Archive for April 1st, 2005

An irresponsible proposal by an opposition politician

April 1, 2005

One of
the reasons that it is hard to be optimistic in Venezuela is that while I don’t see
how Chavez’ economic programs will get the country going, the mentality in most
opposition leaders and parties is not much better. Venezuela has overprotective labor legislation
which is one of the causes of the chronic high unemployment this country
enjoys. There are things like you can’t hire workers by the hour because after
three hours they become full time workers anyway, there is a minimum salary
that is increased in compulsory fashion every year, there is a firing freeze
that gives you very little flexibility and there are all sorts of obligatory
benefits that imply that a workers salary is typically only 60% of his pay package.

This used to be worse, but when Petkoff was Minister of Planning in the second
Caldera administration he ironed out an agreement that eliminated double
severance pay if you were fired and simplified rules. Well, today
an opposition politician
Alfredo Ramos, from Nuevo Sindicalismo who is a member
of Causa R is asking for legislation that would go back to that old system.
Moreover, he is proposing other things like night shifts can only be four hours
long. At a time when unemployment is 15%, they should be thinking about making
labor legislation more flexible, not less. What all of these rules do is to
make companies more conservative on hiring and hurt those that don’t work while
they benefit only those that do. It also reduces the competitiveness of the

This mentality is pervasive in Venezuelan politicians, they don’t seem
to understand that you want unemployement to go down, not to give perks
and protection to those that already have jobs. After all, the employed are teh priviliged ones! Moreover, we need to be
able to compete in those areas where the country ahs advantages, but if
you increase labor costs, you will be killing those same advantages.
But try explaining it to them!