Standing on the back of a slow moving pick-up plastered with posters, Brisa Gálvez grasped a microphone and addressed a rain-soaked crowd of protesters. As she passed the neoclassical facade of Chile’s presidential palace, she led a chorus of voices shouting “se va a caer!” (it’s going to fall), prophesising the coming demise of the country’s privatised pension system.
On this rainy spring day in October 2016, tens of thousands marched in Santiago de Chile to demand an end to the AFPs (Administrators of Pension Funds), a market-linked model that has left the majority of pensioners in Chile facing abject poverty. The nationwide march was the third since July, constituting the biggest social movement in Chile since the return to democracy in 1990.
Brisa Gálvez, president of FENATS
Brisa Gálvez is one of few women leading a trade union in Chile. She is the president of FENATS, the organisation protecting the rights of the workers of Barros Luco, the public hospital in Santiago. She is also one of the organisers of the “Campaign of women workers against the AFPs”.
The day after the march, Brisa sat opposite me, drinking a black sugary coffee, full of the same energy she showed when addressing a crowd of thousands. She explained how the current pension system is leaving many under the poverty line and how it is bound to hit women particularly hard. “What’s happening here is awful. Everything is privatised and pensions are not sufficient to cover the expenses.”
A Neoliberal Experiment
Introduced in 1981 by the social security minister, José Piñera, the current system was one of the neoliberal experiments of Gen. Augusto Pinochet’s military dictatorship, a 17-year period that overturned the economic structure of the country and left 3,000 leftists “disappeared”.
The full effects of the AFPs, however, are becoming evident now. In Brisa’s words, “people are only just now realising that their pensions are miserable, that those in charge of the AFPs are making profits out of our money and leaving us with nothing.”
The pension system is based on a compulsory contribution that workers pay monthly to individual savings accounts managed by private pensions providers (“AFPs”), chosen by the employee. As the OECD’s review of Chile’s pension system explains, “fund members can choose between five different portfolios differentiated by the proportion of their portfolio invested in variable income securities.” There is some degree of regulation on the investment of “customer” deposits; however, citizens’ savings are still vulnerable to fluctuations in the global marketplace.
A System for the Privileged
“Welfare in Chile was dismantled 35 years ago, in midst of the dictatorship,” explains Luis Mesina, leader of No+AFP, the largest organisation behind the protests.
“The previous social security fund was very good and with great coverage, including pensions and health. This was replaced by the new system of individual capitalisation, a private system managed by joint-stock companies – a unique system on a global scale denying retired workers from receiving a decent and honourable income.”
Having an individual account, where what you receive depends on what you pay, means that those who have a well-paid regular job and are able to pay contributions without interruption, might receive an adequate pension. However, in a country with a large informal economy, a high level of precarious labour, and a patriarchal social structure where women are primarily seen as the carer of the house, this system leaves many destitute, and particularly women.
The individual accumulation of contributions is discriminatory in itself. “Women don’t work as much as men,” says María Luz Navarrete, spokesperson of No+AFP in Santiago Centro. “There aren’t enough nurseries, and society won’t help, nor your family, or even your own partner. If women work, they face discrimination and rarely have a career.”
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The negative impact of the Pinochet-era pension system will be felt by the next generations.
Below Minimum Wage
The Chilean Pension Supervisor revealed in 2016 than an average pensioner receives 207,382 pesos (314 USD) a month within the AFP scheme. This is below the national minimum wage, and a paltry figure in a country where the cost of life is comparable with many developed countries. For women, however, the situation is far worse. More than 94 percent of retirees receive less than 156,000 Chilean pesos (236 USD).
During the 1980s, Piñera promised a pension replacement rate equalling 70 percent of the salary to convince workers to switch to the new pension scheme. Today, this rate is 30 percent for men and 22 percent for women, according to No+AFP.
Basic Pension Guaranteed
In 2008, the Socialist government of Michelle Bachelet tried to soothe a dramatic situation by replacing the previous poverty prevention programmes with the New Solidarity Pillar (pilar solidario). This programme guarantees the least affluent 60 percent of the population a basic pension of 102,897 pesos (156 USD), regardless of their past contributions. In other words, as opposed to reforming the system as a whole, the state chose to bolster a scheme that consistently fails the most precarious sectors of Chilean society. Revealingly, the public cost of the new scheme is lower than government spending on the pensions of the armed forces, who remain under the pre-existing fund, partially funded by the state.
