Sunday, April 20, 2008

Another urban legend debunked 

One assertion that I've seen time and again on opposition web-sites, in the Venezuelan media, and in the U.S. media is that employment at the Venezuelan state oil company, PDVSA, has somehow exploded. The numbers I have heard go up to 100,000 employees and presumabely this is an example of Chavista inefficiency and featherbeading.

Needless to say, if one actually reads the 2007 Financial And Operational report for PDVSA posted on their web-site (and please note all those who used to whine about PDVSA financial statements not being produced on time seem not to have noticed that this report is both on time and amazingly informative) you can easily find PDVSAs employment numbers going back to 2002. Just to make it even easier it is on page 28.

Here is a chart of PDVSA's employment treds:

The yellow bars represent total PDVSA employment. Note that while there has been an increase there has certainly been no dramatic increase in the number of employees - the total number went from just under 70,000 to just under 80,000.

And of course this increase is to be expected within the operations of the oil company as PDVSA, just to name one example, assumed control of the operating agreement oil fields in western Venezuela and most of the employees of the foriegn oil firms became PDVSA employees. A similar process is happening with the Orinoco Belt Strategic Associations which have also been taken over by PDVSA. So this increase in employment makes perfect sense within the context of PDVSA's oil operations.

Now, there have been changes within the composition of PDVSA's workforce. The purple bar reflects the number of regular PDVSA employees who are on its payroll and recieve full benefits and protection accorded to Venezuelan workers under the law. This number has increased substantionally.

The red bar represents contract employees who are not official employees of PDVSA and who do not get full benefits from it. This number has steadily declined since the oil strike necessitated its increase as employees have been put on the regular payroll. Over time this type of employee should go to zero as all should be regular PDVSA employees with full benefits.

In sum, we see that there has been no significant increase in employment at PDVSA and certainly none that is not warrented by PDVSA's increased oil production responsibilities. Further, we see that PDVSA has been moving employees out of the temporary contractor status and into regular employment as it should.

Finally, there was one additional item on this topic of human resources for PDVSA. And that is the top ten executives of PDVSA were collectively paid $2.5 million dollars. This comes to an average of $250,000 per executive. This is an increase over what it was in the recent past and is at the upper end of what is reasonable - that is while these salaries are probably defensible (and VERY moderate compared to what the executives of a comparably sized private company earn) they should not go any higher than this.


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