Venezuela: Wage demands challenge government call for austerity

CARACAS
Petroleumworld.com, Mar 10, 2009

Even as President Hugo Chávez adds to his growing list of expropriated or “intervened” business assets, problems are cropping up across a swathe of state controlled entities as labor unions press for big pay rises to compensate for high inflation.

The annual round of collective bargaining talks is under way, as is normal around this stage of the year. But there's a big difference this time round.

In recent years, the government could tap high state revenues from sky-high oil export earnings to foot the bill for pay hikes. Now, it's struggling in the face of what threatens to become the worst global recession in decades.

Finance Minister Alí Rodríguez Araque, a survivor from last week's Cabinet reshuffle, has unveiled a new austerity drive in the wake of the abrupt downturn in Venezuelan oil prices and government income. He said this included eliminating costs that didn't much matter during a “time of abundance.”

As examples, he cited the purchase of new vehicles that at time had been “unnecessary” in the past and spending on foreign trips that “might be useful but aren't indispensable.” Wags wonder whether this will impinge upon the president's penchant for traveling to foreign parts and playing on the world stage.

The minister insisted that social spending wouldn't be touched, and toed the official line that the government's economic policies meant that Venezuela wouldn't be as badly affected by the world crisis as critics claim. But the 2009 budget remains unscathed, even as critics claim it's been overtaken so badly by events that it's become meaningless.

The budget, which was approved by parliament without question or amendment, is based on the assumption that Venezuelan oil prices would average $60 a barrel this year. Rodríguez Araque now forecasts that Venezuelan oil prices will average $36 a barrel through this year.

Critics say that implies spending will have to be slashed right across the board. Those less unsympathetic to the government argue that things are perhaps not quite as bad as gloomy economic doomsters say, or at least not yet.

The Energy Ministry says that Venezuelan oil prices averaged $38.73 a barrel last week, up $1.93 on a week before, when prices also nudged upwards. But the overall picture looks bleak.

Venezuelan oil prices averaged $36.01 a barrel in February and $36.33 a barrel in the year up to the end of last week, according to the official figures. The ministry said that the relative upturn was in line with the global trend, but pessimists warned that prices could resume the downward trend again.

Amid all the uncertainty, the government has urged workers to practice austerity of their own, in what is seen as code for moderating wage demands this year. If that's the case, it would seem the message has yet to get through to employees at state-owned entities.

Not least among them are workers at the stated-owned Corporación Venezolana de Guayana (CVG), which runs a flock of primary industry companies including aluminum production in the east of the country.

In Caracas, a labor dispute has broken out at the Metro subway system. To date, this has caused some inconvenience to passengers but has yet to reach the stage where people are wondering when and if they'll be able to get to and from work.

Union leaders at CVG and the Metro are pressing for pay rises over and above last year's inflation, officially calculated at 30.9 percent, a figure that's seen as an under-estimate of the true trend in the cost of living, and not just by instinctive skeptics.

“Look, it's got to be 40 percent or nothing,” one evidently quite determined employee at the Metro told this reporter. “Without that, we're the ones who lose. Bills have to be paid.”

This individual knew where to place the blame and he could see plenty of trouble ahead if he and his colleagues played it soft. “Look, I don't run the economy. I don't ride around in a big car. My children have to eat,” he declared for all to hear. “And there'll be hell to pay from the wife if we get less,” he added with a rueful grimace.

This man makes no secret that he's backed the president all the way from day one back at the elections in late 1998. But he knows that now, he and probably the president as well are going to find themselves between the proverbial rock and a hard place.

For his part, Chávez has not taken well to unrest in the grass roots. He has publicly rejected pay demands put forward by the unions at CVG and the Metro amid talk of strike action. They could go ahead with that, he said, “They don't make me afraid.”

Strike talk is also in the air at the state oil corporation, Petróleos de Venezuela (PDVSA), which is also under pressure from contractor companies to pay overdue bills. Energy and Oil Minister Rafael Ramírez, who's also PDVSA president, has tried to focus public attention on the companies rather than audible growling from the labor front.

PDVSA workers in Anzoátegui and Falcón states have started a series of marches to back their pay demand, blocking highways outside oil industry centers. So far, protests have reportedly passed off without major incident, but people wonder how long this will hold.

Union representatives claim that the collective bargaining agreement ended on January 21, and there's been no response from PDVSA since. A prolonged stoppage at PDVSA would pose severe problems for the government. Oil accounts for about half of gross domestic product and, in normal times, four fifths or more of overall export income.

But it's not just at PDVSA where problems are brewing. A rash of pay protests has broken the truce state workers observed during the run-up to the referendum that lifted a ban on successive re-election on February 15..

Unofficial estimates have it that something like 1.4 million state employees – about a tenth of the national workforce – are showing signs of running out of patience.

Newly appointed Labor Minister María Cristina Iglesias, back for a second stint in the job after the Cabinet shake-up, is already under pressure to speed up negotiations on a new collective bargaining agreement for public administration workers. The unions claim the old agreement expired four years ago and still hasn't been renewed.

As in so many other instances in Venezuela, all this could eventually land up on the president's plate. There's not much doubting about where disgruntled public sector workers intend to take their demands in the last instance, if it's necessary.

Story by Jeremy Morgan from Latin American Herald Tribune
Latin American Herald Tribune 03 /10/2009