This situation has further stoked anger among the Chilean populace, including advocates of the AFPs. “The state spends more on the pensions of the 180,000 people in the armed forces than on 1.3 million ordinary citizens. It’s clear that we have a problem here,” says Fernando Larraín, CEO of Asociación de AFP, an organisation representing the AFPs.
According to Fernando Larraín, the AFP system is the best possible deal for Chile, but needs to be strengthened. Only a tributary reform (in which the state spends more, men and women work equal hours, have higher salaries, employers match workers’ contributions to 20 percent, and the retirement age is raised) would ensure fair pensions for all, including women. On average, women pay contributions for only 15 of a possible 35 years. “This is not sustainable,” comments Fernando Larraín. “But the fact that women do domestic work and that this work is not officially recognised, is a much deeper problem than just the AFPs.”
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Protesters want to see the current pension system completely dismantled.
Fundación SOL, a Chilean non-profit research organisation specialising in labour, advocates a complete scrapping of the AFP system. In response to those who say that the AFPs should not be blamed for what is a “cultural problem,” a researcher for the foundation, Carla Brega, replies: “of course it is cultural problem that women have to do double work, in the house and outside, and that they are discriminated in the workplace. However, the Chilean labour system is not adapted around this at all. On the contrary, it maintains women in a disadvantaged position. This system is a structural reproduction of gender inequality.”
A recent study by Fundación SOL shows that only 48.3 percent of women of working age are actually part of the labour force. “The main reason for inactivity,” states the report, “is the commitment to the household chores: part of what is called ‘reproductive work’, work without prestige and without pay.” Half of women workers receive less than 220,000 Chilean pesos (320 USD) a month. Low incomes are a common reality in Chile, but they disproportionally affect women, who, even in comparable positions, receive 21.4 percent less than their male counterparts. The small public sector has made strides towards gender equality, with equal pay initiatives and accessible nurseries, however, workers in the private sector have made no such gains. “Childcare in this country is just a woman’s affair, and this has big repercussions when you retire,” says Brisa Gálvez. “Women stop working to take care of their children, and therefore stop paying contributions into the scheme. As a consequence, women’s pensions end up being much lower than men’s.”
For Brisa, it all comes down to the unpaid and undervalued domestic work – but things have changed. “Women are more independent now. Before, women just had to comply with their role as a housewife.” Brisa’s mother was a housewife for her whole life, financially dependent on her husband. “That’s why she had to put up with many things to which I, with a qualification as a paramedic technician, can say ‘no, no more’ and I go ahead with my life together with my children.” Ultimately, however, those who are able to work still have to cope with the cumulative burdens of housework and workplace discrimination, and still receive small pensions.
Still a Dictatorship
For many, including Fundación SOL, only a new system, Reparto Tripartito Solidario, based on solidarity across generations, genders and income groups — where the state, employers and employees contribute — will guarantee gender equality (at least in retirement age). The proposal, drafted by No+AFP, has a specific provision that acknowledges the complex obstacles women face. The proposal is even more significant when considering the politico-economic trajectory of Chile throughout its transition to democracy. The opposition to the AFPs marks one of the first moments when a broad swathe of Chilean society oppose to the neoliberal economic model of the dictatorship. María Luz Navarrete, spokesperson for No+AFP, emphasises that this is not a recent fight. “The ‘physical force’ might be gone, but we are still in the dictatorship because the social and economic structure has not changed. This is a fight against the dictatorship – against the structure of the dictatorship.”
In fact, No+ (no more), the main slogan of the movement, is the same phrase that was painted on walls and chanted collectively before the 1988 plebiscite, which saw Pinochet ousted from power. In other words, the campaign emphasizes a continuity of structural violence, thus countering dominant discourses of societal healing and reconciliation.
A New System is Necessary
“This fight is an awakening of the people in regards to many things,” explains Brisa. “Chile is a very submissive country, very fearful of what might happen. We suffered a brutal dictatorship and because of everything horrible that happened during those years, people are still very fearful of reacting to anything imposed by the state. People complain over and over, but we have never before seen such a powerful social movement as the one happening now against the AFPs.” When asked if it’s possible to introduce a new system, María Luz Navarrete replies: “It’s necessary. It’s not about being possible. It’s indispensable. Indispensable to achieve a human right. You cannot leave women in this condition of inequality.”
Considering the obstinate pro-AFP stance of President Bachelet, it is unlikely the system will fall in the near future, as was declared by Brisa during the march in October. Nevertheless, the movement questions the dominant attitudes towards privatisation and the roots of inequality in contemporary Chile.
This article was first published in iFOKUS nr. 3, 2016