In Santiago, I wonder who is actually earning less than 500K today? I have several friends who own smaller companies - none of them pay less than 500K to any of their employees(and haven’t for years). Waiters earn more, nana’s earn more.
I guess that the picture probably is different outside Santiago, where the living costs also are very different. In that respect, a national minimum wage does not make a lot of sense. And I really doubt it will be adhered to in agriculture for example…
Its pretty well accepted that when the prices of stuff at the stores keeps going up it is due to “inflation”
You were saying that the prices have been going up on stuff to buy and thats why the government basically has to mandate minimum wage increases.
What problem is being solved by reactively inflating the minimum wage as a result of the prices of goods inflating?
What if after the min wage is inflated…those powers that set the prices at the store realise that every chilean in chile who has a salary likely has a little more money to spend and so they further inflate the prices of goods to juice just a few more pesos. Simple right? Just raise the min wage again
So if tit for tat inflation is not the answee via min wage inflation then why are the prices of goods going up and how do we bring them down?
Why not just mandate that all products have to not cost more anymore ever again?
Ya know we just mandate it.
Sort of like an algebra equation…equal on both sides.
If its totally rational and reasonable to mandate a min wage then it is equally rational and reasonable to mandate that all prices cannot go up anymore for every product and service chile. Job done!
Then we will never have to inflate wages or prices ever again.
Right?
Could there be an organic solution that doesnt require “tit for tat whackamole by mandate”?
You wrote “I believe that if a small business can’t pay a living wage to its workers, it should not exist.”
I dont think its a stretch to say that phrase means a small business does not deserve to exist if it cant pay X wage to its workers.
How could it even be possible that each employee does not have a legitimate market value in a country that actually has a legitimate market?
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That is hardly the most convoluted part. To say that a small business does not deserve to exist if it cannot pay a “living wage” is essentially saying only the rich should be able to start a business which makes it an extremely elitist sentiment. It sounds proletarian but when application is attempted it becomes squarely bourgeois. The fact that most small businesses cannot even pay their single employee founders come under that same sophistry. Does your business deserve to exist when you cannot pay yourself a living wage? According to to the explanation given, absolutely not. Who benefits from the reduction in competition? Oh, that’s right those who are already wealthy or have large businesses.
On top of that since the living wage fluctuates daily, thus the only fair way to compensate workers would require an ever fluctuating wage schedule; otherwise how would a wage be guaranteed as being a living wage? Paying employees more than a living wage would be unfair, because they didn’t earn it and fairness is the goal after all. I suspect that those who think a living wage should be paid would have quite the tantrum if employee wages were based on, said fluctuations. Today you earn 1.000 pesos for 8 hours labour. Tomorrow you earn 700 pesos for 8 hours of labour because the cost of living went down. The day after you earn 850 pesos for 8 hours of labour. There are simply too many undefined and impossible to define variables for such a system to work, unless of course, intentional economic volatility is the goal which in turn injures the wage earners the most.
And yes attaching a living wage to the value of a worker is in fact turning a worker into a commodity even though the value of said commodity fluctuates continuously, quite humorous, I might add.
I will never understand people who want to keep repeating this obsolescent tactic. I strongly suspect it is concept meant to explain away failure to act and prove one’s idealism. Since one knows he/she will fail; one never needs attempt.
Here’s someone who thinks exactly as I do, on this ocasion at least - Hermógenes Pérez de Arce, the guy the Commies love to hate. Referring to Boric’s win, he says:
Para ganar la elección éste practicó un gigantesco cohecho: como la mitad de los chilenos gana $400 mil mensuales o menos, ofreció un salario mínimo de $500 mil, más cargos en los directorios de las empresas para los trabajadores y menos horas de trabajo (de 45 a 40 semanales). Entonces más de un millón de personas, que antes no votaban, se sintieron estimuladas a ir a sufragar y ahora se aprestan a “pasar por caja” después del 11 de marzo, ganando más y trabajando menos. Pero ¿cuántas pymes van a quebrar después de esa fecha?
Boric bribed the electorate with that irresponsible promise.
And it won’t be $500.000. With the obligatory, but never mentioned gratificación legal, for minimum wage earners it will be $625.000.
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I’m from the UK. In the 1990s the right opposed the idea of any minimum wage at all saying it would be a disaster with people being out of work and the economy crashing. Of course, there was no such disaster and now the right also strongly supports the minimum wage and tends to propose similar increases as the left.
Granted, the minimum wage was brought in in the UK at a level below what many were earning and at a time of economic growth and stability.
The absolute amount of the minimum wage of 500,000 is not that high, and easily comparable and suitable with other countries as pointed out already, and is more just.
However there is a question about the speed of change here.
If it causes inflation they will be able to meet the goal of 500.000 by end of government more easily!
A fast change would have all sorts of effects such as:
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Increasing the price of things somewhat.
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Once it becomes possible for anyone to get 500,000, we may see gardeners, plumbers, and other hourly/daily labourers continue to increase their fees since there is no point working for an uncertain 500,000 for an average week’s taking doing such work if you can get the same guaranteed. If inequality reduces as a result of this and other policies, you may see the upper middle class chose to do the gardening and some other jobs themselves. You may end up with the nanas only being for the really upper class rather than upper middle class.
