Ministerio del Trabajo y Previsin Social Adopted Measures

Ministerio del Trabajo y Previsión Social Adopted Measures by the Ministry of Labor and Social Welfare of Chile facing the crisis Washington DC, May 20 , 2009

Agenda Ministerio del Trabajo y Previsión Social 1. Chilean context 2. Summary of adopted measures until March 2009 3. May 2009: National Agreement for the Employment, the Training and the Labor Protection

Ministerio del Trabajo y Previsión Social Chilean context

Context Ministerio del Trabajo y Previsión Social Chile has had an acknowledged economic performance in the past two decades. Annual Growth compared GNP. Fuente Informe OECD Chile 2009

Context Ministerio del Trabajo y Previsión Social LABOR MARKET IN CHILE: Occupancy by Sector 1. Diagnóstico 2. Origen de la propuesta 3. Principales elementos del Proyecto de Ley

Contexto LABOR MARKET IN CHILE : Distribution of enterprises by size Ministerio del Trabajo y Previsión Social

Context Ministerio del Trabajo y Previsión Social LABOR MARKET IN CHILE : WORKFORCE (Jan-March 2009, Informe INE) Workforce 7. 276. 663 Unemployed 669. 160 (9, 2%) Employed 6. 607. 503 (90, 8%) Unemployed by sex: Mujeres: 10, 9% / Hombres: 8, 2%

Context Ministerio del Trabajo y Previsión Social LABOR MARKET IN CHILE : (Jan-March 2009, Informe INE)

Ministerio del Trabajo y Previsión Social Summary of adopted measures until March 2009

$ D er ns rt 50$ Summary of adopted measures until March 2009 Ministerio del Trabajo y Previsión Social 4 packages of measures for $ 6. 000 USD millions (around 4% of the GNP) businesses and exporters, investment, labor’s capital, bank factoring and encouragement of the finantial market. housing subsidy; strengthens fund of guarantees for small entrepreuneurs, National Bank capitalization, improvement in taxes return

Summary of adopted measures until March 2009 Ministerio del Trabajo y Previsión Social expense, public investment, support to SMEs and to the purchasing power of the most vulnerable sectors. New credit line CORFO - Announces Pro Crédito in March 2009; Support the microundertaking, stimulate bank and not bank credit, promoting greater competence in the finantial system and encouraging more options of finantial assistance for persons and enterprises. These measures could generate $3. 600 USD millions in additional private credit

Fiscal Stimulus Plan (January 2009) Ministerio del Trabajo y Previsión Social This plan is a fiscal contra-cyclical strategy to estimulate employment and growth that compromises resources for $4. 000 USD millions equivalent to 2, 8% of the GNP. - Stimulus to investment and consumption, some of these measures are: - Increase in $ 700 USD millions of public investment. This created 60 thousands new jobs. - Elimination of the postage tarifs - Extra-ordinary contribution of $41 USD millions to the Fondo Común Municipal, destined to support su tarea de servicio e inversión en las comunidades locales - Strengthening of the access to private funding - Transitorily reduction of PPM in 15% to small and medium sized enterprises, and in 7% for bigger ones. - Implementation of a line of CORFO with a capital of $ 50 USD millions to brindar guarantee en la reprogramación de créditos.

Fiscal Stimulus Plan (January 2009) Ministerio del Trabajo y Previsión Social - Support to Persons Payment of a special bonus of $70 USD per family load for vulnerable families. To March 2009, 740. 000 payments (90% of the beneficiaries) for a total of $ 80 USD Milliones were completed. - Strenghtening Employment and Training (aprooved in March 2009) - Create a subsidy to work to encourage formal employment for under payed workers between 18 and 24 years. The beneficiaries will receive a subsudy equivalent to 20% of its salary, and the employer one equivalent to 10%. - Requirements: Belong to the poorest 40% of the population and have gross remunerations under $ 600 USD per month (like $466 USD cash) or $7. 200 USD annually. - Effets: will benefit a universe between 250 and 300 thousands young men, and it will have a fiscal cost of $80 USD millions this year.

Fiscal Stimulus Plan (January 2009) - Ministerio del Trabajo y Previsión Social Strenghtening Employment and Training - Re-adjustment of maximun value granted by the Tributary Franchise SENCE to carry out courses in the Tecnical Formation Center accredited from $335 USD to $880 USD. It is expected that this measure, that will be of gradual application, will mean an increase of 15% on the demand for curses CFT, only in the first semester of 2009 in respect to the observed in 2008.

Extension of the Unemployment Insurance coverage Ministerio del Trabajo y Previsión Social It began operating in 2002. To this date, more than 5 million workerd have joined (it’s madatory). Recent Improvements to insurance (February 2009) - It incorporates workers in fixed terms as beneficiaries of FSC for two months with replacement rates of 35 and 30%. - It adjusts maximun values (in a 28%) and minumun (between 14 y 35%) of FSC

Other permanent character measures - Fiscal usage Plans : Proempleo Ministerio del Trabajo y Previsión Social

Ministerio del Trabajo y Previsión Social National Agreement for Employment, Job-training and Labor Protection May 2009

Origin of the proposal. Shared Diagnosis - - Ministerio del Trabajo y Previsión Social Repercusions of the crisis in the latin american economies and in Chile Contraction due to economic activity and unemployment growth (9. 2% Jan-March 2009). Workers need protection of their jobs before the economic contraction. Employers need supporting toold to keep workers. Need of anticipating to the most severe consecuences of the economic contraction. The good management of macro-economic and of the public policies of Chile, alowed roominess for the design of new instruments. These instruments should be temporary and answer the needs of labor protection, income and job training.

