* Government payroll much larger after nationalizations
* Tense relations with unions despite pro-worker rhetoric
By Brian Ellsworth
CARACAS, May 6 (Reuters) - Venezuela's President Hugo Chavez faces growing protests by government workers this year as falling oil prices cut into economic growth and force spending cuts.
Unions representing workers from the education and health sectors to the vital oil industry are demanding that the socialist government, the country's top employer, raise wages despite a growing cash shortfall.
Chavez has long had tense relations with the unions, which he complains are over-privileged, but he managed to keep a lid on problems by raising wages during a five-year oil boom.
Once-mighty labor organizations tied to opposition parties have lost influence under Chavez, but the protests could still slow operations of key government-run services such as electricity, telecommunications, schools and hospitals.
"The economic crisis is going to hit Venezuela, and it's not fair that the workers should end up paying the price," said Orlando Chirino, a union leader who supports Chavez but criticizes the government. "Without a doubt we're going to see an increase in labor conflicts this year."
The loudest protests so far come from oil workers, who have for months complained the state oil company PDVSA is stalling collective bargaining talks. They reacted angrily when Energy Minister Rafael Ramirez said they would not receive bonuses or wage raises this year.
An all-out industry stoppage is unlikely, but continued sporadic protests by PDVSA employees along with tens of thousands of contractors could weaken vital oil production that analysts say is already in decline.
"It's obvious that the state has a cash-flow problem, so it can no longer afford to continue buying labor stability," said economist Luis Vicente Leon of the polling firm Datanalisis.
In recent weeks other state employees have stepped up demands for wage increases to keep pace with the country's galloping inflation that reached 32 percent last year.
Workers at telecommunication company CANTV, nationalized two years ago, are demanding salary increases above inflation, arguing that the company's strong profits provide plenty of resources to do so.
The electricity sector has suffered chronic labor problems since Chavez nationalized it in 2007. As well as back pay, employees demand improved working conditions after years of underinvestment led to a wave of national blackouts last year.
LABOR PAINS
Venezuela's traditional union federations were for years key power brokers thanks to their close ties with the now discredited political leadership of the pre-Chavez era, but their influence has waned over the last decade.
The ranks of the CTV workers' federation, once the country's largest, shrank as light industries went out of business while the influence of pro-government unions grew.
Despite pro-worker rhetoric, Chavez's brand of "21st Century Socialism" is not closely tied to labor movements and he recently argued the unions should cease to exist in his self-styled revolution.
His strongest support comes from the nation's poorest, who generally hold informal jobs with no union affiliation.
But a two-year nationalization drive has boosted state employment rolls by placing cement, steel and telecom companies in government hands and creating a new cadre of state workers who often receive better benefits than in the private sector.
State oil company PDVSA has more than tripled its permanent employees to about 75,000 since 2003, according to recent figures.
In recent days, possibly in response to growing tensions, Chavez has promised to address worker concerns -- to a point.
"As long as we have the resources, you can be sure we will continue increasing worker benefits," Chavez told a gathering of socialist youth last week.
(Editing by Alan Elsner and Frank Jack Daniel)