Oct
17
2012
Posted by
admin
Comments

REPORT: CHÁVEZ EXPROPRIATES 1,168 COMPANIES IN A DECADE; JAUA SAYS THERE’S MORE TO COME

agropatria1210 REPORT: CHÁVEZ EXPROPRIATES 1,168 COMPANIES IN A DECADE; JAUA SAYS THERES MORE TO COME

Courtesy of: Jack Bocaranda / AVN

During the last 13 years, Hugo Chávez has earned his reputation as a fierce opponent of private industry. Even as inflation soared and Venezuelans experienced shortages of even the most basic goods, Chávez held true to his socialist ideology, nationalizing huge swaths of the nation’s economy – from farming to oil production to the media. A report from the analysis firm Conindustria indicates that from 2002 to 2012 Chávez’s government nationalized 1,168 private companies. From the seizure of private oil operations to the expropriation of millions of hectares of farmland to the takeover of vacation homes on Los Roques, Chávez has shown that no sector of the economy is beyond his grasp.

However, the pace of expropriations slowed drastically in the months before the election. It seemed that even Chávez recognized his crusade did not represent sound economic policy. The trend began late last year, when Chávez slowed the rate of expropriations and began striking deals with companies he once derided – part of an effort to prop up Venezuela’s economy in an election year.

But now, having been granted the political cover of a new six-year term, Chávez has vowed to deepen his socialist revolution. A reinvigorated opposition can challenge the president on many fronts, but on his bread and butter policy of expropriations, Chávez will likely have free rein. Former Vice President Elias Jaua said in an interview last week that Chávez plans to take full advantage of that power. He told media that the “strategic expropriation” of companies is again on the agenda for Chávez’s next term. Since that time, Jaua has been replaced by Foreign Minister Nicolas Maduro and now stands as a candidate for Governor of Miranda state against Henrique Capriles.

Economists agree that Chávez’s policies have made Venezuela one of the hardest countries on the world in which to do business.  And Venezuela’s people have felt the consequences: foreign direct investment has fallen to less than $1 billion per year from $3.9 billion the year before Chávez took office. Meanwhile, government policies have kept arable farmland idle, forcing Venezuela to raise imports by more than 400 percent to make up for the losses.

Unfortunately for Venezuelans, the situation seems unlikely to improve in the immediate future.

 
Jun
1
2012
Posted by
admin
Comments

The Truth About Venezuela’s New Labor Law

On April 30, before departing to Cuba to receive additional cancer treatment, President Hugo Chávez signed Venezuela’s new labor law on national television, in commemoration of Venezuelan Labor Day. The ceremony was — as most of his recent speeches have been — short, revealing few details about what the law actually entails.

After being reviewed by the Supreme Court, the 554 articles and 7 transitional provisions were formally approved and published on May 7. The ambiguity surrounding the details has left many wondering about the finer points of the new law, however. Critics, including opposition candidate Henrique Capriles, have argued that the law was approved primarily for political posturing, only seeking the consultation of his ministers and bureaucrats on such a sweeping reform, not business advocates or even the National Assembly itself.

The law’s enactment came less than two months away from the expiration of the 2010 passage of Venezuela’s “enabling law,” which gave the president 18 months to govern through issue decrees carrying the full force and effect of a measure passed by the Assembly. While the power was bestowed upon him to give him authority necessary to cope with the heavy rains and flooding that ravaged the country, as few as about six of 33 approved laws have to do with the reasons for requesting the enabling law. Despite its lack of relevance, Chávez circumvented the Assembly, unilaterally enacting this law. On the cusp of his most challenging election ever, he continues to tout it as a fundamental tool for the continuation of his socialist project.

The law does have populist appeal – reducing the working hours from 44 to 40 hours per week, limiting night shifts to 35 hours per week, raising minimum wage by nearly one-third, entitling women to an additional two months of maternity leave, and protecting new parents from dismissal for up to two years after the child’s birth.

