Steve Ellner

"LABOR REACTION TO GLOBALIZATION AND NEOLIBERALISM IN THE THIRD WORLD: The Venezuelan Case"

(Spanish Abstract)

This paper will look at the response of the Venezuelan labor movement to globalization and privatization and then make generalizations for the rest of the third world. Specifically, we are interested in the response of organized labor in Venezuela to neoliberal policies during the 1990s under the administrations of Carlos Andrés Pérez and Rafael Caldera (1989-1998) and then its reaction to the present government of Hugo Chávez (1999-). We are especially interested in the contrast between the neoliberal policies of the Pérez and Caldera administrations, on the one hand, and the policies of the purportedly anti-neoliberal government of Hugo Chávez, on the other.

Overview of the Period
Economic contraction combined with flagrant corruption undermined regime legitimacy in Venezuela in the 1980s, a trend which was aggravated when Presidents Carlos Andrés Pérez (1989-1993) and Rafael Caldera (1994-1999) disregarded their electoral programs by embracing neoliberal formulas. Venezuela's political party system went from three decades of stability to volatility in the 1990s and then collapsed following the election of Hugo Chávez in 1998. This 180-degree change was unmatched in other Latin American nations, which lacked Venezuela's democratic longevity and tradition of well-institutionalized parties.
The loss of prestige of the Venezuelan labor movement over the same period is not surprising given its close ties with the nation's increasingly discredited traditional parties. Formerly, political analysts characterized the Confederación de Trabajadores de Venezuela (CTV) as a major pillar of the political system since the organization's founding in 1936 and as an interlocutor, not only for organized workers, but popular sectors in general (Collier and Collier, 1991: 251-270; Ellner, 1993: 102 ). This historical behavior was demonstrated by the two most important strikes in the nation's history, both in the oil industry: the strike of 1936-37 which unified the entire nation in opposition to the "imperialist" oil companies; and that of 1950, aimed at overthrowing the military government of Pérez Jiménez. In 1980, the CTV again went beyond the bread-and-butter concerns of its members with its proposal for the reorganization of society under the slogan of "Workers Participation" (Cogestión). And in May 1989, the CTV linked up with the lower classes, which had taken part in the massive disturbances of the week of February 27, by calling a general strike against the neoliberal program of Carlos Andrés Pérez.
During the 1990s, the CTV narrowed the focus of its concerns and moderated its positions related to social benefits and economic transformation. At the same time, its natural constituency shrank and the informal economy, which was largely outside of the union fold, steadily grew. The CTV failed to reach beyond the organized working class by defending the interests of this lower stratum of the population. For instance, the CTV accepted the privatization of the health system, which essentially legalized the practice of providing the poor, who lacked insurance coverage or ability to pay, with second class-treatment in public hospitals. In another concession to neoliberal formulas, the CTV dropped its opposition to changes in the system of job severance payments and approved a reform that, in effect, reduced the large sums of money companies had to pay employees when they left the job. Finally, the CTV virtually abandoned its Cogestión proposal without replacing it with another all-encompassing strategy for change, thus putting in evidence the Confederation's short-term approach and its loss of interest in societal transformation.
Given these retreats from defense of worker interests, the CTV could but timidly react to the hostile posture assumed by Hugo Chávez, who characterized it as a corrupted pillar of an undemocratic Punto Fijo system. In the face of threats including the confiscation of union property, the CTV leadership attempted to "cover its back" by drafting new statutes conceding many of the internal democratic reforms it had long resisted (interview with Alfredo Ramos, Causa R presidential candidate, September 26, 2000, Caracas). In December 1999 President Chávez sought a mandate via referendum for the radical restructuring of the labor movement. CTV leaders opposed the referendum on grounds that it was unconstitutional and violated internationally recognized norms. Even though the abstention rate was 77 percent, CTV leaders abided by the results and immediately stepped down from their posts.
