November 27, 2007 / 7:05 PM / 11 years ago

Venezuela six-hour workday challenges business

SANTA BARBARA, Venezuela (Reuters) - Cattle rancher Arecio Machado makes a good living selling prime cuts of beef but he fears Venezuelan President Hugo Chavez’s constitutional reform plans will hit business by shortening the workday to six hours.

Venezuela's President Hugo Chavez speaks to supporters during an event in Caracas November 26, 2007. REUTERS/Jorge Silva

Machado says he will not be able to find enough ranch hands to maintain production of beef and milk, which are already in short supply in the OPEC nation, if voters approve Chavez’s reform proposals in a referendum on Sunday.

“Cows don’t take vacations,” said Machado, 66, owner of the La Esperanza farm outside Santa Barbara in western Venezuela. “There will be as much work afterward as before — but you cannot hire more people, because there aren’t any.”

The six-hour workday proposal is a sweetener in a raft of controversial changes that include removing term limits on Chavez’s rule as president, declaring the nation socialist, expanding the state’s powers to expropriate property and allowing Chavez to censor the media in an “emergency.”

Many of Chavez’s working-class supporters like the workday proposal and will vote in favor of the reforms despite concerns about giving him new powers to extend his self-described socialist revolution.

But business leaders say it is the latest in a string of regulations that make doing business in Venezuela increasingly complicated against a backdrop of rampant inflation and heavy state intervention in a growing but overheating economy.

The referendum could be the tightest vote that Chavez has faced since winning office nine years ago. Polls show a swing in favor of the “No” vote, eroding a lead the Cuba ally held for weeks.

The opposition says the anti-U.S. leader, who this year nationalized swaths of the economy and calls capitalism an evil, wants to concentrate power and stay in office for life.


For businesses, ranging from banks in shiny office towers in Caracas to ranches in the cattle pastures of this western Zulia state, it is the workday plan that has raised most concern. Many are confused over who it will affect and indeed whether Chavez really means it.

In Venezuela, many people work in the informal economy as taxi drivers or street vendors. Long hours combined with long commuter traffic lines mean they have a dawn-to-dusk routine.

Chavez has told public sector employees that their six-hour daily average means they will leave early on Fridays after working normal hours the rest of the week.

He says the move will create 150,000 jobs, and compares his proposal with the current eight-hour workday. “Those two hours mean getting home earlier, getting to see our children ... and that our children can sleep with the hope that a true fatherland is being built.”

But one Caracas executive in a company with a large workforce said he was making no plans to adapt to the rule.

He said Chavez made pension back payments central to his campaign the last time he re-wrote the constitution in 1999, but then did little to implement the costly measure.

Chavez originally announced the workday plan when he said he would immediately withdraw from the IMF. Months later, Venezuela remains a member of the Washington-based lender.

Economists say the workday proposal follows a dizzying array of regulations imposed this year, including an aggressive anti-hoarding law, a retooling of the currency, and a financial transactions tax introduced with only weeks notice.

The measure also comes amid shortages of food products, including beef, which can be hard to find even here in Santa Barbara in the heart of cattle country. Price controls force merchants to leave shelves empty or sell at a loss.

Economists say the possible change makes companies wary of planning new investments, even as Venezuela’s economy grows at about 10 percent a year on the back of record oil prices.

“If you want to create a new company, you have to calculate the cost of labor,” said economist Orlando Ochoa, an opposition sympathizer. “What this is doing is paralyzing those projects, because you do not know how much they will cost.”

A self-styled revolutionary, Chavez has won over the poor with spending on schools and clinics, but business owners complain of price controls on many goods and byzantine rules on acquiring dollars wrap them up in red tape.

“Nobody can work this way, it is impossible,” Jose Ramon, the owner of a butchers shop in the town of San Juan de Colon.

Ramon says he does not plan to reduce his employees’ hours even if the measure goes through. He already sells products like meat and eggs above regulated prices.

Even many of the employees who would benefit from the change are not convinced that Chavez will enforce the move.

“There are laws, but very few people here comply with them,” shrugged Yola Villasmil, one of five employees at a bakery in Santa Barbara who will vote “No”.

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