In addition, it seeks to implement absolute job stability; in the absence of due cause, the only way for employers to terminate any employment relationship is via a workers’ resignation. The law reestablishes a rule calling for a retirement bonus of a worker’s last monthly wage multiplied by their years of service, while also requiring that employers compensate unfairly dismissed workers with double their retirement bonus.

Finally, the measure seeks to abolish private sub-contracted labor in Venezuela.

To the naked eye, many of these provisions would appear to be beneficial to working-class Venezuelans. However, many critics argue that law also promotes a regulatory scheme that many believe will hinder production and adversely impact small and medium sized enterprises, especially if the government is unable to reduce inflation in the coming years.

Others also fear that if not accompanied by the right policies to stimulate productivity and growth, the new law could inevitably deteriorate real wages, lead to a reduction in jobs availability, and result in lower investment and production, all of which would exacerbate inflation rates and shortages. Furthermore, critics have argued that women could be severely affected by the new regulations, as companies could see the extensive maternity leave as a risk, generating discrimination by employers when hiring female staff.

The most controversial provision, however, seems to be the formation of a government-managed fund from the severance benefits of workers. Severance benefits are the rainy day money Venezuelans deposit into individual trust accounts, which now will be placed into a state-managed fund. Previous to the new law, workers had direct access to these funds when they change jobs, retire or need to cover medical, housing or other expenses. Following rumblings of the proposed change, nervous workers lined up at banks to empty as much as they can out of their severance accounts. But the government, insisting that the new plan was still in development, blocked public sector workers from drawing on the accounts. Indeed, the government’s proposal has sparked widespread concern that could prove to weaken the president this fall.

Ostensibly, the provision’s objective is to establish a mechanism used to guarantee new bonds and finance development projects. But local analysts have cautioned that the private sector will absorb these costs, stoking unemployment. Moreover, analysts have expressed worries over the increased control of these benefits by a government notorious for its lack of transparency.

In addition, the labor law will restore the retroactivity of severance payments from June 1997, for those currently working in private or state-run sectors who decide to quit — a measure some believe will cause further strain on businesses.

As Ismael Pérez Vigil, the executive president of the Venezuelan Confederation of Industries (Conindustria) claims, “obviously, retroactivity (of severance payments) will have a very strong impact; (Venezuelan) businesses will be hardly hit.”

By appealing to workforce and the lower classes, Chávez hopes to use the labor law as an electoral gambit. By failing, however, to integrate many sectors into the discussion, skeptics fear that it will give rise to conflicts between businesses and employees, risk fueling unemployment, and shrink Venezuela’s private sector even further. Its full impact remains unclear, but it is apparent that there is more behind the law than the simple desire of bringing social justice to workers.

 
Sep
22
2010
Posted by
admin
Comments

VenEconomy: Annihilating Private Enterprise

exito1 VenEconomy: Annihilating Private EnterpriseThis article was originally posted by The Latin American Herald Tribune

This Monday, September 20, El Nacional opened its front page with a report by the journalist Katiuska Hernández based on the list of expropriated companies compiled by Conindustria.

According to Conindustria, so far this year, 174 companies have been expropriated, which, added to the 131 expropriated in 2009, brings de facto expropriations of industrial or commercial companies (i.e. those that do not comply with legal requirements and do not have a firm decision handed down by a competent court) in the past 21 months to a total of 305. After the oil sector, the companies that have been most affected are those in the food sector (37 in 2009 and 36 more this year).

The significance of this expropriatory attack stems from a state of affairs that is impossible to hide: that the experience of recent years has demonstrated that any company taken over by the government ends up in ruins, sooner rather than later.

Another evident truth is that the government arrogates the “right” to take companies and properties at whim, because it feels like it, and simply just because. This explains, per se, why domestic and foreign investors are risking increasingly less investment capital in Venezuela. Unfortunately, the price of this lack of investment is being paid for by the entire Venezuelan population with recession and unemployment

Read More