Chavista union leaders, however, were unable to take advantage of the vulnerability of their CTV adversaries. As a result, the CTV regained the initiative in 2001 by promoting strikes among steel and oil workers, teachers, and public employees. At the same time the Confederation organized internal elections to select members of its executive board and those of affiliate unions. The pro-Chavista labor leaders failed to strengthen their position in the electoral process by organizing large numbers of workers who were outside of the union fold. This feeble response reflected the Chavista movement´s organizational weakness, which, as Maria Pilar García shows in her chapter, cut across the entire spectrum of civil society. Like the rest of civil society, the Chavista labor movement was held back by the dilemma of whether to defend President Chávez unconditionally and reap benefits from his widespread popularity, or to develop an autonomous movement and put forward critical positions.

The CTV's Response to Neoliberal Policies of the 1990s
Even though labor movements throughout the rest of the continent were forced on the defensive in the 1990s, many of them maintained critical positions toward government policy. In contrast, the CTV abandoned its traditional stands. At the outset of the decade, the behavior of the CTV invited comparisons among political analysts with Argentina's Confederación General de Trabajadores (CGT), which was also controlled by a pro-social democratic governing party. The CTV was initially more militant in its opposition to the market reforms of the Pérez administration than was the CGT to Carlos Menem's policies (Murrillo, 1997). By 1996, however, the CTV had followed AD into its tacit alliance with the pro-neoliberal Caldera administration without any significant or forceful objections on the part of top party labor leaders. The CGT leaders, on the other hand, became increasingly critical of the government's proposed labor reform, which included the sharp reduction of severance payments; eventually a sizeable, hard-line faction split off from the Confederation. In Brazil, Uruguay, Chile and Colombia labor confederations with considerable worker backing also adamantly opposed neoliberal programs.
The AD-dominated CTV reacted to the neoliberal program unveiled by Carlos Andrés Pérez upon assuming the presidency by calling a general strike on May 18, 1989. The work stoppage was the first time since the overthrow of Pérez Jiménez in 1958 that labor completely paralyzed economic activity in order to make a political statement. CTV leaders pledged themselves to additional protests, and indeed organized a more limited one in February of the following year, but after that they avoided mobilizations. Pérez´s defenders (Naím, 1993; Naím and Francés, 1995) blame the CTV, along with other neocorporatist institutions such as the business organization FEDECAMARAS, for blocking market reforms. In fact, the CTV´s opposition to Pérez´s economic program lost momentum and ended up as purely rhetorical. Thus shortly prior to Pérez´s removal from office, AD labor congressmen closed ranks with other party members by voting against a proposed censure of the government's neoliberal policies.
During the succeeding period of President Caldera (1994-1999), AD fashioned an unofficial alliance with the government in support of its neoliberal "Agenda Venezuela," and the CTV largely followed suite. Many political commentators, including leftist ones, applauded the CTV´s inclusion in a Tripartite Commission to draw up important labor legislation, since it provided labor with input and was thus contrary to Pérez´s non-consultative "shock treatment" approach to neoliberalism. The CTV, however, paid a heavy price for its participation in the commission. The CTV´s critics, particularly the Causa R and the Chavista movement, assailed the Confederation's leadership not only for having accepted unpopular measures related to the "Venezuela Agenda," but for having helped draft them in the first place.
The two key pieces of legislation drawn up by the commission transformed the severance payment and social security systems. The laws, which were promulgated in 1997, prioritized wages over worker security and favored well-paid workers at the expense of low-income ones, including members of the informal economy. In essence, the severance pay reform undermined the system's fundamental objective of providing workers with a large sum of money to help them cope with lengthy periods without formal employment. Most important, the reform eliminated what was referred to as "retroactivity," (which had no equivalent anywhere in the continent) in which severance payment was determined by the worker's last salary and the number of years at work. In effect, retroactivity served as a hedge against inflation. In contrast, the 1997 reform calculated worker severance pay on the basis of each month's salary.
The nation's privately-run social security system enacted under Caldera favored workers whose salary far exceeded minimum wage. All workers deposited a percentage of their salary in an "individual pension fund" in his or her own name as well as a "solidarity fund" for those whose retirement benefits did not reach minimum standard. Nevertheless, unlike the "mixed system" as practiced in Uruguay and elsewhere, low-paid workers could not draw money from both funds simultaneously and thus were to receive the very minimum amount set by law. The term "solidarity" was also misleading since workers of the informal economy (even better paid ones) received little incentive to form part of the system.
