Chile's congress passes labor reform to strengthen unions

SANTIAGO (Reuters) - Chile’s congress approved on Wednesday night a labor law opposed by business leaders and conservative lawmakers, leaving a legal challenge from the opposition as the only hurdle left for President Michelle Bachelet’s signature reform.

The law, containing dozens of new rules intended to give unions more power, was passed by both houses, where Bachelet’s center-left Nueva Mayoria coalition has majorities.

The new rules will make it more difficult for businesses to replace striking workers, and companies will also be prohibited from extending benefits to non-unionized employees. Workers within the same business sector will be allowed to unite when negotiating wages and benefits with employers, though that aspect of the reform was weakened in negotiations.

Since it was introduced in December 2014, debate over the bill has been fractious, as centrists within Bachelet’s coalition demanded some provisions be watered down.

In recent months, Bachelet has had to agree to significant modifications to maneuver the bill through multiple committees and both houses.

“The labor reform is like a horse without a tail. It’s not pretty, but it walks,” Senator Juan Pablo Letelier of Bachelet’s Socialist Party said during debate on Wednesday.

Lawmakers from Bachelet’s Nueva Mayoria coalition have said the reform was needed to level the playing field in a nation with biting inequality and loose collective bargaining rules.

Business leaders and opposition lawmakers counter that the reform will hurt the top copper exporter’s already moribund economy. And mining companies say they are bracing for salary hikes and less reliance on cheap outside contractors as a result of the reform.

Conservative lawmakers claim that several aspects of the bill are unconstitutional and plan to launch a legal challenge.

“Here, in our judgment, we are threatening an important aspect of workers’ liberty,” Deputy Patricio Melero of the right-wing Independent Democratic Union (UDI) party said earlier on Wednesday.

Labor lawyers, however, believe that most provisions of the reform will survive the legal challenge, with the possible exception of an article stabilizing a union as the only valid bargaining unit.

“We’re going to defend the principles that inspired this reform,” Labor Minister Ximena Rincon told reporters. “And we hope, obviously, to emerge victorious.”