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Out-sourcing in chilean mining: theoretical elements for analysis*

Sandra Leiva Gómez
Arturo Prat University, Department of Social Sciences, Ave. Arturo Prat 2120, Iquique, Chile
Email:sandleiva@gmail.com

Received: 8.26.2009 Accepted: 10.26.2009

* * *

Introduction

The conflicts of contract workers of the mining area have been these recent years in the table of national news events, which gives account of the great importance of this topic. In addition, as legislation on this matter is relatively new –in january 2007 entered into force the out-sourcing law-there appear conflicts that from the legal point of view constitute a challenge not only for lawyers and judges, but also for the chilean government. On the other hand, these conflicts reveal that still there are varied situations to be resolved in this topic. How these conflicts now framed in a legal regulation, can be understood and explained from sociology regarding the lack of protection they involve, is the central axis of this research. 

The neoliberal economic socio-political paradigm existing in Chile has made possible the existence of highly flexibilized labour relations, which has meant deterioration in workers' labour and social conditions in various cases. The return to democracy of the country has not gone coupled, however, of a a reset of the workers protection. On the other hand, out-sourcing is understood within the framework of an economy that has had to adapt to changing conditions, leading the companies to create strategies that flexibilize the labour-market. In this way, companies have sought the way how to reduce the costs of their production through mechanisms such as externalization, outsourcing and subcontracting, among others. These changes have provoked deep transformations in society, one of which relates to the reduction of the classic, standard or normal employment. Wage labour has been losing pre-eminence, and, befote it, there have appeared atypical modalities of employment. These new forms of employment in some cases imply a loss of protection, which has been conceptualized as precarious employment. 

This article seeks precisely to consider outsourcing as example of a modality of employment with insufficient protection. It seeks, in addition, to explain the subcontracted workers' conflicts in the large mining companies, at the light of analytical categories applicable to precarious employments or without sufficient protection. It is argued that subcontracted workers conflict in mining are due to labour and social protection inequalities and to inequalities in remunerations perceived among subcontracted workers and their plant pairs.

In the first part of this article is briefly exposed the problem of subcontracted workers in the mining area. Following, out-sourcing is situated in the framework of labour market flexibilization in Chile, in the context of a socio-political paradigm change. Later are exposed theoretical elements that allow to analytically understand out-sourcing. Such elements relate primarily to the emergence of new forms of employment and the consequent decrease of the classic or standard employment, which leads to highly problematic situations for workers and society in general. Then there are given some antecedents on out-sourcing in Chile from its origins to the present times, providing information about sectors of the economy that subcontract more and their evolution in time. In the following paragraph are provided concrete data about out-sourcing in the mining sector, showing amounts of client and contractor companies, and on the number of workers contracted in one and others. Finally, this text ends with an outsourcing analysis, based on the theoretical elements given above..

Conflicts of subcontracted workers in mining

In recent years workers subcontracted by mining companies have starred serious conflicts, even when there already exists an out-sourcing regulation. Various divisions of the National Copper Corporation - CODELCO- have resorted to justice, appealing against the dispositions issued by the Labour Dictorate, referred to subcontracted workers internalization. The legal basis for this is Article 183 of the Labour Code -dispositions introduced by the out-sourcing law- in which certain mining companies are considered as employers of these workers. The appeal courts of Valparaíso and Antofagasta failed in 2007 in favour of mining companies, while the Copiapó court rejected the relief that the El Salvador mining company had presented. On May 12 the appeal courts failed in favour of CODELCO and La Escondida mining company. Even when recognized a fault to the law by the mining companies, it is not recognized the capacity of the Labour Directorate to make comply the law through an order of workers recruitment.

One of large labour conflicts lived by CODELCO during 2007 originated in the wages improvement (Daroch 2007). This conflict was characterized by a massivity and wide convocatory, articulated from the own workers, secondly, a young leadership in relation to other disputes, being their motivation to overcome past trade union practices, thirdly the conflict responds to the movement's logics and not to political parties, fourth, violence in manifestations and in fifth place a great coverage in the media (Daroch 2007). In this conflict, workers decided that the interlocutor for the negotiation would not be the direct employer -subcontractor company- but CODELCO (Daroch 2007). 

