Formal Sector

Venezuela's official labor force in 1989 stood at 6.7 million. The labor force constituted 57 percent of the economically active population (those over age fifteen) and 35 percent of the entire 19.7 million population. Many workers, particularly youth, women, and the elderly, were not recorded in official labor data, however. Some 6.12 million workers of the total labor force had jobs in 1989, resulting in an unemployment rate of 8.7 percent. Unemployment fluctuated based largely on the health of the oil industry. In 1978 as few as 4.3 percent of the official labor force was unemployed, compared with the peak level of 14.5 percent in 1984.

Services accounted for the greatest portion of the labor force in 1989 (26 percent), followed by commerce (20 percent), government (20 percent), manufacturing (17 percent), and agriculture (13 percent). Mining and petroleum, the source of most government revenue and nearly all exports, employed less than 1 percent of the labor force.

Female participation in the labor force was increasing, but represented only 31 percent of the official work force in 1987. A growing cadre of female technicians and laborers worked in heavy industries, but women still generally received lower salaries than men.

The typical rural employee earned 25 percent less than his or her urban counterpart, and white-collar workers averaged more than double the earnings of blue-collar workers. Income distribution was highly skewed, in that the wealthiest 20 percent of the population owned 45 percent of the country's wealth, while the poorest 20 percent held only 6 percent of the wealth.

The Venezuelan government passed a rather comprehensive labor law as early as 1936 in response to protracted disputes between workers and foreign oil companies. A new labor law in 1974 further expanded workers' rights, and the country debated a revised labor law in 1990. The nation's 1990 labor law incorporated provisions for organized labor, collective bargaining, generous fringe benefits, and retirement and disability pensions. Venezuela passed a national minimum wage in 1974. As throughout Latin America, however, the Ministry of Labor in Venezuela was generally incapable of adequately enforcing the country's labor code. Conversely, many employers complained of the difficulty of firing a worker after the first three months on the job.

Over one-quarter of all workers were organized, and labor unions played a visible role in society. The Confederation of Venezuelan Workers (Confederación de Trabajadores de Venezuela--CTV), affiliated with the Democratic Action (Acción Democrática--AD) party, represented the majority of organized labor. There were also three smaller labor federations and a handful of independent unions. The public sector and heavy industry employed the highest percentages of organized workers.

Unlike many Latin American countries, labor relations in Venezuela were consultative rather than confrontational, and the CTV had good working relations with the major business group, the Federation of Chambers and Associations of Commerce and Production (Federación de Cámaras y Asociaciones de Comercio y Producción--Fedecámaras). Strikes were rare, and the government typically did not intervene to resolve labor contract negotiations. Labor's relations with both management and the government soured somewhat after the 1986 fall in oil prices, however. Unprecedented inflation from 1986 to 1990 quickly eroded unionized salaries, further straining these alliances as the country sought to find new mechanisms to compensate for the effects of inflation. In May 1989, the CTV led a general strike to protest the February 1989 adjustment in the value of the bolívar and austerity policies, indicating a growing division between the CTV and its political affiliate, the AD.

Informal Sector

An estimated 2.3 million persons, or 38 percent of all workers, operated outside the formal economy in 1988. Although estimates varied, the informal sector accounted for between 32 and 40 percent of the labor force throughout the 1980s. This sector included nonprofessional self-employed workers, businesses employing five or fewer persons, and domestic workers. So-called informales drove taxis, offered door-to-door mechanical services, cleaned homes, sold clothing on downtown streets, and worked as day laborers. Youth, women, and Colombian indocumeutados (undocumented or illegal aliens) apparently constituted a disproportionate share of the informal sector. According to some analysts, the country's large underground economy stemmed from the government's excessive regulation of the formal economy and the private sector's inability to provide sufficient jobs for the country's burgeoning urban populace.

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Source: U.S. Library of Congress