Experimental feature

Listen to this article

Experimental feature

A quarrel that has surfaced this week between Venezuelan workers and the local subsidiary of soft drinks bottler Coca-Cola Femsa might, at first sight, appear to be nothing more than a routine labour dispute.

But, at least according to some economists, it just may be a taste of what is to come under President Hugo Chávez’s recipe for “21st-century socialism”.

Since Monday, hundreds of unemployed ex-contractors have blocked delivery trucks from distributing the soft drink around Venezuela in demand of what they allege is $2.8m worth of severance arrears owed to more than 10,000 former workers. Coca-Cola alleges that the protest action is “illegal”.

The former Coca-Cola employees, however, are being actively encouraged in their protest by a government-backed commission from the Venezuelan legislature, which is controlled 100 per cent by government allies.

“The company should be expropriated,” said Iris Valera, a pro-government deputy who is supporting the labourers, adding that Coca-Cola’s four plants should be converted to produce a homespun Venezuelan brand soft drink.

While rural properties and farms have long been the target of expropriations as part of a government-led “land reform” programme, it is only recently that the authorities have turned their attention to urban factories.

Some analysts say it is evidence of the government’s overt intention to hand over control of privately-owned factories to the workers.

Mr Chávez, who has been in power for eight years and who is running for re-election for a further six years in December, says “social enterprises”, or companies in which workers have control, is the preferred corporate model.

José Guerra, an economist, predicted that the current dispute between government-backed ex-workers and Coca-Cola is an example of what might become a common event during a third Chávez government.

“This is clearly part of a government plan to harass the private sector and it’s going to continue,” he said.

A torrent of income from oil exports has allowed the economy to grow strongly during the past two years, largely as a result of a massive increase in government expenditure. However, unemployment remains stubbornly high.

Mr Guerra added: “Because the economy is not generating a sufficient number of jobs, the government’s objective is to take over existing successful companies and oblige them to provide additional employment.”

Venezuela is also in the process of establishing majority state control over oil production units previously operated by multinational oil companies.

Furthermore, over the past year Venezuela’s tax collection agency, Seniat, has temporarily closed a number of local units of US-based multinationals, including McDonalds, IBM and Microsoft, for alleged tax irregularities.

But it is not the first time that Coca-Cola – which last year sold 4bn 8oz bottles of the soft drink in Venezuela from 33 distribution centres – has faced problems from the Chávez government.

In January 2003, during a protracted strike against the government by businesses, troops seized control of a bottling plant in the city of Valencia, west of Caracas, and distributed thousands of bottles free to the public.

Get alerts on US & Canadian companies when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article