Venezuela’s government “has systematically violated workers’ rights, undercutting established labor unions while favoring new, parallel unions that support its agenda,” according to Human Rights Watch. The country’s employers have also come under attack, but the proletariat and bourgeoisie appear to be joining forces to counter the Chávista populist agenda.
Over the past decade, Venezuelan President Hugo Chávez has expropriated some 1,000 firms of all sizes, both foreign-owned and domestically held, write Richard E. Feinberg and Carlued Leon. Yet one very large and highly visible Venezuelan company remains standing: Empresas Polar.
The story of Empresas Polar provides a useful object lesson in how one company turned its corporate social responsibility (CSR) programs into a successful business defense against a powerful, predatory regime. And it demonstrates how companies that have focused on improving the economic and social conditions of their stakeholders—employees, communities and consumers—can protect themselves against expropriation and make avaricious governments contemplating seizure of company assets think twice before risking social backlash.
Chávez’ predatory practices
Ever since Chávez came into power in 1999, the business environment in Venezuela has been ambiguous. On one hand, profligate public spending has stoked consumer demand. On the other, Chávez’ populist agenda of wealth and power redistribution led to expropriations of private firms. Expropriations to date have occurred in nearly every major sector of the economy, including mining and other extractive resource industries, food and agriculture, retail, telecommunications, real estate, and banking.
The largest food manufacturer and supplier in the country, Polar has 30 industrial plants, employs more than 31,000 people directly, and generates an additional 150,000 indirect jobs. In 2011, Polar’s revenue represented 3 percent of the country’s non-petroleum output and contributed nearly 4 percent of the government’s non-petroleum tax revenue.1Still, Polar’s size and success did not appear to faze Chávez.“If you think that I do not dare to nationalize Empresas Polar then you are wrong,” the president told Lorenzo A. Mendoza Giménez, CEO and owner of Empresas Polar, in June 2010.2
In January 2011, Polar suffered a glancing blow: Chávez ordered the expropriation of lands owned by Polar, alleging that the terrain had been “abandoned.” In fact, Polar had acquired the plots to extend its community medical center, and Chávez was forced to beat a hasty retreat.4 Most recently, in the run-up to this October’s presidential election,chavista-influenced unions closed down some Polar production units in disputes over compensation.
What is different about Empresas Polar?
Arguably, one reason why the government has not added Empresas Polar to its long list of asset seizures is Chavez’ fear of alienating the loyalty and goodwill it has earned among Venezuelans for its three decades of efforts to improve Venezuelan socioeconomic conditions.
Polar has also been a leader in corporate social responsibility since its founding in 1941, well before the term CSR was coined. The company’s core business strategy involved aligning its operations with social and environmental programs aimed at addressing specific realities of the Venezuelan community.
The strategy mirrors the practices of many global CSR programs, which seek to go beyond simply fulfilling minimum legal requirements of corporate citizenship to include additional investments in human capital, environmental stewardship and, in the context of developing countries, poverty alleviation. CSR initiatives translate into highly skilled and motivated workforces, increased incomes, and benefits for employees and their families. They also produce a smaller environmental footprint, positive media coverage, greater levels of productivity and competitiveness, and a better business environment.
Polar offers wages and benefits packages above industry standards. The base wage of a full-time worker in a plant is at least twice the minimum legal wage—about $475 per month as of September 1, 2012. And the compensation package includes 22 additional non-mandatory benefits.
In addition, workers receive a wide range of monetary and in-kind benefits: a monthly gift package of Polar products; health insurance covering hospitalization, surgery and maternity leave; life insurance; personal accident insurance; school supplies, Christmas toys and summer camps for workers’ children; scholarships for workers and their children; access to free recreational and sport facilities; bonuses for years of service; and a retirement plan.
The retirement plan is especially generous: it does not require contributions, and offers retirees the choice between a single payment and a lifetime annuity. Retirees remain eligible for health and life insurance for themselves and their spouses.
These worker-focused CSR programs made business sense—reducing absenteeism and worker turnover and increasing productivity. They also burnished Polar’s image among its employees and their communities, building brand and corporate loyalty .
Polar’s proletarian counterrevolution
Most dramatically, in 2010, in response to threats by Chávez against Polar, union workers, despite their long-term political alignment with chavismo, demonstrated to show support for Polar. The president of the Brewery and Soda Union, Frank Quijada, shouted, “If expropriation takes place, workers will defend the plants and their jobs.” Outmaneuvered, Chávez denounced these “outcast workers that defend the bourgeois [Mendoza] who exploits them […] they should be ashamed.”5
Last April, workers from the Barquisimeto plant organized an all-night vigil to protect the property after new threats to expropriate the plant’s land for use by the government’s housing plan, Misión Vivienda. The general secretary of this plant’s labor union, Richard Prieto, announced that workers would stand watch to protect the plant from any expropriation action.6
Union leaders have repeatedly explained that their support for the company obeys no political agenda. Prieto has insisted that Polar workers “[...] do not defend the bourgeoisie but our jobs” because the workers “do not believe in the participative socialism the president sells. All the companies the government has taken over are now bankrupt.”