The CTV's failure to defend viable alternatives to neoliberal policies, as shown by its positions on severance payment and social security, undermined the Confederation's image during the 1990s. One survey, which measured public confidence in 12 major institutions, placed organized labor in tenth place, behind the military, the neighborhood movement, the police, the private sector, the courts, and the Catholic Church (Fundación Pensamiento y Acción, 1996). Six negative aspects of the behavior of CTV leaders contributed to the Confederation´s loss of prestige.

1. Failure to consult the rank and file over key issues. The Causa R demand that the proposed modifications in the severance payment system be submitted to workers in a referendum went unheeded. In addition, various labor leaders insisted that the Tripartite Commission be enlarged to include the Church and professional organizations and that the CTV itself call a special general council to discuss the issue (Urquijo, 2000: 81). Some CTV leaders who defended the 1997 reform subsequently recognized that the Confederation had committed a grave error in not opening a debate within the movement in order to win the workers over to the proposed changes (Rodrigo Penso, CTV executive committee member, interview, Caracas, July 11, 2001).
2. Abandonment of mobilization strategy. Following the initial protests against Pérez´s economic program, occasional threats of CTV leaders to launch a nation-wide work stoppage failed to go beyond words. The CTV, for instance, refused to support a nation-wide "paro cívico" (civic strike) called on August 27, 1991 against the government's economic policies on grounds that it had not been formally invited to participate. Instead it announced that it was organizing demonstrations of its own on September 25, but the protests were never held.
3. Acceptance of a series of concessions that whittled away historical worker benefits. For years, the CTV leadership refused to even discuss modification of the retroactive feature of severance payment, even though the major parties including AD, COPEI and MAS had favored changing the system since the early 1990s. The CTV reaffirmed its position at its 1995 congress, but by January of the following year the Confederation reached a tentative agreement with FEDECAMARAS in the Tripartite Commission to eliminate retroactivity.
4. Adherence to party dictates rather than developing an independent position on labor related issues. Katrina Burgess argues that in Latin America and Europe neoliberal policies implemented or endorsed by social democratic parties put the party loyalty of labor leaders to the test. Burgess (1999: 131) calls the CTV's position a "balancing act" in which the Confederation tried to maintain credibility among the workers but at the same time "remain in the good graces of the party." Burgess and others (Murillo, 2000: 154; 2001: 52-91) posit a correlation between the degree to which the social democratic labor leaders such as those of AD vied with other forces for control of organized labor and their autonomy vis-a-vis their own party. According to these scholars, the more intense the rivalry within the labor movement, the more its leaders are inclined to be critical of neoliberal reforms. Although the CTV is often viewed as "pluralistic" with broad political party representation, in fact AD hegemony was never seriously threatened (Ellner, 1993: 54). In accordance with Burgess's thesis of inter-party rivalry within organized labor, the comfortable control exercised by AD union leaders in the labor movement obviated the necessity of clashing with the party over its neoliberal policies in order to retain worker support.
5. Lack of a consistent line or analysis of such all-encompassing policies and trends as neoliberalism and globalization. In some instances, the CTV defended Venezuelan capital and insisted on stringent conditions for the foreign take-over of privatized companies. In 1998, for instance, the CTV insisted on freezing plans to privatize the aluminum industry in order to ensure that national metal-mechanic companies receive a steady supply of aluminum and that national interests in general be guaranteed. Subsequently, they discussed the matter with the president of the Venezuelan Investment Fund (FIV) in charge of privatization and called for lifting the freeze. In general, the CTV failed to speak out against foreign penetration of sectors such as retail, finance, cement, paint, restaurants, and gasoline stations, nor did it put forward a critical analysis of Caldera´s "Venezuela Agenda."
Structural changes related to globalization further weakened the position of organized labor. Partial or total privatization of such sectors as telecommunications, ports, oil, steel, and airlines after 1989 reduced the size of the strategically located work force and transferred ownership to foreign capital. Following privatization unions could no longer channel their demands and grievances through political parties, nor could they insist on union privileges that did not strictly conform to the law in the area of union hiring, special job security for union officials, check-off of union dues, and other privileges (Ellner, 1999c: 133-134). The practice of outsourcing, which became widespread in the oil, metalmechanic and textile industries, and the growth of the informal economy, whose workers were hard to organize, further weakened the position of organized labor.
