Kast Sets a 120-Day Clock for a New Public Employment Reform

Chile’s government has made another attempt at a long-postponed reform. On Monday, President José Antonio Kast and Finance Minister Jorge Quiroz installed a 12-member Ministerial Advisory Commission for the Modernization of Public Employment, with a 120-day mandate to produce proposals for a bill that would change the rules governing state employees. The agenda covers career progression, the widespread use of temporary contrata contracts, performance evaluations such as the Management Improvement Programmes (PMG), and the conditions under which a public official can be separated from the state.

Kast argued that the diagnosis already exists and that there is broad technical consensus; what has been missing, in his view, is execution. Quiroz added that the public sector’s working schemes have been overtaken by technology and by the new functions the state has acquired, and that the challenge is to improve both service effectiveness and the use of public resources. The government framed the exercise as a way to balance stability and management capacity: protecting employees from arbitrary decisions while creating mechanisms that recognise good performance and make it possible to act on persistently poor performance.

The commission is not starting from a blank page. Named members include Fernando Claro, executive director of Fundación para el Progreso; Francisca Díaz Del Río, a retail executive with more than two decades at Sodimac; and María Francisca Yáñez, a civil industrial engineer and director at Banco Santander, Coca-Cola Andina and Socovesa, who also leads the AI Hub at Universidad Adolfo Ibáñez. Other members bring direct government modernisation experience, including former Hacienda undersecretary Heidi Berner, former Segpres minister Macarena Lobos, former Budgets director Cristina Torres and former Fiscal Council president Jorge Rodríguez.

The commission will hear from public officials, union associations, lawmakers and technical experts before delivering its conclusions. The Executive then intends to turn those conclusions into a bill. Kast said starting the process at the beginning of the government should allow it to be resolved within the same term rather than being passed on to the next administration.

The Commission's Real Battleground: Contratas, Performance and Political Trust

The contrata question is the political core

The commission’s most difficult task will be deciding what to do with the contrata system. Chile’s public administration increasingly relies on temporary hires for functions that are effectively permanent. For employees, that creates uncertainty; for the state, it coexists with very high stability for other officials. Enrique Rajevic has described the original Administrative Statute model as denaturalised: a system designed around permanent plants, public competitive entry and career development now depends mainly on contrata workers. This is not a technicality. Matías Acevedo, a former Budgets director, has argued that the problem cannot be solved through isolated provisions in the annual public-sector pay adjustment law; it requires exactly the kind of structural reform this commission has been asked to prepare.

That is where the political tension will concentrate. Formalising contrata positions would give workers more certainty but could reduce the flexibility that ministries and services have to manage staffing and political appointments. The commission is therefore being asked to redraw the boundary between career civil servants and positions of political trust.

Why the government chose a business and AI-heavy panel

The named members point to the direction of the debate. Fernando Claro brings think-tank and economic advisory experience; Francisca Díaz Del Río brings private-sector operations and retail management; María Francisca Yáñez brings econometric modelling and board-level experience in finance and artificial intelligence. Quiroz made the technology argument explicit, saying old working schemes have been overtaken by technology and by new state tasks. That suggests the commission will not only discuss labour rules but also how public-sector talent is measured, managed and deployed.

The Mendoza blueprint still shapes the options

The commission inherits a long technical debate. In 2019, former Comptroller General Ramiro Mendoza led a council that proposed indefinite contracts with severance, entry by public competition, merit-based professional development, and clearer limits on political confidence positions. Ernesto Silva had earlier called for a “new deal” for public employees that combined protection with efficiency. María Jaraquemada has warned that technical positions must be protected from the political logic of governments. The 120-day group will not be short of proposals; its job is to convert them into a bill the Executive can sell politically.

What the 120-Day Process Means for Officials, Unions and the Government

For the groups with most at stake in the next 120 days, the immediate questions are concrete.

  • Public servants and union leaders: The government has said it will hear the Agrupación Nacional de Empleados Fiscales (ANEF) and other associations. Use the consultation window to put detailed positions on contrata regularisation and evaluation reform on the table before the commission drafts its bill.
  • Hacienda and commission members: Decide early whether to adopt the indemnified permanent-contract model floated by Ramiro Mendoza in 2019. That choice will determine the bill’s fiscal cost and the intensity of union and parliamentary resistance.
  • Ministries and service managers: If the commission follows its own diagnosis, current flexibility to staff permanent functions through contrata hires is unlikely to remain unchanged. Workforce plans and budget requests should begin reflecting a more formalised career structure.
  • Members of Congress: Expect a bill to arrive after the commission reports, with the central political fight over dismissal grounds, evaluation systems and the separation between career officials and trust positions.