The strike in CODELCO occurred by the unequal conditions of salary and absence of certain subcontracted workers guarantees with regard to their contracted pairs (Daroch 2007). The first strike of subcontracted workers begins in late 2005 and early 2006. Later there begin negotiations between contractor companies, CODELCO and subcontracted workers, causing within this framework in June 2007 one of the most violent and massive manifestations of the last years. Such manifestation concludes on July 31st, after 36 days of strike. It was achieved agreement by signing between workers and CODELCO a bond of approximately $450,000 and payment of 8 days of strike, in addition of certain benefits in health and life insurances (Daroch 2007).

Labour market flexibilitation in Chile

To understand out-sourcing in Chile there must be mentioned the economic transformations in Latin America in the last 30 years and the circumstances in which they were carried out. Due to the inability of Latin America to cancell the foreign debt during the 1980s, there were implemented a series of economic reforms that led to a change of economic, political and socio-political paradigm, among others. The Latin American countries, which until then had followed an “inward” development model driven by ECLAC in the modality of industrialization by imports substitution, had to change their style of development. It must be highlighted that this change of strategy was not calculated, but was rather the result from impositions that international financial organizations -such as the International Monetary Fund and the World Bank- imposed to the region to continue receiving credits. In this way there began to be progressively implemented in the diverse countries of Latin America the economic neoliberalism, based on the ideas of Milton Friedman on economy on the side of offer.

In Chile labour reforms began to be implemented already in the seventies after assuming the military government. In 1979 three important laws were enacted -the labour plan- which tended to strongly flexibilize the labour market. Through the enactment of these and other laws that followed, labour relations,¹ both individual and collective, became highly flexibilized. With the country's return to democracy it was expected that the Government undertook significant changes in labour matters, among others. An aspiration consisted in restoring the individual and collective labour rights which had been lost as a result of flexibilizing actions. Even when during the Governments of the “Concertación” successive reforms to the Labour Code have been done, there remain important norms which give account of the still vast flexibility labour. Example of this is the Labour Code, article 161, which allows the workers' dismissal alluding to needs of the company, without means of criteria or specifications for such needs. In the field of collective labour relations, trade unionism levels that had already dramatically decrease due to dictatorship, have failed to recover, and even have continued decreasing in democracy.

Theoretical elements for the analysis of out-sourcing: new forms of employment

In Chile the studies of workers deprotection have been performed mostly by researchers linked to the Labour Directorate (Henríquez and Echevarría 2006, Echeverría 2006, Ugarte 2008). The out-sourcing problem has been investigated in our country from the juridical point of view (Ugarte 1999, Albornoz 2001, Ugarte 2007). The juridical concept that marks the boundary between wage employees and the independents is dependency (Ugarte 1999 Feres, Henríquez and Ugarte 1999). In effect, a labour relationship is constituted as such when the worker has a relation of dependency or subordination with his employer (Albornoz) (2001). If this dependency or subordination is absent, then the relationship does not constitute a labour relationship, but civil or commercial. The occupied person is not protected by the laws of the labour code, as he does not have the legal status of the worker. The big problem is, therefore, to determine in which cases this relationship of dependency between the worker and the employer is given and when not. Eventhough this is an exclusively juridical problem, because such determination corresponds to instances which have the work of making comply the labour law, from a sociological point of view it is possible to find lights that allow explaining conflicts in the out-sourcing field.

Although today it exists an Out-sourcing Law²in our country, the problems between workers and companies have not been resolved. In order to understand and explain the subcontractor workers discontent, specifically of mining, it is opted here by a theory of medium extent: the approach of classic or normal employment, also called wage labour. This approach constitutes a theoretical framework that enables to understand out-sourcing in an analytical manner, and thereby, to explain, in a sociological manner, the labour disputes which have been lived in the last years in the large mining in Chile. Below will be exposed then the pertinent concepts for the out-sourcing analysis, contextualizad in the changes suffered by companies throughout the world.

The world-wide economy has undergone great changes in recent decades. In order to adapt to changing conditions of the economy, companies have had to develop a series of strategies oriented to maintain their competitiveness, giving thus origin to labour market flexibility. In this way, companies have sought for alternative forms of work, different to the wage labour. Non-labour costs associated with productivity -payment of pension contributions, holidays, vacations, maternity, among others- are too high for companies. In order to reduce these costs, they have developed strategies to save them. One of those strategies is to replace the worker for persons providing services, giving thus origin to externalization, outsourcing and subcontracting. Companies today use these strategies all over the world -and our country is not apart of them – to lower their costs and be able to compete with others of their field.

