ABSTRACT
This chapter reviews the economic and labor reforms undertaken by Pinochet's regime. It explores the military government's repressive policies toward the labor movement in the period immediately following the coup and after 1979 with the institution of the new labor code. During the first decade of the military regime, macroeconomic policy centered on controlling inflation, leading to a volatile macroeconomic environment. The macroeconomic environment was unfavorable to domestic industries adjusting to the liberalization program as well as to emerging export industries. Chile entered the 1980s with a large trade deficit, sustained through the inflow of foreign capital. During the international financial crisis of 1981-1983, these inflows quickly reversed, leading to a severe balance of payments crisis in the Chilean economy. The contemporary weakness of the Chilean labor movement is in large part the result of the limitations of the 1979 labor code imposed by the military government as well as the successful crippling of labor during the military's 17-year rule.
