http://reuters.com/financeNewsArticle.jhtml?type=governmentFilingsNews&storyID=3
087455

Venezuela prolongs labor firing
ban to January 2004
Mon July 14, 2003 06:39 PM ET

(Adds reaction from private business leader, paras 4-5)

CARACAS, Venezuela, July 14 (Reuters) - Venezuela's government, moving to
shield workers from a sharp recession, Monday extended until January 2004 a
decree prohibiting public and private companies from reducing their work
forces.

The government firing freeze signalled a further financial blow for
Venezuela's battered private sector, which is already reeling from the
effects of tight currency controls and the worst economic recession in
Venezuela's recent history.

"The cabinet order decreeing the firing freeze for six more months will
come into effect tomorrow," Vice President Jose Vicente Rangel told
reporters in Caracas.

Private business leaders condemned the announcement as a "populist" move by
leftist President Hugo Chavez's government, aimed at bolstering support
from workers as it faced criticism for its handling of the depressed
economy.

"It's regrettable ... it won't help to generate more jobs," Rafael
Alfonzo, head of the Venezuelan Food Industries Chamber (CAVIDEA), told
reporters. He said the measure was likely to force some firms out of
business, swelling the ranks of the unemployed.

The so-called labor immobility measure stops employers in the world's No. 5
oil exporting nation from laying off workers except in exceptional
circumstances.

The government applied it in April last year, shortly after populist Hugo
Chavez was restored to power following a brief coup against him.

Chavez's government has kept on extending the measure. But the official
firing freeze did not stop it from dismissing more than 18,000 state oil
workers who joined a crippling strike against the president in December and
January.

A Venezuelan court ruled last month these dismissals contravened the firing
ban but the government has insisted the sackings were justified because it
said the oil workers "abandoned their posts" during the strike.

The measure has failed to halt a jump in unemployment to 19.1 percent in
April from 15.9 percent in the same month last year, according to
government figures.

Private sector associations say nearly 2,000 companies went out of business
in the first quarter of 2003 when the economy, squeezed by the strike and
currency controls, shrank a record 29 percent. They say the real jobless
rate exceeds 22 percent.

Business leaders are lobbying the government to ease tight foreign exchange
controls imposed more than five months ago. They say the restrictions on
hard currency are throttling business activity, reducing manufacturing,
imports and exports and increasing bankruptcies and job losses.


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