VZCZCXYZ0000
PP RUEHWEB
DE RUEHSG #1906 2502204
ZNR UUUUU ZZH
P 072204Z SEP 06
FM AMEMBASSY SANTIAGO
TO RUEHC/SECSTATE WASHDC PRIORITY 9949
INFO RUEHLP/AMEMBASSY LA PAZ SEP LIMA 4684
RUEHCV/AMEMBASSY CARACAS 1068
RUEHBU/AMEMBASSY BUENOS AIRES 3185
RUEHBR/AMEMBASSY BRASILIA 3282
UNCLAS SANTIAGO 001906
SIPDIS
SIPDIS
E.O. 12958: N/A
TAGS: ECON EFIN ETRD CI
SUBJECT: COPPER STRIKE ENDS, WAGE PRESSURES CONTINUE
REF: SANTIAGO 1769
1. Summary. After nearly a month, the strike at the world's largest
copper mine ended August 31. Workers received substantial wage and
benefit increases. The concessions are likely to become the
standard throughout Chile's mining sector, including state-owned
CODELCO. This time of year is popular for new demands as the GOC
develops its annual budget in September. We can expect that groups
as diverse as high school students and truckers will continue to
pressure the Chilean government to spend more of the country's
windfall from copper. End Summary.
Strike Ends With Concessions
----------------------------
2. The 25-day strike at the world's largest copper mine, La
Escondida, ended August 31. Workers at La Escondida, which in 2005
supplied eight percent to the world's copper, approved a new
forty-month contract. The agreement included total salary increases
of seven percent and a one-time bonus per worker of USD 16,600. The
contract also added health, education and housing benefits for the
union's 2,000 members.
3. The nearly-month long strike is reported to have been the longest
private sector strike ever in Chile's mining sector. Others are
worried by the outcome, believing the benefits and salary increases
agreed upon will now become the sector standards. Alfredo Ovalle,
President of the National Mining Society (SONAMI) said publicly "it
is risky to determine long-term salary conditions using exceptional
copper prices, which will not remain high indefinitely, as a basis
for calculation. Once prices decrease, Chile will face high labor
costs."
4. The strike has been closely followed throughout Chile as the
government is under pressure to spend more of its own copper
windfall. In particular, miners at the state-owned copper producer,
CODELCO, have indicated the La Escondida agreement will be their
model for negotiations scheduled to begin in December 2006.
5. Comment. As copper prices continue to hover near record levels,
the pressure for wage concessions from the mining companies, private
and state-owned CODELCO, will remain. We have also seen consistent
pressure on the GOC from a whole range of groups, from high school
students to truckers, to spend some of the windfall from high copper
prices. So far, the GOC has resisted but there is no indication
these demands will cease, especially as we move into September, when
the government writes its annual budget.
KELLY