourteen times, as mentioned, public expenditure increased almost thirty times and social expenditure over one hundred times. The main growth took place in education and especially in health. The fiscal balance of pension system delivered a considerable surplus until 1981, however, after the privatisation of social security contributions, the fiscal deficit ballooned enormously as the State continued paying public pensions to the vast majority of elders, absorbing good part of the recovery of public social expenditures since 1990, from the depressed levels left over by the dictatorship (table 3 in appendix).

However, almost all the achievements in public social policies took place during developmentalism, as they were severely dismantled during the dictatorship an stagnate during the Washington consensus as a whole. The increase in public social expenditure during the first period almost doubles GDP growth, meanwhile during the second it grows significantly less than the latter. The average yearly increase of public expenditures in education and health is twice as fast during the first period in relation to the second. Oin this way, meanwhile during developmentalism public social expenditures grew consistently as a proportion of GDP, the opposite took place during the second period considered as a whole (table 3 in appendix).

The developmentalist State built universal public social services that achieved a remarkably wide coverage in relation to the population as a whole. During the ensuing period, instead, they were partially privatised, which was achieved in large part in pensions and education, and less in health.[vii] On the other hand, the concept of universality was abandoned in favour of targeting a diminished social expenditure in the poorest- This is appreciated clearly in the cases of education and pensions, which will be detailed further on.

3.1. A new welfare State model in the Making? Also in Chile?

In mid 2005, millions of tele-viewers of CNN in Spanish were astonished. No wonder. In a live debate among Chilean presidential candidates, all of them agreed on one point: the urgent need to reform the privatised pension system. Along a quarter century, it had been lauded as a rotund success that he whole world should consider imitating. No few countries had in fact reformed their own pension systems in part following this model. At the beginning of 2006, just a few months into the government of President Michelle Bachelet and as pension reform was already underway, one million students took to the streets and held their schools - the movement was called “the march of the penguins,” in reference to the white and dark blue school uniforms of the kids - demanding the same for the largely privatised school system.

What had failed? As will be argued, after two decades, the privatisation of public social services remitted its benefits to the financial markets, private service providers, and a small high income minority, with no few problems even for the latter; additionally, in a high strain for fiscal resources. On the other hand, targeting diminished public expenditure in the poorest alleviated their condition in part, especially in the case of indigents. Meanwhile, the massive emergent salaried middle sectors have been unprotected and forced to increase their out of pocket payments to the flourishing private social services industry. At the same time, indiscriminate opening of the economy to globalisation made their employment more precarious, as shown, and their general livelihood more insecure.

On the other hand, in the local political sphere the institutional and political bondage left in place by the dictatorship finally seems to be unravelling after almost two decades of “transition to democracy.” The simultaneous displacements of all political forces since the elections of President Bachelet, over the backdrop of a renewed social mobilisation not seen since the end of the dictatorship, together with the reformulation o public policies, constitute the most clear signs.

In a longer term perspective, this phenomena seem to be signs of a complex moment, where large tensions are unravelling across different planes and dimensions. On the other hand, they seem to coincide with a moment of inflexion in the general state development strategy in a context that transcends the country into the regional level. As will be seen, it has the traits of being the general background of the present moment and thus the principal criteria at the time to determine the course to be followed.

Bibliografía

· Banco Central de Chile (BC) www.bcentral.cl visitado el 25 de febrero 2008.

· Banco Mundial (BM), 2008. EdStats Query en www.worldbank.org, visitado el 12 de febrero 2008.

· Bertranou, Fabio M. 2007 “Informal Economy, Independent Workers and Social Security Coverage in Argentina, Chile and Uruguay” International Labour Office Santiago, Chile

· Brunner, J.J.; Peña, C. (editores) (2007). La reforma al sistema escolar: aportes para el debate. Universidad Adolfo Ibáñez, Universidad Diego Portales. Santiago

· Cenda , 2008. Chile, Pérdidas de los fondos de pensiones durante la crisis http://cendachile.cl/perdidas_afp

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Anexo: Cuadro 1

Anexo: Cuadro 2

Anexo: Cuadro 3

4 Notas a los anexos cuadros 1 a 3

^{[i]- in spite most of the pensioners still depend on the public systems and will continue to do so under the new pension reform, only a small number of active contributors to the old public pension systems, mainly military and police, must be added to the bulk of AFP affiliates,}

[ii] Esta diferencia puede deberse en parte al momento del ciclo económico en que se hace la medición. Sin embargo, esta corresponde a diciembre del 2001 que es más bien un período de moderada actividad en el ciclo respectivo, que se inició en la recesión de 1998 y no alcanzaría su auge sino hasta el 2007.

