* Workers demand government action to end layoffs
* Turnout estimated at 12,000
* Government says 148 people arrested (Updates number of arrests, adds new government comment)
By Ariel Miranda
SANTIAGO, April 16 (Reuters) - Thousands of workers marched in the Chilean capital on Thursday to demand job security and more state protection amid a rash of layoffs linked to the global economic crisis, with a small core of protesters clashing with police.
Police cordoned off the presidential palace downtown and stopped traffic along Santiago’s main thoroughfare as protesters marched with banners reading: “The workers will not pay the price for the crisis” and “Worker dignity.”
The march was organized by Chile’s largest labor union umbrella group, known by its Spanish initials CUT, and the protesters included a broad spectrum of workers from teachers to supermarket staff.
Some protesters pulled down metal barricades and lobbed them at police, who responded with water cannons and teargas, during a short-lived clash in central Santiago, but Reuters witnesses said marches in the capital were otherwise peaceful.
The government said police arrested 148 people mostly in Santiago, 53 of them minors. Local media put the turnout in Santiago at 12,000 people.
Like many of its emerging market peers, Chile’s economy, long regarded as one of the most stable in Latin America, is facing a sharp slowdown as the global crisis hammers demand for its top export, copper, and depresses domestic consumer buying.
“Big businesses are firing workers,” CUT President Arturo Martinez told fellow marchers in downtown Santiago. “(Protests) will go on and on until the abuse stops.”
Martinez also called for a state pension fund instead of private pension funds, while protesters used the strike to demand improvements to the country’s education system.
The marchers sought to pressure the center-left government as it heads into a presidential election later this year that opinion polls indicate a resurgent right will win.
“We think this has been a relatively orderly demonstration. Workers have been able to voice their demands,” said Patricio Rosende, undersecretary at Chile’s Interior Ministry.
“We’re sorry that as always there are isolated groups who try to disrupt the legitimate right of workers to speak out,” he added. Protest leaders condemned the violence.
CUT led a four-day strike in November in which hundreds of thousands of Chilean public-sector workers participated to demand a pay increase, forcing President Michelle Bachelet’s government to improve its pay raise offer.
“We are fed up with abuses by businessman who are sheltering behind the crisis and making huge layoffs,” said Lilian Gallardo, 40, a union leader who represents staff at department store chain Almacenes Paris.
Chile’s jobless rate for the December-to-February period rose to 8.5 percent from 8 percent in the November-to-January period as the global crisis took its toll.
State-run copper giant Codelco told Reuters its output had not been affected by Thursday’s protests. Chile’s top private copper mines were also unaffected, Chile’s National Mining Federation union said.
To combat the economic downturn, the government unveiled a $4 billion fiscal stimulus plan in January and introduced measures to spur credit, while the central bank slashed its target lending rate.
But Chile’s economy shrank 3.9 percent in February, the biggest decline since May 1999 and the fourth consecutive monthly drop, putting it on the path to recession.
Analysts now forecast Chile’s economy will contract 0.5 percent in 2009, a far cry from the 2-3 percent growth the government had been forecasting. (With reporting by Rodrigo Martinez and Bianca Frigiani; Writing by Simon Gardner; Editing by Peter Cooney)