Chile’s 1979 labor law weakened unions by forcing them to compete and individualizing bargaining

Evidence

Existing trade unions were made illegal, and workers were denied the right of collectively bargaining over wages and working conditions. The new law allowed only weak trade unions and forced them to compete with each other rather than to unite in order to improve the competitive position of labor vis-à-vis owners and management. Collective bargaining rights were hampered in several ways. Basic wage increases offsetting inflation were mandated by law, and individuals were granted the right to bargain for wages and conditions regardless of “collective” agreements, although employees in both the public and service sectors were exempted from this rule. — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1586

Categorization

• XREF: The mechanism of forcing unions to compete rather than unite matches the Virginia School’s public choice logic in action — connects to Buchanan and Tullock’s theory of rent-seeking and collective action problems. — connects to: Chile abolished import substitution and embraced export-led liberalization in the mid-1970s — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin: The Making…, 1578; Unemployment functioned as a deliberate political weapon to weaken labor — Clara E. Mattei, The Capital Order: How Economists…, 994

Broader Connections

• Unemployment functioned as a deliberate political weapon to weaken labor #corroborates (0.80) — Clara E. Mattei, The Capital Order, 994