Such strategies developed by companies are giving rise to new forms of employment, which brings consequently a decreasement of wage labour. Thus, percentually the new forms of employment increase, while wage labour decays. A serious problem is that many times these new forms of employment are precarious, in other words, they do not provide a security to the worker, in terms of social prevision, nor in terms of labour conditions. Other times they present even lower remunerations. These new forms of employment have been conceptualized in literature as atypical works, since they differ in one or more characteristics of a wage employment that offers basic and standard norms (Rodgers 1988). When atypical employments deviate of the standard norms, in most of the ocassions they become precarious.

The theoretical construct of normal employment (Leiva 2006) allows to understand the so-called atypical employments, which are defined as opposed to the established, norm, this is, atypical employments are those that escape from the norm, deviating in one or another feature, or in several of them, of the employment of normal character. At this point it is necessary to refer to the precarious employments that also escape from this norm. It is important to make clear that atypical employments and precarious employments are not synonymous expressions, although when until a few years ago still (ILO 1998) they were considered synonymous. Precarious jobs are those which suffer lack of protection in some important field (Rodgers 1988). A fundamental difference between atypical employments and precarious employments is that atypical employments are not necessarily unprotected (Leiva 2000 Leiva 2006), what can be seen more clearly by observing the types of employments existing in other countries,³ as is the case of Germany.⁴ In that country, many of the atypical employments were regulated so that they were granted of protection in diverse scopes. Thus, those jobs are atypical, but not precarious.

The theoretical distinction between atypical employments and precarious jobs is a key to understand the outsourcing phenomenon in Chile, because it constitutes an atypical form of employment, and because this atypical form of employment is also precarious as it does not have the necessary protection. Precisely this absence of protection is one of the Achilles heels of this form of employment, and what could explain the workers conflicts and strikes emerged in subcontractor companies of large mining.

Out-sourcing in Chile

(a) Legal aspects

The subcontractor figure emerges in Chile in 1975 with the dictation of Law number 1.263, that establishes out-sourcing labours with certain restrictions. Thus, there were excluded from the out-sourcing regime labours inherent to the main and permanent production of the company. In addition, the contract was limited to the equipment's repair or maintenance. The Decree Law number 16.757 of 1979 extends the subcontractors functions that had been established by the law of 1975, making it possible to outsource workers for all the companies' areas. (Silva 2007). In the 1980s and 1990s several transnationals increased even further the out-sourcing figure. With the arrival in the country of temporary service's companies, such as Manpower, Ecco and Part-time in the 1980s, out-sourcing generalized even further (Silva 2007). By one hand there existed the out-sourcing practice, which was increasingly massifying, and on the other hand there existed supplied work, figures that tended to be confused. Gradually conflicts and irregular situations emerged, and as there was no law to regulate labour in outsourcing regime nor supplied work, its legal treatment was difficult. Although the economy benefited from these changes, this brought about a decline and sometimes loss of the protection that labour and social law granted to workers.

The out-sourcing law, approved in 2006, and that began to rule in January 2007,⁵recognizes two different figures: on the one hand the labour out-sourcing as such, and on the other hand, the workers supply⁶ (Ugarte 2006, Labour Directorate 2007). Both in the out-sourcing figure - defined in terms of this law -as in the workers supply figure, three key actors are distinguished: in first place the client company or the user company, in second place the contractor or supplier company and thirdly the workers. Both figures are distinguished by the relations –labour or commercial- and by the legal implications derived, for both the companies and workers, from such relations.

Out-sourcing refers to the situation where a client or main company instructs another, the contractor company, the production of goods or provision of services. The contractor company develops the work in an autonomous way, performing it on its own account and with its own monetary, material and human resources. In this case a labour relationship is established between the contractor company and the workers it has in charge, while between the client company and the contractor company is established a commercial relationship of services' provision. It should be noted that the workers and the client company do not establish a labour relationship, this is, workers develop their tasks for the contractor company.

Meanwhile, the staff provision figure corresponds to a user company and a company that provides its workers, so-called supply enterprise. In this case, unlike the previous one, workers establish a labour relationship with the user enterprise, since they receive instructions directly from it and they work under their dependency. Despite the fact that the worker establishes a working link with the user enterprise, it is the supplier company who pays his salary, which leads to say that the employer figure appears dissociated in this figure.