The declining influence of organized labor reflected itself in the structural reorganization of political parties, and AD in particular. Previously AD's Labor Bureau and Peasant Bureau chose labor leaders for top positions in party slates at all levels on a regular basis. Beginning in the early 1990s, five other party bureaus including several newly created ones designed to represent the emerging civil society competed with labor in placing their members on slates. Due to the loss of their party prerogatives, AD labor leaders failed to gain practically any representation in the national congress in the 1993 and 1998 elections for the first time in fifty years (Ellner, 1996b: 97). Simultaneously, the Causa R replaced AD as the only party with a significant number of trade unionists in elected positions.

The Chávez Presidency and the CTV Elections
For the first two years of Chávez´s presidency, the CTV was on the defensive. The government reduced state subsidies to organized labor to a bare minimum at the same time that it threatened to dissolve the existing union structure. The CTV reacted in April 1999 by calling its Fourth Extraordinary Congress in order to democratize its internal electoral process. The congress approved new statutes which included such far-reaching measures as: direct rank-and-file election for the CTV´s executive committee; automatic affiliation of all unions legalized by the Labor Ministry; incorporation also of organizations of retired workers and professional associations; worker referendums to approve contracts and remove union officials; and the elimination of political party domination of the confederation's electoral commission. Later that year, CTV leaders stated they would consider the possibility that union elections be supervised by the state´s National Electoral Commission (CNE) in order to guarantee impartiality. In another major move designed to improve labor's image, the Federation of Oil Workers (FEDEPETROL) renounced the highly criticized practice of union hiring of 60 percent of all oil workers, which over the years had bred corruption and clientelism.
By 2001, the CTV leadership consolidated itself, established accepted rules for the organization, and assumed a more aggressive posture toward the government. The flexibility of AD labor leaders and the concessions they granted made possible their reemergence as important actors in 2001 and the formidable challenge they posed to the government (León Arismendi, interview, July 11, 2001, Caracas). Immediately following the December 2000 national referendum, which forced federation and confederation leaders to temporarily step down from office, prominent CTV leaders belonging to AD withdrew from national politics and union affairs. Of particular importance was the resignation of CTV president Federico Rarmírez León and César Gil, the head of the Confederation's collective bargaining department, both of whom had long been accused of unethical conduct. AD leaders Carlos Ortega and Manuel Cova, who ran as CTV president and secretary general respectively, had merits of their own, not merely party endorsement. Ortega had successfully opposed application of the new severance pay system to the oil workers. Cova, the president of the construction workers, had close ties with the rank and file. Cova, however, was also widely accused of corrupt dealings stemming from union hiring practices, and indeed his initial aspiration to run as CTV president was staunchly opposed by fellow party trade unionists. Ortega, Cova and other AD trade unionists ran as candidates on the ticket of the allegedly nonpartisan Frente Unitario de Trabajadores (FUT) in order to appeal beyond their party.
Over the decades, CTV leaders had generally asserted a degree of independence from AD whenever it was in the opposition, but now their survival depended upon the Confederation distancing itself from the party. During the December 2000 municipal elections, held simultaneously with the referendum on organized labor, the CTV called on workers to abstain, in contrast to AD, which urged them to go to the polls to defeat the proposition and vote for its candidates. Following the referendum, the established labor leadership set up "Juntas de Conducción" to run the CTV and its federations until new elections were held. These Juntas generally excluded top AD and COPEI leaders closely linked to the party and widely accused of corrupt practices. Many Juntas were led by non-AD members and, in some cases (as in the CTV itself) someone who was on the fringes of the labor movement. Subsequently, the Juntas de Conducción incorporated representatives of many different parties including the former guerrilla Bandera Roja and the Causa R, which until then had refused to form part of the CTV´s leadership. Causa R leaders justified their change of policy on grounds that the CTV had accepted their party´s long-standing demand for direct rank-and-file elections for the Confederation´s national leadership. Rodrigo Penso, who had represented MAS in the CTV´s executive committee, stressed the broad representation of the Juntas and the absence of party control, stating that "for the first time CTV pluralism is no longer a myth but a reality" (interview, July 11, 2001, Caracas).
