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Unions Join Chile Protests as Pinera Strives to Quell Unrest

Laura Millan Lombrana and Sebastian Boyd

(Bloomberg) -- President Sebastian Pinera’s mea culpa and raft of concessions designed to quell Chile’s worst social unrest in decades weren’t enough to prevent more street protests and disruptions at giant copper mines and ports.

On Wednesday, workers proceeded with planned strikes and demonstrations, with at least three facilities owned by state copper producer Codelco disrupted as unions encourage members to join anti-government protests that have swept Chile for the past five days.

Operations in most ports are halted as union members also walk out in solidarity, joining public sector, health and teachers’ unions demanding the army be sent back to its barracks. Codelco sent letters to clients that it expected delays in shipments. TV channels showed thousands of protesters marching in downtown Santiago, Antofagasta and Concepcion.

Demonstrations are going ahead even after Pinera asked for forgiveness for the failure of successive governments to adequately address inequalities. The center-right president pledged to raise the maximum income tax rate to 40% from 35%, lift basic pensions by 20% and introduce a guaranteed minimum income among measures estimated to cost $1.2 billion a year.

“The measures are positive, but they will only serve to cure the fever and don’t solve the core problems,” Fuad Chahin, president of the opposition Christian Democrat party said in an interview with Radio Pauta.

After a meeting with opposition leaders, Pinera resisted lifting the state of emergency or making any cabinet changes -- two key demands of some of the protesting groups.

“One element that has not been present in Pinera’s reaction has been political accountability,” said Sebastian Brown, chief economist for Latin America at Deutsche Bank AG. “Yes, he apologized for his lack of vision. However, no minister has been fired. He could for example replace his Minister of the Interior who is responsible for public safety, which could open the doors for the rest of the opposition to open up to negotiating.”

The S&P IPSA equity index fell as much as 1.9%, led by power holding company Enel Chile SA. Pinera also said he would freeze electricity rates. The peso weakened while government bond yields fell.

The concessions threaten the government’s previous economic agenda, which included allowing shareholders to offset corporate tax against personal payments and a bill to boost pensions by topping up the existing system of individual savings accounts. Protesters are demanding a return to a publicly-run retirement system.

The protests though may be entering a new phase with the unions’ involvement.

The unrest began Friday in reaction to a rise in subway fares, quickly morphing into a broader movement against income inequality and perceived corruption of elites. The government has reported 18 deaths, although the rate of serious violent events slowed in the past 24 hours. Chile’s human rights institute says five died in clashes with police or soldiers, while 269 have been wounded and 1,894 arrested.

The government initially tackled the violence as a law-and-order matter, an approach that only made things worse. On Tuesday, Pinera apologized for having failed to recognize the genuine grievances behind the protests.

In a survey by pollster Ipsos, 67% of respondents said the reason the protests started is because “people are tired of their living conditions when it comes to the economy, health and pensions, as they are perceived as unfair and unjust.”

(Updates with comment from economist in seventh paragraph. Earlier version corrected day of the week in second paragraph.)

--With assistance from Maria Jose Campano and Eduardo Thomson.

To contact the reporters on this story: Laura Millan Lombrana in Santiago at lmillan4@bloomberg.net;Sebastian Boyd in Santiago at sboyd9@bloomberg.net

To contact the editors responsible for this story: Daniel Cancel at dcancel@bloomberg.net, James Attwood

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