It must be noted that the fundamental difference between one and other figure is the workers dependency: while in the case of out-sourcing the workers dependence is set with the contractor company, in the case of workers supply the workers dependence remains established with the user enterprise. This dependency is vitally important because it determines the type of contract established among workers and companies. When there is a labour relationship, it corresponds to sign an indefinite or a fixed-term contract, which are submitted to the labour code norms. When there does not exist a labour relationship, but civil or commercial, it corresponds to sign a fees contract, which is ruled by the civil and commercial codes. While the first are considered workers and enjoy all the labour and pension benefits that laws recognize to them, the seconds are not considered workers and therefore are not submitted to the labour code regulations.

It is necessary to recognize in this dichotomy of labour and civil contracts an important problem and still unresolved. In a globalized world, in constant change, whose changes occur many times at dizzying speeds, companies are forced to react with sufficient quickness before a demand for goods and services ranging in time, opting to avoid the indefinite recruitment and even occasionally the fixed-term recruitment. Thus, many companies prefer to use more flexible contracts for, in a moment of low demand for their goods or services, being able to dispense of their staff without having to incur in indemnization expenditures.

(b) Out-sourcing in amounts

There is a difficulty to understand and study out-sourcing at national level since the current national instruments do not give account of subcontracted workers,⁷ wether working in out-sourcing regime in strict sense -sense of the out-sourcing law- or working in user companies. In other countries, companies must be registered in the labour inspection department that, according to their jurisdiction must perform labour control. In Chile there does not exist a record of this type for effects of labour legislation control which makes difficult the statistical collection (Silva 2007). In addition, in our country there does not exist a record of contractor companies and staff suplply companies,⁸ nor of the number of people working under an out-sourcing regime (Silva 2007). For this reason in the out-sourcing study is utilized the Labour Directorate Survey (ENCLA)⁹ as reference, which seeks to complete the information provided by national surveys in relation to the out-sourcing phenomenon.¹⁰  Although the ENCLA does not have a character of national implementation, it is the instrument that is in better conditions to measure out-sourcing at national level.¹¹  

According to ENCLA 2006,¹² companies that subcontract reach 41.2%. It should be noted that companies that mostly subcontract are those of greater size. According to ENCLA 2006, the major company subcontracts 68,3%, the medium company 58.7%, the small company 40.7% and the¹³ microenterprise, 27,9 % (Labour Directorate 2007), which makes the great company especially attractive in the out-sourcing study. On the other hand, the branches that percentually subcontract more according to ENCLA 2006 are in first place electricity, gas and water companies, in second place sectors of social and health services, thirdly construction, fourthly the industries sectors, and in fifth place, mining (Labour Directorate 2007). It must be noted that in the previous year of the survey application, ENCLA 2004 recorded mining as the second sector with more participation in out-sourcing.

Another important data to consider are the sectors where out-sourcing has increased more. In this sense, mining is the sector where out-sourcing has increased more, percentually: of a 37% in 1999 it ascended to a 63.8% in 2004, registering an increase of 26 percentual points, which is significant to consider.

Out-sourcing in mining

As seen in the previous paragraph, mining is one of the branches of economic activity that mostly uses the out-sourcing figure (Directorate of Labour 2007, Echeverría 2006). As mentioned previously, mining is the only branch of economic activity which has, by disposition of the National Service of Geology and Mining (SERNAGEOMIN), a record of the out-sourcing. In it are contained the client, contractor companies, the own staff and subcontracted staff (Echeverría 2006). Below will be reviewed sucg data to see the number of mining companies -detailing between contractor and client companies- and their evolution in time. In addition, will be reviewed the number of workers occupied in these companies, also carrying out an analysis of its trend over time. 

In first place, it must be boted a significant increase in the mining sector.This increase is reflected both in the number of mining companies that exist (see graphic number 1) as in the number of workers employed in this field (see graphic number 3). In the mining sector are distinguished client and contractor companies, being this distinction what precisely motivates this article. Client companies require of contractor companies the performance of a labour, which must be carried out under its own account and risk. The contractor company uses its own workers for this purpose. Thus, there are workers who are employed by the client companies and workers employed by the contractors companies.

By analyzing mining companies data from 1997 until 2006, it is clearly seen a rise in the companies total (see table number 1). It must be seen that this rise is constant, this is, year after year, mining companies have increased. In addition, it is about an increase not only constant, but significant, since in ten years mining companies have increased in 270 %, this is, they have almost tripled themselves. In effect, the number of mining companies was 1322 in 1997, and in 2006 reached 3628.