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Another effect will be to make Chile more attractive to immigrants, so they need to strengthen border control, and review whether they need to put more limits on immigration.
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Another effect might be a reduction in Chilean inefficiency and an improvement in service quality. It is one thing paying 300,000 for someone to do a half assed job, it is another thing for 500,000. Hopefully we´ll see less of shops where there are three people to serve you to buy one item for instance. However, such changes would likely take many years since inefficient behaviours are ingrained.
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We might see less of people scrapping together a living buying and selling things, and working for cash on market stalls, since the minimum wage may now be a better bet for them.
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Since it’s now going to become possible for someone in Maipu to earn 500,000, it won’t make sense for them to commute huge distances to Las Condes every day. Therefore basic jobs will have to pay 550,000 or 600,000 in the barrio alto. Alternative is that jobs in Las Condes still pay 500,000, but are very easy to get, while jobs in Maipu become scarce.
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We should see a lot of people getting the same salary, and we might see less gap between unskilled labour and and some skilled labour.
They will have to raise the minimum wage bit by bit measuring the effects on the economy I suspect it will be OK but if Boric gets advice from economists that it isn’t going well or it just becomes obvious he could submit the final 500,000 project through the senate with only a lukewarm recommendation and have it rejected there to save face and say he did his best to uphold his promise. The senate is mildly conservative and I don’t see them approving all the way to 500,000 if most economists disagree and the economy isn’t going well.
Anyone who thinks that raising wages and reducing working hours will produce greater efficiency has NO experience of Chilean work practices, where the aim is to do the minimum possible for the maximum amount of money. That’s what 30 years here as an employer has taught me, the same lesson quickly learned in the emblematic case of Maersk, who upped and left when confronted with Chilean reality.
Here’s what a Chilean negociante has to say on the subject:
… la principal preocupación en cualquier empresa consiste en que los empleados no roben; la segunda es que no destruyan el material y las instalaciones; la tercera consiste en intentar, con poco éxito, que traten de manera respetuosa y diligente a los clientes y, la cuarta y menos importante es que trabajen más o menos bien. En resumen, que no lleven a la empresa a la quiebra. No es broma, es la realidad, se los digo yo."
And don’t forget that these wage increases will not come from some big bag of cash that businesses keep tucked away. They will be paid by the consumer, ie you, and me in the form of higher prices.
TINSTAFL.
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Minimum wage will ALWAYS lead to worse economic outcomes.
It will increase unemployment, crush SMMEs which keep big corp in check with prices, and give big corp even more consolidated power over wages.
If living costs are out of control, the solution is deregulation to create more competition to lower prices. Leftist thinking is so damn simplistic and results in exactly the outcome they think they’re ameliorating against.
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It’s odd that you think the current dominant global economic system is capitalism.
Its not working here either.
But its hard, for me at least, not to see this as an ongoing attempt by this government to subvert the economy.
Another initiative in process is the 6% additional Pensions proposal, whose cost will be borne by the employer, in effect an employment tax. This is hardly mentioned in the ongoing discussions, just like the 25% gratificacion legal that all minimum wage earners receive but keep quiet about.
This will also increase unemployment as small businesses will be unable to afford it, while big businesses will just hike their prices to compensate - more inflation.
The opposition have limited themselves to quibbling over the way this extra pension money will be divided up, being all too aware of Chilean universal approval for this “free money” measure. A more responsible set of pols would have pointed out that the country can’t afford it.
Punishing regular businesses by making it more expensive for them to operate, while soft-pedalling on illegal street sellers is part of a larger destabilization plan.
And, of course, for independent contractors like me, I imagine I get to pay that 6%. The monthly retention for boletas de honorarios has been going up for the last several years. This year it’s going from 13.0% to 13.75%.
Longer-term. I’m guessing the 6% is going to be factored into employers’ calculations as far as starting salaries and raises. But, it will definitely be a shock to employers if/when it takes effect.
Also the cotzacion into FONASA goes up for independents (blessed be those that actually pay into the system) for each increase in the minimum wage.
So is ISAPRES still set to collapse next month?
Well at least it’s your own money you will be forced to save, eventually you may see some benefit, although I frankly wouldn’t trust this lot to run a Pension Fund.
In the meantime its a monthly outgoing that has to be accounted for.
Well, 3 percentage points, I guess, as things stand now. The rest goes to solidarity. So, I get to help give pensions to people like my former neighbor who couldn’t keep a job for more than a month and withdrew the money she had in her AFP during the pandemic.
I hear you, but like I said some benefit… maybe. 
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Remember those private meetings the govt had with business recently…some cooking going on.
Hmm, I wonder if that is why they keep increasing the monthly retention. They take FONASA out of my tax refunds.
A city in the US recently added a $5 fee/tax on all delivery based businesses (uber eats,etc). The goal was to help pay a living wage to the workers. Only problem is that it tanked the business…less customers willing to pay even more and so just forgo the service. Now these same workers are unable to continue that work.
Another example of fail while trying to do the opposite.