[iii] Las estadísticas del nuevo seguro de cesantía confirman la alta precariedad del empleo en Chile: los 5.2 millones de contratos laborales nuevos firmados entre octubre 2002 y diciembre 2007 equivalen al 75% de la fuerza de trabajo y al 80% del total de ocupados, y ¡exceden en un 17,7% el número total de asalariados ocupados! de las encuestas del INE.

[iv] La constatación de las estadísticas previsionales acerca de la amplia aunque precaria participación femenina en la fuerza de trabajo viene a matizar asimismo las estadísticas regionales respectivas publicadas por CEPAL que basándose en las cifras del INE constatan que la participación femenina aparece más baja en Chile que en otros países de la región.

[v] Del orden de unas pocas decenas de millones de dólares.

[vi] El total de desocupados según el INE ascendía en diciembre del 2007 a 510.800, de los que 85.455 cobraban el seguro de cesantía por un monto de 105.984 pesos mensuales (1 dólar equivale aproximadamente a 500 pesos). Fuente: < www.safp.cl >, <www.ine.cl >, visitados 12 febrero 2008

[vii] La evolución del sector salud no se trata en detalle en este trabajo. Sin embargo, parece necesario destacar que al igual que en educación, el Estado desarrollista construyó un sistema nacional de salud que hacia 1973 ofrecía una amplia cobertura a toda la población, con calidad muy aceptable. Todos los partos recibían atención e iniciativas como el medio litro de leche a todos los niños (1971) permitieron reducir la mortalidad infantil y materna y la desnutrición a niveles cercanos a países desarrollados. Con posterioridad al golpe militar el gasto en salud se redujo a menos de la mitad en términos reales y las remuneraciones del personal de salud más aún, mientras el sistema nacional fue sometido a sucesivos intentos de desmantelamiento. El mas serio tuvo lugar con la reforma de 1981 que creo un sistema de aseguradoras privadas (ISAPRE), diseminó la atención primaria a los municipios y los hospitales a las regiones, desmembrando el servicio nacional. Se estableció una cotización obligatoria de 7% que los asalariados podían integrar voluntariamente al sistema público o al privado. Este sistema se mantuvo en lo fundamental a partir de los 1990, recuperándose sin embargo significativamente el nivel de gasto público, aunque éste sigue siendo inferior al anterior al golpe en proporción del PIB. Hacia mediados de los 1990, las ISAPRE habían captado alrededor de un tercio de la población y casi la totalidad de los sectores de altos ingresos, desarrollando una importante industria de servicios de salud privados. Sin embargo, a diferencia del sistema de pensiones, se mantuvo en este caso la posibilidad de retornar al sistema público. Las insuficiencias del sistema privado y sus elevados costos hicieron que la mayor parte de sus afiliados retornara al sistema público, el que hacia el 2000 había recuperado al 85% de la población, sin embargo, los sectores de altos ingresos se mantienen en las ISAPRE. Es uno de los aspectos que refleja más agudamente la segmentación de la sociedad chilena. El gobierno de Lagos inició en 2003 un plan denominado AUGE, que pretende mejorar la salud ofreciendo garantías legales de calidad de atención a la población, mediante un mecanismo que va incorporando enfermedades gradualmente, a partir de las de mayor incidencia. La implementación del sistema ha significado un importante aumento de los recursos públicos, sin embargo ha creado una serie de distorsiones dada la dificultad de separar efectivamente unas enfermedades de otras. En la práctica, se está avanzando hacia un sistema de asignación presupuestaria de recursos y no por prestaciones.