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17 December, 2007
BHP Billiton, the world's largest combined energy and mining company, will file a legal appeal to avoid hiring contract workers to full-time, permanent jobs at its Escondida copper mining operations in Chile. That was the Australian company's response to a directive from the country's Ministry of Labour on 7 December that it is to directly employ 767 subcontractors at its large copper mining operation in northern Chile, in order to comply with a Law on Subcontracting.
The directive, issued in a report, follows the notice that state-run mining company Codelco, the world's largest copper mining enterprise, must bring over 5,000 workers onto its permanent rolls for the same reason. Codelco utilises the services of some 30,000 subcontractors, compared to 15,000 permanent workers.
Furthers reports from the Ministry are expected on Xstrata and AngloAmerican. BHP Billiton wasted no time in saying it will challenge the directive, which, it says, will raise its full-time employment at Escondida by 25%. Escondida is 57.5% owned by BHP, while Rio Tinto holds a 30% stake, and a Japanese consortium holds 10%.
Chile's Law on Subcontracting was passed in 2006 and took effect in January 2007. It sets limits on the number of staff that can be used on short-term jobs. The law changed the secondary responsibility of companies utilising contractors regarding labour responsibilities, giving them primary responsibility. It also created a process in which enterprises must register and establish a fund to meet wage costs and guarantee the supply of full-time workers in case of non-compliance.
The purpose of the law is to ensure compliance with existing Chilean labour law and to prevent unfair competition between companies on work conditions. In Chile, some 50% of enterprises were estimated to contract out part of their production, while 20.7% contracted out their main economic activity. Prior to the law taking effect, a full 35% of Chile's labour force was estimated not to have a direct contractual link with the primary enterprise.
In Chile's copper industry, permanent staff earns three times more than contract workers, who oftentimes perform the same work. This issue caused a six-week strike in June and July 2007 by the 30,000 subcontractors of Codelco at its five Chilean divisions.
The Labour Ministry's report on Xstrata and AngloAmerican, which each own 44% of Chile's third largest copper operation, Dona Ines de Collahuase, is expected to be released this week.