Table Number 1

Client and contractor companies in Chile mining in the period 1997-2006

Observing with more detail, depending if these are client or contractor companies, it is appreciated a noticeable difference between the evolution of both types of enterprises. While the contractor companies have constantly increased, the evolution of client companies rather shows a development numerically constant. Both trends may be observed more clearly by observing data in percentual terms (see graphic number 1). Contractor companies represented in 1997, 69,5 % of the total mining companies. This percentage has been constantly increasing, in such a way that ten years later, the contractor companies represent 87% of the total, being observed an increase of more than 17 percentual points. Accordingly, client companies have decreased their percentual participation in mining companies. In 1997 the client companies represented almost one-third of mining companies (30.5%), reaching in 2006 only 13%. In the analysis it should be noted that client companies have reduced their percentual participation within the total number of mining companies of the country in more than half just in ten years.

Graphic number 1

Client and contractor companies in Chile mining in

period 1997- 2006 in percentages

Source: Own development based on SERNAGEOMIN data.

On the other hand, the number of workers employed in mining has grown ostensibly. While in 1985, there existed 67.100 workers employed in this category, in 2005 there are 133.989 workers. In other words, in 20 years the number of workers employed in the mining sector was doubled (see table number 2).

Table number 2

Number of mining workers of client and contractor companies

in period 1985-2006

The number of workers in contractor and client companies is, in the same way that the amount of the contractor and client companies, surprising. In 1985 there existed a low percentage (47%) of workers employed in contractor companies, in 2005 this percentage grows in more than thirteen times, reaching 64,1% of workers occupied in contractor companies (see graphic number 2). While mining workers employed on contractor companies increase drastically, the mining workers employed in client enterprises equally decrease also in a drastic way their percentual participation.

Graphic number 2

Number of workers of client and contractor companies in Chile mining in period 1985- 2006 in percentages

Source: Own development, based on SERNAGEOMIN data.

In conclusion, the mining sector has grown considerably. This growth is appreciated both in the quantity of mining companies as of workers amount employed in this category. It should be noted that this growth is significant in the contractor companies, since client companies have percentually decreased. In addition, it must be considered that there is an increasingly important participation of workers in contractor companies, with the consequent significant percentage reduction of workers in client enterprises. There are increasingly more contractor companies. There are increasingly more workers in these companies. It is not strange, then, that when labour conflicts appear in contractor companies, a large number of workers are involved in such conflicts.

Out-sourcing analysis in the light of theoretical elements

There emerge varied problematic aspects in relation to the out-sourcing law. One of them refers to the differences in rights occuring between subcontracted workers and contracted pairs. This leads to realize that the types of protection offered by the law to workers is not homogeneous, since some forms of out-sourcing would have lesser degrees of protection than for the plant workers. These differences lead to think about the existence of first class and second class workers. In addition, another difference is given by the inequality of remunerations between workers of the user enterprise or the client enterprise (as the case may be) and workers remunerations in supplied companies or in subcontractor companies, respectively (Ugarte 2008).

Another problematic aspect in the out-sourcing law is due to the difficulty to determine in certain occasions if a company is client or “user company”. This means, if a company that makes use of external workers does it under the -legal- form of out-sourcing or of staff supply, independently of the denomination that this gives. According to the law, there exists out-sourcing when there is no power control between the company utilizing services and workers, and in the contrary, there exists supplied work when this power control is present between both. To determine when there is power control and when there is not, becames on occasions highly complex. This has been precisely one of the focal points of conflict, among others, since the Directorate of Labour began controlling some subcontracted companies once the out-sourcing law came into force.

It should be noted that subcontracted workers strike in mining was illegal. In this point it is important to highlight that according to the current juridical framework the strikes in sobcontractor enterprises are not applicable. Strikes are regulated in labour situations, and when there exists a comercial or civil juridical regime, a right to strike is not considered. Labour legislation grants the right to a collective negotiation in the case of an indefinite or fixed-term work contract. In the case of a worker in out-sourcing regime a collective negotiation is not applicable. Thus is established in Article 305 number 1 of Labour Code "Workers (...) contracted exclusively for performance in a given transitory or temporary labour” cannot negotiate collectively. Even when strikes on out-sourcing matters are illegal, in the public opinion there exist voices claiming that the Government should take action in the matter and regulate this type of labour relations in order to avoid these conflicts. "What has occured (…) is a very serious alert call to the Government regarding its regulation in labour matters and to trade union leaders and entrepreneurs, to seek common sense and ways of solid understanding."¹⁴

