April 16 (Bloomberg) — Chilean police used teargas and water cannons to break up demonstrations in Santiago as unions called a national strike to protest layoffs and demand higher taxes on the rich.

About 12,000 people marched today in support of the strike, according to Radio Cooperativa. Chile job losses may reach 250,000 this year and the unemployment rate may rise above 12 percent for the first time in 20 years, according to Santiago-based bank Grupo Security SA. Chile’s economy is shrinking at the fastest pace since 1999 as the global economic slowdown crimps demand for its exports.

Companies are firing more workers than necessary to weaken unions and undercut pay demands, Cristian Cuevas, a national secretary of the union umbrella group called Central Workers’ Unit said in a telephone interview.

“Workers shouldn’t pay for the crisis because the workers didn’t start it,” Cuevas sad. “Financial speculation” triggered the global economic crisis,” he said.

Police spokeswoman Carla Ortega declined to give details on the number of arrests, saying that some people who were detained this morning have since been freed.

Protestors also want a state pension system and a constitutional amendment allowing the government to intervene in companies that fire workers, Arturo Martinez, president of the Central Workers’ Unit, said yesterday. Chilean workers are obliged to contribute to the nation’s pension fund system.

“After this crisis the world has to organize itself differently,” Martinez told reporters in Santiago. “We can’t continue with the same labor laws.”