The political puzzle behind the government's new battle to remove the rigidity of public employment

On August 9, 2026, Chile’s Minister of Finance, Jorge Quiroz, delivered a speech during the Estado Nacional television program, invoking a phrase once spoken by British Prime Minister Winston Churchill during World War II. The quote, “This is not the end. Not even the beginning of the end. But perhaps the end of the beginning”, was used by Churchill after the Allied victory in the Second Battle of El Alamein in November 1942. In his context, the remark was meant to temper public expectations, acknowledging that while the war had turned in favor of the Allies, the struggle would continue. Today, Quiroz used the same words to frame the passage of Chile’s megareform known as Reconstrucción, which passed through Congress earlier that week. For Quiroz, this marked not an end, but rather the start of a new phase in Chile’s political and economic transformation. The megareform, approved by Congress, represents a sweeping set of measures aimed at revitalizing the country’s financial markets and addressing long-standing structural issues within the public administration. Among its key components is a proposal to stimulate the capital market by encouraging medium-sized enterprises and small businesses to issue shares or bonds. This initiative seeks to restore the dynamism of the Santiago Stock Exchange, which has been stagnant due to low levels of corporate activity. The government argues that such reforms will deepen the market, allowing more participants, particularly smaller investors, to engage with greater ease. Additionally, the reform includes provisions to lower consumer and mortgage credit rates, aiming to alleviate financial burdens on households and support economic growth. Beyond the financial sector, the reform also touches upon the broader framework governing public employment. The Estatuto Administrativo, a law enacted in 1989 under the military dictatorship, has long served as a barrier to reforming the civil service. It grants public employees job security that is virtually guaranteed, making it nearly impossible to dismiss them, even for poor performance. Critics argue that this system creates a culture of complacency and undermines merit-based advancement. The current government, led by President Gabriel Boric, has proposed a comprehensive overhaul of these rules, including the creation of a cross-sector commission led by an independent economist to assess and recommend changes. The goal is to introduce flexibility into public employment, promote efficiency, and align the state apparatus more closely with citizen needs. The push for reform has encountered resistance from unions and leftist parties, who view the changes as an attack on workers' rights. The National Association of Fiscal Employees (ANEF) has already raised concerns over the potential erosion of job stability. However, supporters of the reform argue that the current system is outdated and incompatible with modern governance. They point to recent scandals involving fraudulent medical leave claims, which exposed systemic weaknesses in how public officials are held accountable. Between 2023 and 2024, over 25,000 public servants were found to have violated their medical leave conditions by traveling abroad, leading to resignations and disciplinary actions. These incidents have intensified calls for reform, framing the issue as both ethical and practical. Political analysts suggest that the success of the megareform could serve as a model for future legislative efforts. With a majority in Congress, the ruling coalition believes it can navigate the challenges ahead. However, opposition from the left remains a hurdle, particularly given the weakening influence of leftist parties in recent years. Some experts predict that the upcoming reform will be more complex than previous attempts, reflecting deeper institutional flaws. Meanwhile, Senator Luciano Cruz-Coke of Evopoli has called for urgent action, emphasizing that modernization of the Estatuto Administrativo is essential for improving public services and restoring trust in government institutions. As the government moves forward with its agenda, the focus remains on implementing the reforms that were approved. The next steps include drafting detailed legislation, engaging stakeholders, and ensuring broad consensus before final approval. The outcome of this process will shape the trajectory of Chile’s political and economic landscape for years to come.