Another aspect that should be considered is related to the economic prosperity of the companies in which subcontracted workers participate. Workers notice the abundant economic gains, and they wish to be part of this prosperity too (Daroch 2007). Thus, Felipe Monrandé says that "those problems do not arise from nothing, but are the result of the feeling of wealth that exists in the country and of which great part of the citizens feel outside."¹⁵  In the case of CODELCO it must be added the high price of copper (Daroch 2007), factor that should be present in times of analyzing the demands of the copper workers. And despite that workers contracted under an out-sourcing regime do not have the right to collective negotiation -among several other rights-, that does not prevent them to feel legitimacy to cry for wage improvements, especially when the company for which they work experiences enormous economic gains.

Despite its progress, the out-sourcing law presents serious problems because it does not give account of problematic situations for subcontracted workers. They relate mainly to the difference in wage conditions and in labour conditions between workers on the one hand subcontracted and supplied and on the other hand the direct workers of the main company (Silva 2007). These differences allow us to speak of discrimination of these two types of workers, which would be creating first and second-class workers. The workers of first category would correspond to wage employees, this is, they occupy under the form of a normal or standard employment. To them is directed the Labour Code, and they are guaranteed the maximum protection that the juridical system can guarantee. The workers subcontracted by subcontractor mining enterprises would constitute a kind of workers of second category. The level of protection offered to subcontracted workers is not as high as in the case of the first category workers. And there may even exist the danger that contractor companies do not assume their responsibility in the pension contributions' payment. Fortunately, this latter situation was regulated in the out-sourcing law, however, the alternative being proposed in the law, that the client company solidarilly assumes the responsibility of the contributions' payment, is not exent of problems and problematic situations.

Another problematic area that subcontracted workers experience refers to remunerations.¹⁶ There is a big difference between remunerations perceived by workers contracted by the client company and workers contracted by contractor companies, although both do the same type of work. This situation is defined by subcontractors as unfair. To achieve a remuneration compensation, occasionally subcontracted workers have decided to negotiate not with the company of which they directly depend, the contractor company, but with the client company, since it is this who receives the greater profits and which is in financial conditions to grant them a remuneration bond that satisfies them according to their perceptions of justice.

In addition, there exists a serious difficulty in relation to the qualification of a company as contractor or as services supplier. The key concept that makes the difference is subordination or dependency. If the worker performs his work under subordination or dependency of the contractor company, he effectively establishes a clear labour linkage between this company and the workers. Conversely, if workers are occupied under subordination and dependency not of the contractor company, but of the client company, then a working link between workers and the contractor company is not established. The labour link is set in this case between the workers and the client company. This case is highly confrontational.

When establishing the labour link between the client company and subcontracted workers, there are two possibilities: it is about a supplied work, or well a labour situation is being disguised taking advantage of this situation in detriment of the workers' rights. The law clearly states certain conditions for the supplied work. Some of these conditions refer to the registration of service supplier companies, and to a temporary limitation of supplied workers, which cannot exceed 180 days. What happens then to supplier companies which have not legally declared themselves as such, is a question that still has to be resolved.

The concrete situation is that some companies that declare themselves contractors in reality are not. And they are not, because they fail to comply the basic requirement of the existence of a labour link between their contract workers and these. The legal situation is then complex, to say the least, since it is being disguised a labour relationship. In this case a correction of the situation should be made to comply with the law. And such correction implies that the client company must assume its legal responsibility, hiring the subcontractor workers who effectively work under subordination and dependeny of this same client company. This has been precisely the situation registered on several occasions.

Conscious of the labour disguise modality of some contractor and client companies, the Directorate of Labour has reacted ordering the client company to internalize or hire those workers. Client companies have appealed to justice to reverse this order, and in most of the cases they have been approved. The Dictorate of Labour World not, according to the courts' decisions, the faculty to order the client companies the recruitment of contractor workers who have a link with the client company.