Origin of the proposal. Actors - Ministerio del Trabajo y Previsión Social dialogue between the different, relevant actors relevantes of the labor market. National agreement subscribed by the Governement, workers, Small , Medium and Big entrepreneurs. Wide consensus among the main actors of the labor market.

Objective of the agreement Ministerio del Trabajo y Previsión Social “Labor Protection and encouragement of the job training of Chileans to face the present contraction scenery of the world economies”. Workers, entrepreneurs and governement are engaged to spread and apply these measures to achieve its success.

The measures 1. 2. 3. 4. 5. 6. Ministerio del Trabajo y Previsión Social Retention of workers and Job training Permit Job training Pre-Contract of Job training Scholarships program MYPE for working/employed women Program for the recognition of previous learning Expand access to the Cesantía Solidario Fund (FCS) to workers with a fixed rate (PF) and Obra o Faena (OF). Measures 1, 2, 3 and 6 are within the framework of the Draft Law send to the National Congress on May 7, 2008

1. Retention to Workers and Job training Ministerio del Trabajo y Previsión Social Measure: - Authorize enterprises to imput against its PPM an additional amount of discount equivalent up to 2. 5 times the monthly job training expense. - This will apply only to the job training expense of dependent workers with taxable incomes less than U$600 per month, encouraging the employability of less qualified workers.

1. Retention to workers and Job training Ministerio del Trabajo y Previsión Social Requirements: - Entrepreneurs must maintain the same number of workers in their monthly list, in respect to the one they had in April 2009 - For this, as a requirement it will be stablished that the average of the last three months prior to the declaration of the PPM must be equal or greater to the number of workers in April 2009.

2. Job training Permit Ministerio del Trabajo y Previsión Social Measure: - - Workers that are members of the SC, will be able to pact a permit for job training without the benefits of income (as an alternative to despido) Workers and employers will sign a t of job training agreement before a minister of faith. The permit has a maximun extension of 5 months, continued or not, in a 12 month period. The job training classes will have a minimun duration of 60 hours per month, and they will be given in institutions with a recognized path and quality. Requirements: - To access: The worker must be a member to the SC, with a undefined-term contract and have 6 welfare contributions that must have been continued and with the same employer. To obtain benefit: Keep attendance to the job training classes that will be given , and not be receiving another remuneration.

2. Job training Permit Benefits for the Worker: - taxable remunerations of the last 6 months. - The maximun benefit is U$300. Ministerio del Trabajo y Previsión Social

2. Job training Permit Ministerio del Trabajo y Previsión Social - Example of the benfit (remuneration $240. 000): - Funding: - Tri-party: employer, individual unemployment account of and solidarity fund. Job training is funded in the first hand with the surpluses of OTIC and later with charge to the FCS.

2. Job training Permit - Ministerio del Trabajo y Previsión Social Job training courses: - Job training modularized courses, based in labor competences, which may lead in some cases to the certification of competences, technical formation and tasks. - Extent between 60 -90 hours monthly, without counting number of months. - The courses are modularized each month, and an certificate is given to the participant that certifies that such module is part of an offer that may continue a long term training trajectory. - OTEC and other accredited entities (universities, CFT, IP, Leveling of studies) will teach the courses. - The enterprise will nominate its workers in a web enabled in the SENCE. All job training offer will be in it. - The worker will be able to access each month to these courses; the permit is individual and must be negotiated between worker and employer (the agreement is signed once and renewed monthly).

3. Pre-contact of Job Training Ministerio del Trabajo y Previsión Social - Measure: - Enables to assign FT resources to train potential workers. In 2008, 25. 803 were trained through this program (big, medium, micro and small entreprise) The maximun amount of the FT, destined to this type of training, is amplified (from 1% to 1, 25% of the remunerations). The extent of the training of the funded by FT wides to 6 meses. A nourishment and tranportation bonus may be given to the beneficiaries. It covers work accidents during the training period.

6. Expand acces to the FCS for workers PF y OF Ministerio del Trabajo y Previsión Social - Measure: - Expand workers to PF and OF in their access to FCS. Recognize as already paid to the FCS teh contributions, continued or discontinued, executed to the individual accounts of these workers during the 24 months prior to May 1 of 2009. - Requirements: - Have contributions in the individual account. Meet with the condition of having 12 contributions in 24 months.

Monthly benefits of the measures Ministerio del Trabajo y Previsión Social

Measures 4 and 5 Ministerio del Trabajo y Previsión Social - Measure 4, The Scholarships program MYPE for working women, seeks to expand the current program by duplicating its budget, so that it may open 20 thousand new places for working women heads of household. - Measure 5, The Program for the recognition of previous learning, seeks to validate knowledge that hasn’t been learned in the formal system for 1000 workers, certifying them throughout an evaluation system in certified academic institutions. This, to recognize articulately such learning

Ministerio del Trabajo y Previsión Social Thank you