Nicolás Maduro, head of the Bolivarian Workers Force (FBT), which grouped Chavista labor leaders, defended the formation of parallel unions. At one point, Maduro argued that "either we construct a force for real transformation or we stay in the CTV¨ (El Nacional, April 30, 2001). He went on to claim that the CTV had inflated its membership statistics, which in fact were far under one million. The FBT accused CTV unions of drawing up electoral lists behind closed doors and insisted that the entire electoral process be supervised by the National Electoral Commission (CNE), as required by the nation's constitution (in its Article 293). Maduro and other hard-liners at times considered the possibility of participating in the CTV elections should the nation's electoral authorities (the CNE) guarantee its fairness. Nevertheless, Maduro insisted that the goal of "returning the Confederation to its members" in the form of a national workers assembly (which the Chavistas called a "Workers Constituent Assembly") take precedence over discussion of actual names of candidates (José Khan, national MVR labor leader, interview, April 20, 1999, Caracas).
The hard-liners, who favored passing over the existing CTV structure, were reacting to the Confederation´s declining prestige and influence over the previous decade. Unlike the Causa R, with its working class orientation, many Chavistas (including Chávez himself) displayed a certain distrust of organized labor per se (Blanco Muñoz, 1998: 392). They spoke of the need to discipline the labor movement, a goal best achieved by replacing the entire CTV bureaucracy.
The FBT avoided creating a formal structure and instead placed a premium on continuous discussion and consensus, practices that the Bolivarian movement sought to put to practice throughout its history (see the chapter by Margarita López). The FBT leadership consisted of a committee of coordinators who were allegedly chosen on the basis of experience and general recognition, but whose undisputed head was Nicolás Maduro. The FBT created organizations in each state known as "Regional Workers Councils," whose members were chosen in worker assemblies. Following the December 2000 referendum, some of these Councils decided to occupy the headquarters of the CTV-affiliate federation in their respective states in order to provide it with leadership until new elections were held. Nevertheless, aware that these actions were widely repudiated for being anarchical and that the loose structure of the Chavista movement had encouraged spontaneity, the FBT refused to approve the takeovers (Rubén Molina, FBT international relations coordinator, interview, July 9, 2001, Caracas).
On October 25, 2001, the CTV carried out direct, rank-and-file elections for the confederation's national leadership, a system with few equivalents in the labor movement throughout the world. During the campaign, the Chavista candidates, headed by Aristóbulo Istúriz (ex-mayor of Caracas and a member of the PPT party), pledged themselves to defend the social reforms embodied in the 1999 constitution, including return to the old system of state-run social security and severance payments based on retroactivity. Carlos Navarro (former CTV secretary general who had recently resigned from COPEI) represented the opposite extreme in that he stressed the advantages of globalization and "modernization." Other candidates for the CTV presidency included Alfredo Ramos (of the Causa R) and Carlos Ortega of the FUT (supported by AD, Copei, the far-leftist "Bandera Roja," and the Union Party of Chávez's ex-ally Francisco Arias Cárdenas).
The electoral contests were marred by widespread disturbances, accusations of fraud and other irregularities, and an abstention rate estimated at between 50 and 70 percent. Indeed, the elections for the all-important FEDEPETROL were so disruptive that no definitive results were announced. Furthermore, the elections for the CTV leadership were postponed in the oil-producing states of Anzoátegui, Zulia, Monagas and Amacuro, while the Causa R's Alfredo Ramos filed for a recount in several other states.
In the days following the election, only four of the eleven members of the CTV's electoral commission were willing to place their signatures on the final document confirming the results. Nevertheless, Ortega (AD's candidate) was proclaimed the winner anyway, allegedly receiving 57 percent of the vote, compared to Istúriz with 16 percent, Ramos with 11 percent, and Navarro with 6 percent. The CNE certified the validity of the elections for individual federations, but not for the CTV itself.
Social polarization of Venezuelan society (a major theme of this book) reverberated within organized labor and played a major role in the conflict within the CTV. As the formally employed, organized working class shrunk is size, resolving the question of how to incorporate economically marginalized sectors became more crucial for the continued vitality of organized labor. However, this issue was politically charged, as FBT leaders had the most to gain from allowing retired and unemployed workers into the CTV fold, as well as members of the informal sector.
