VENEZUELA: BRV PRESSES SOCIALIST LABOR AGENDA

C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 000643

SIPDIS

E.O. 12958: DECL: 05/22/2019
TAGS: ECON ELAB EINV PGOV PREL VE
SUBJECT: VENEZUELA: BRV PRESSES SOCIALIST LABOR AGENDA

REF: CARACAS 339 AND PREVIOUS

Classified By: A/Economic Counselor Richard T. Yoneoka for reasons
1.4 (b) and (d).


1. (C) Summary. The Government of the Bolivarian Republic of
Venezuela (GBRV) is making determined efforts to stem the
demands of public sector workers and to reshape
employer-worker relations along socialist lines. The
National Assembly is considering a draft reform of
Venezuela's labor law, which would, in part, establish
"worker councils" that may supplant the functions of trade
unions. The GBRV is also reportedly trying to make more
uniform its negotiations with public sector unions based on a
government-determined "social salary." So far in 2009, labor
unrest has increased significantly, particularly in the
public sector. Inter-union violence has also spread.
President Chavez reappointed Maria Cristina Iglesias, a
hard-line supporter, as Minister of Labor in March. While an
economic decline is likely to contribute to continued labor
union activism, the GBRV still appears to have the upper hand
with respect to a badly splintered and often co-opted or
cowed Venezuelan trade union movement. End Summary.

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PENDING CHANGES TO THE LABOR LAW
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2. (SBU) The National Assembly is currently drafting a major
reform of the Organic Labor Law (LOT). Local experts believe
the law, once passed, will contain a number of changes
included in the constitutional reform package that voters
rejected in the December 2007 referendum. National Assembly
members are holding consultations with key interested
sectors, including trade unions, employer associations, and
academics. The GBRV's justification for the reform is that
Chavez's Bolivarian Revolution requires, "a pattern of change
in the character and content of the legal instruments that
cover the social relations of production, to improve the
norms and regulate the exploitation of workers in capitalism
and contribute to the workers liberation and emancipation
from a perspective of constructing Socialism."


3. (C) While the National Assembly has not yet shared a draft
of the new labor law, its proponents have publicly
underscored that they expect the new law to provide for a
transition to a 36-hour work week, retroactive application of
current salaries for calculating severance payments (which
would lead to significantly higher severance payments),and
the creation of "worker councils." PSUV National Assembly
Deputy Francisco Torrealba told PolCouns May 20 that the
issues at the forefront of public discussions are job
security and the worker councils. Trade unions fear the GBRV
intends to use and co-opt worker councils to sideline trade
unions. Is not yet clear whether the National Assembly
intends to pass the labor law overhaul in 2009 or 2010.

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LABOR IN 21ST CENTURY SOCIALISM
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4. (SBU) The GBRV is also reportedly seeking to remake
collective bargaining practices in Venezuela, particularly
the determination of salaries and benefits. The National
Institute of Labor Studies (Inaesin),a private foundation,
released to several journalists a purported Labor Ministry
document that outlines the GBRV's strategy for negotiating
with public sector unions to "advance the construction of
socialism." The plan stipulates that the GBRV will determine
"the true necessities" to be included in collective
bargaining agreements, eliminate benefits considered as
"privileges" and increase workers' understanding of their
obligation to the people (within socialism) and the
acceptance of a "social salary" imposed by the GBRV.


5. (C) Also, the alleged leaked minutes of a March meeting
with key cabinet members are currently circulating in labor
circles. The purported minutes suggest that GBRV leaders
intend to formulate a unified, consistent public policy
towards the labor market. The ministers reportedly
underscored the need "to lower those who are high, and raise
those who are lower," a reference to the inequalities among
the public sector collective bargaining agreements (including
those of petroleum and steel workers.) The document outlines
twenty conclusions that form the GBRV's plan for labor,
including the need to explain the country's true economic
situation, the creation of a standardized salary table for

CARACAS 00000643 002 OF 002


all public workers, the need for the equitable distribution
of public sector salaries (to achieve social justice) and
national guidelines for collective bargaining agreements.
The document also suggests the GBRV will engage with
pro-government union leaders, not the rank-and-file, to avoid
"confusion."

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CONTINUED LABOR UNREST
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6. (C) Labor unrest is increasing in Venezuela. According
to UCAB professor Victorino Marquez, in March 2009, labor
conflicts increased 91.5 percent in comparison with February

2009. Of the 113 conflicts in March, 78 percent related to
the public sector. Marquez told the local media recently
that the biggest cause of labor problems in the public sector
has been the GBRV's refusal to sign collective bargaining
agreements. The most emblematic cases are those of the
petroleum industry, electricity and public health. Marguez
also noted that the labor movement is divided and confused.
Traditional public sector unions have asked their membership
to accept a cut in benefits, while parallel unions view the
benefits as their right.


7. (C) Union violence is also spreading beyond the
internecine fighting between construction unions in Bolivar
State. In late April, the Secretary of the Workers' Union of
the Toyota plant in Cumana was shot to death outside his
residence. This killing set off a series of strikes by plant
workers, and Toyota workers reportedly assaulted the plant's
human resources manager. Local government officials
condemned the killing and pledged to investigate. According
to local labor analyst Rolando Diaz, the murder of the Toyota
union leader was the result of mafia-style fighting between
members of rival pro-government unions vying for control over
workplaces. In Venezuela, the dominant union in car
manufacturing plants control lucrative perks, such as free
vehicles and kickbacks from dealerships for "expedited
delivery" of vehicles.

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A NEW LABOR MINISTER
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8. (SBU) President Chavez named Maria Cristina Iglesias to
be Minister of Labor and Social Security in March. Iglesias,
a former Minister of Light Industry and Commerce, was
previously Labor Minister from 2002 to 2005. During her
first tenure, Iglesias took a hard line in collective
bargaining negotiations. She also handled the labor dispute
at PDVSA in 2002, which ended with the dismissal of over
22,000 petroleum industry employees in 2003. Chavez's
decision to reappoint her to the job is widely interpreted as
a signal that the Venezuelan government intends to adopt an
even tougher posture against traditional trade unions.

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COMMENT
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9. (C) Some local pundits are arguing that brewing labor
discontent could prove to be President Chavez's "Achilles'
heel" during a period of economic decline. They note that,
while only some 12 percent of the Venezuelan workforce is
covered by collective bargaining agreements, labor unions are
still important in Venezuela's most important economic
sectors, including the oil sector. Nevertheless, local trade
unions are badly divided not only between pro-government and
opposition unions, but also among themselves as groups
figuratively - and literally -- fight for control over
workplaces.


10. (C) More than twenty pro-government and opposition unions
are currently discussing ways to forge greater union unity,
but this effort is only just beginning. In the meantime, the
Venezuelan government still has the upper hand in dealing
with trade unions. President Chavez, for example, recently
succeeded in rescinding salary increases that the
once-powerful Caracas Metro workers had negotiated into their
contract last year by threatening to send the National Guard
to run the Metro.
GENNATIEMPO