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Chile's Labor Movement Sends Message to U.S. Congress: Don't Adopt Chile's Failed Fascist Pension Plan!

Dec. 14, 2004 (EIRNS)--If you had the opportunity to speak before a committee of the U.S. Congress, what would you tell the U.S. Congress, EIR today asked Arturo Martinez, president of Chile's largest labor federation, the Unified Labor Federation (CUT). Martinez replied:

"I would tell them that they cannot repeat the failure of Chile; the system has failed. In Chile, we are replacing this system, because it collapsed. And the United States cannot try to implement a system which was imposed by blood and fire by Pinochet, who finally imposed it by force. The United States, at least, will have to debate with its people, what it is that they want to do for the future of pensions in that country, but they can't copy a fascist model, a model of individual capitalization, which only serves for the investors to make money. The money of the workers is being invested, and the investors are making a lot of money from it, but the workers don't benefit."

Martinez reported that next January, 2005, Chile will begin debating how to reform its pension system. The government will submit draft legislation for a new pension system in Chile, because the current system—the very system which Bush is determined to implement in the United States—has collapsed! The CUT will release its own proposal for a new system on Jan. 10.

Pinochet's system is deficient in both coverage and benefits, at a tremendous cost to the State, Martinez explained. Of the 6.4 million Chileans in the labor force, each month normally only 2.9 million pay into the system. There are always some who are entering the system, and some who are leaving. That is, less than half of the workers are covered by the private pension system. And, of those 2.9 million who pay into the system, 58% will never make enough to earn a minimum pension after 20 years, he said. The State will have to cover the difference—for those who put in money for 20 years.

What happens to the rest? They are left indigent, without coverage, dependent on the State for some kind of support. This is the great problem of those who hold temporary jobs, working for three months, unemployed for the next four, then finding another short-term job, etc. The great majority of the Chilean workforce hold only temporary jobs; of the 3.8 million Chileans who are hired by an employer, Martinez reported, 2.6 million are temporary workers, who receive no health benefits, never mind a pension. They have no social security of any sort. The cost to the State is enormous, because it must bear the health costs of these indigent people, and, when they are old and indigent, then the costs of their old age.

This mass of temporary workers, which is what finally sunk the private pension system, is the result of the "labor flexibility" reforms pushed worldwide by the World Bank, and begun first in Chile under Bush's emigre pension pirateer, Jose Pinera, EIR notes. It is labor recycling. Martinez called the labor mobility "savagery." It is an entire system which was installed in Chile, but has been exported to other countries, although not with the same degree of savagery as in Chile, he said.

So, EIR commented to Martinez, at the same time that Bush is pushing the Chilean model, you are debating changing it because it--

"Collapsed!" he exclaimed. "We're debating how to reform the pensions, because the model collapsed! I don't understand how Bush wants to install it in his country. The system only works for those who make a lot of money. It's very bad for those who receive low or middle-level salaries, and bad for those who have temporary or transitory jobs.''