On October 25, 2020, an overwhelming majority of Chileans voted to replace their existing constitution, which dates back to the dark days of Augusto Pinochet’s military dictatorship. It is a historic event that marks the beginning of a new political era in Chile.
In October 2019, over a million Chileans took to the streets to protest against inequality and to demand profound social reforms. Protests began due to an increase in metro fares in the capital city of Santiago, but quickly came to express Chileans’ general anger about high living costs and poor social services. Protesters with different priorities (from improvement of the healthcare and pension systems to better educational standards) found common ground in a demand to modify the constitution. This eventually moved President Sebastian Piñera to organize a referendum on constitutional reform.
The dictatorship-era constitution lacked legitimacy due to its authoritarian origins. Many also believed that it concentrated wealth and power in a minority of the population, and that the difficulty to modify it was the underlying cause of the issues Chile is facing today.
With a new constitution in place, Chile “could become a country with a more solid and sustainable social contract that resolves the legacy issues [left by the Pinochet dictatorship],” said Mario Marcel, the president of the Chilean Central Bank.
Grappling with Pinochet’s economic legacy
Chile was long seen as an exemplary model of development in Latin America. Undeniably, the pro-market economic model that was implemented by Pinochet and embedded in his constitution resulted in high levels of growth and economic success. The protection and expansion of the Chilean private sector, which went as far as privatizing services like water, health and education, allowed it to become one of the most prosperous countries in Latin America and a role model for neighboring countries.
These economic advances have resulted in increased prosperity and improvements in living standards in the last decades. Thousands of Chileans have been lifted from poverty, making the middle class the country’s largest socio-economic group. Concretely, poverty was driven down from 30% in 2000 to 3.7% in 2017. Inequality, contrary to the general Chilean belief, has decreased over the same period.
But last year’s protests brought to light the cracks in this system. Compared with its fellow members of the Organisation for Economic Co-operation and Development (OECD), Chile is, in fact, the most unequal. Its income gap is about 65% higher than the OECD average. It also spends much less of its GDP on education, health, and pensions than other member states.
Today, Chile’s enlarged, educated middle class is demanding more from the state and asks for equal opportunities across socio-economic groups. They find the cost of privatized education too high, and the quality of state schools too poor. The current private pension system, based on individual savings accounts, has also proved to be unsatisfactory, with practically 80% of old-age pensions lower than the minimum wage of 320,500 Chilean pesos (351.72€).
It is clear that this growth has not reached all Chileans, and that a market society of self-paid pensions, healthcare, and education does not compensate for that. The gap in quality and pricing between private and public services has become unacceptable for a large segment of the population. They believe the current system privileges an elite and that a new constitution should put more emphasis on social policies and redistribution.
A time for change
In last month’s referendum, an overwhelming majority of 78% agreed that it is time for change. The new constitution will be drafted by a constitutional convention made up of 155 citizens. The convention will be elected by popular vote, and men and women should be equally represented. They will then have up to nine months time to draft a constitution that a two-thirds majority of the convention approves of. Final ratification will happen through a referendum in mid-2022.
The result of this constitutional reform is still unclear and unpredictable. So far, only the first step has been taken. The outcome will depend on who makes up the convention that renews the constitution. Although all problems will not be magically solved from day to another, Chilean democracy has taken an immense step forward, and the remains of the dictatorship are left behind further in the past. The new constitution will hopefully give a voice to all Chileans and be legitimate in its very origin.