With independence of whether the Directorate of Labour has or not such right, given that particular case, there is being held a disguise of a labour relationship. The juridical system of the country is not being complied, and workers are being left without appropriate protection. Certainly workers subcontracted by contractor companies and who possess a labour link with the client company have no knowledge of the legal and theoretical foundations of their labour situation. But they do have in various occasions a correct perception that their rights are not being respected and that they are living unfair situations. They know themselves being second-class category, and have the perception that something is not working correctly in legality. They feel they should have the same rights and privileges than their contracted pairs, over all because they perform exactly the same type of work. Continuing these perceptions, it is likely that conflicts in mining continue being repeated. Unless client companies react before the conflict explodes, and they offer substantial remuneration bonds to subcontracted workers.

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Notes

** The present article was presented to the Pre-Alas Encounter Chile 2008, from November 20 to 22 in Concepción, Chile.

1. In Chile are distinguished three stages in the area of industrial relations. The first, which goes from 1931 to 1973, is marked by a labour protectionism, the second from 1974 to 1989, has been oriented more to entrepreneurs, while the third stage, from 1990 until today, is more inclined to workers than the previous one, although there is not a return to the levels of labour protection of the first period (Thiery 2000, Valencia 1998). 

2. The Out-sourcing Law will be analyzed in the following sections.

3. In order to know several atypical forms of employment in Western European countries and to study the protection granted onto them, see Emmerich 1999.

4 Examples of atypical forms of employment in Germany, with legal and social protection, are the part-time work (Teilzeitarbeit), supplied labour (Leiharbeit) and occupations for a minimum amount of hours (geringfügige Beschäftigungsformen).

5. The Law 20123 was published on October 16, 2006 and came into force on January 14, 2007.

6 It must be noted that these denominations are suitable for confusion, because the law has clarified the concept of out-sourcing in a restricted way, even when the concept is broadly used in literature. According to the researcher the denomination of out-sourcing regime granted to the first type of company is not adequate as it contributes to confuse (even more than before) the workers and the public.

7 Neither the Employment Survey of the National Institute of Statistics, nor the CASEN Survey, nor the Internal Revenue Service record out-sourcing.

8. Only in the mining sector there is a record of this type: the National Service of Geology and Mining (SERNAGEOMIN) has mandated that mining companies have a registration of the amount of subcontractor companies and workers who work in client and contractor companies. (Silva 2007).

9. The labour surveyperformed by the Directorate of Labour, ENCLA, recognizes that there are several aspects in relation to work that cannot be measured with instruments existing today in the country, among them, out-sourcing. For this reason it was implemented the ENCLA in 1998, and has been applied later in 1999, 2002, 2004 and 2006.

 10. Even when in 2006 the CASEN Survey considers supplied workers by introducing an answer alternative referred to transitory services, this instrument continues being insufficient to register out-sourcing.

11. The last ENCLA Survey, carried out in 2006, considered ten regions of application, which excluded –for a reason of cost (Directorate of Labour 2007)- the former region of Tarapacá, the Aysén region and the Magallanes region. However, in Aysén there is a similar survey of 2003, while in Magallanes exists a project to be performed (ENCLA 2006).

12. ENCLA considers aaproximately 2% of the sample framework of companies. They were interviewed 1.281 companies in the ten regions indicated. 2 % corresponds to 1560 companies, with a level of achievement of 82 %, which gives a total of 1.281 enterprises surveyed (ENCLA 2006, Directorate of Labour 2007).

13. It is considered large company those who possess 200 workers or more, medium-sized enterprises from 50 to 199 workers, small enterprise, from 10 to 49 and microenterprise, from 5 to 9 workers.

14 Christian Saieh, Director of the Centre of Negotiation, Mediation and Arbitration of the Catholic University, quoted by Daroch 2007.

15 Felipe Monrandé, Dean of the Faculty of Economics and Businesses of the University of Chile, in the Financial Journal, 8.24.2007, quoted by Daroch 2007.

16 Apart comment is deserved by the difference between the mechanism for wages determination in not unionized and unionized markets. According to Mc Connel et al. (2007) in a competitive labour market, where many are the companies and many the workers who demand and offer labour services respectively, there tends to exist a unique salary. In the case of unionized workers there does not exist a balance wage, as there could be so in a competitive market of goods and services. The trade union constitutes a monopoly of the work offer, while the company is a monopoly of the work demand (or monopsony). The wage will not be fixed by the balance between work offer and demand, but will constitute a possible range that will depend on the strength of each participant and the existing legislation.

GRAPHIC 1 Client Contractors

GRAPHIC 2 Number of workers in client companies

Number of workers in contractor companies