The extent to which the CTV had lost its mobilization capacity was put in evidence by the three-day general strike which led up to the April, 2002 coup attempt. Unlike the general strike that had been called in May, 1989 and was a complete success, the CTV requested the endorsement of FEDECMARAS, thus risking being accused of allying with labor's traditional enemy. Since the companies that complied with FEDECMARAS's decision to back the work stoppage offered their employees the day off with pay, the degree of worker support for the strike call was difficult to determine. Industrial sectors in the Guyana region, public employees, and transportation workers did not respond positively to the call. The powerful steel workers leadership broke with the Causa R (which had formerly controlled the union) by criticizing the CTV for uniting with FEDECMARAS and called on workers throughout the country to ignore the strike. Similarly FEDEPETROL (also under non-Chavista leadership) supported by two smaller oil worker federations, also publicly exhorted workers to go to work. Finally, in states throughout the country, the CTV-affiliated federations were unable to mobilize large numbers of workers in favor of the strike. This lukewarm response contrasted with the colossal march in Caracas on the day of Chávez's removal from office, consisting mainly of middle and upper class Venezuelans.

Conclusion
Beginning with a seminal essay by Guillermo O´Donnell (1994), political scientists writing on contemporary Latin American democracy have noted the weakness of political parties, organized labor, and social movements and their failure to channel popular demands at the highest levels of decision making. As a result, the national executive throughout the continent has become largely insulated from pressure groups and countervailing state institutions. Some political scientists were generally optimistic about this emerging model because it opened possibilities for a fluid and direct relationship between executive authorities and the people (Mettenheim and Malloy, 1998). Other writers, who considered mechanisms of sectorial representation in decision making a sine qua non for well functioning democracy, were naturally pessimistic about recent political developments in the continent.
Venezuela was certainly no exception to this pattern in the 1990s. Traditional intermediate organizations lost prestige, credibility and effectiveness. Specifically in the case of organized labor, the CTV ceased to articulate the aspirations of the underprivileged sectors as a whole and became almost exclusively concerned with the monetary demands of its members. In addition, the neighborhood movement and other "new social movements," which proliferated and showed considerable promise in the 1980s, failed to develop a national leadership that was organically linked to the rank and file and thus had limited influence in the formulation of policy (Ellner, 1999d). Under the presidency of Chávez the weak linkage between policy makers and the people was aggravated. The government eliminated subsidies for political parties and labor unions at the same time that it removed the leadership of the CTV and its affiliate federations. Some political scientists characterized the government as "caudillista" and authoritarian; others compared Venezuela under Chávez with the organizational barrenness of Fujimori's Peru.
The revolution that Chávez proclaimed sought to replace the "moribund" (a term Chávez himself popularized) institutions of the "Fourth Republic" with vibrant, autonomous ones particularly responsive to the underrepresented popular sectors. Nevertheless, radical social organizations identified with the "revolutionary process" did not emerge to the extent that they did, for instance, under the pro-leftist regime of General Juan Velasco Alvarado in Peru after 1968.
This shortcoming was particularly evident in the case of the labor movement. The revitalization of the CTV and the adeptness of its leaders in adjusting to the new situation demonstrated that organized labor as an institution was hardly "moribund." Indeed, the labor movement posed more of a challenge to the government than did the political parties of the opposition. Furthermore, creating a new trade union structure was no simple task. The FBT could not easily parlay Chávez's popularity among nonprivileged sectors into votes in union elections and organizational advances in general. Indeed, the moderate wing of the MVR criticized the strategy of Chavista worker leaders of relying on state power to create a new labor movement, without first building organizational links with the rank and file.
This examination of the Venezuelan labor movement puts in evidence the weakness of organized labor's response to globalization and concomitant neoliberal policies. The CTV formed part of the governing coalition during the neoliberal administrations of Carlos Andrés Pérez (1989-1993) and Rafael Caldera (1994-1999). It was very much divided in its response to the allegedly anti-neoliberal Hugo Chávez. Organized labor's response to neoliberalism and globalization has been generally ambivalent. This contrasts with the pre-globalization years when the Venezuelan labor movement, like its counterparts in the rest of Latin America, staunchly adhered to a well-defined model known as import substitution and state interventionism.

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