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DEVELOPMENT BULLETIN-VENEZUELA: Jobs Take a Beating from Venezuela’s Economic Crisis

Estrella Gutierrez

CARACAS, Sep 26 1998 (IPS) - Workers trekked this week from Venezuela’s provinces to the headquarters of the state-run oil company to protest a wave of dismissals by the sector, in an unprecedented act of desperation.

Carlos Borges, president of the Federation of Public Employees, declared Wednesday that several government ministries had warned that they were short of the funds needed to pay salaries this month, while state and municipal governments threatened a “technical close-down” if the government cut their funding once again.

The thousands of dismissals in the up to now privileged oil sector and the troubles plaguing public employees are an indication as to how hard employment in Venezuela has been hit by the economic crisis unleashed here by the crash in oil prices.

On Wednesday, the Council of Ministers was forced to postpone for a week its announcement of the distribution of a 1.36 billion dollar reduction in public expenditures – the third budget cut this year – in order to negotiate with the country’s governors and mayors.

According to estimates by the national oil company, Petroleos de Venezuela (PDVSA), open unemployment will run to 15.7 percent of the economically active population (EAP) by December, the company’s chief economist, Ramon Espinasa, told a local daily Wednesday.

In other words, 1.53 million of Venezuela’s EAP of 9.7 million will be out of work by December.

Meanwhile, PDVSA projects that the portion of workers involved in the informal sector is expected to rise to a full 49.3 percent of all people working by the end of the year.

The 400,000 new jobless will partly come from the central government, which as part of its bureaucracy-trimming programme will lay off 1,300 people, bringing the total number of dismissals in the five years of President Rafael Caldera’s term to 230,000.

The auto-making sector, textiles, construction and services have suffered the most lay-offs since July, when production and consumption were hit hard by the recession and th skyrocketing of interest rates, which currently stand at 65 to 80 percent for loans.

In December 1997, 11.1 percent of the EAP was unemployed, in a year when the economy took heart after three years of recession, according to the governmental Central Office of Statistics and Informatics (OCEI).

That figure rose to 11.3 percent by June – and to 14.1 percent for women – when the economy stopped feeling the effects of last year’s 5.1 percent rise in Gross Domestic Product (GDP) and sank into recession.

At the end of the first half of the year, OCEI reported that the informal sector – which in Venezuela covers street vendors, domestics, the non-professional self-employed and those who work in firms with five employees or less – accounted for 48.4 percent of all people who were working.

The secretary-general of Venezuela’s Central Workers union, Carlos Navarro, said real unemployment was four points higher than the official figure.

More than 50 percent of workers earn less than the minimum monthly salary equivalent to 170 dollars, while the basic consumer basket for a typical family cost 345 dollars in August, according to the Economy Centre.

Poverty is projected to rise this year by at least 10 percent, as it did last year, when according to official figures it expanded to 69 percent of families.

The purchasing power of Venezuelans has plummeted by 65 percent in the past 20 years, 25 percent under the Caldera administration.

Finance Minister Maritza Izaguirre said the government was still confident that it could limit the contraction of the econoy to 0.6 percent of GDP. But Gustavo Garcia, an economic adviser to Congress, said Wednesday that all indicators pointed to a contraction of at least two percent.

PDVSA boasted that it had not dismissed any of its 80,000 workers in spite of the plunge in oil revenues, which Plannning Minister Teodoro Petkoff estimated Wednesday at more than seven billion dollars below projetions for the year.

But companies contracted by the oil sector have laid off some 15,000 employees since June, due to PDVSA’s curbing of oil exploration and production activity in order to meet Venezuela’s commitment to a cutback of 525,000 barrels per day.

So far, public expenditures for the year have been cut by a total of 4.8 billion dollars, to which an additional reduction of 1.36 billion is to be added due to the failure of oil prices to rally.

The government’s team of ministers in the economic arena says the new cutback will not touch the wages and other monetary benefits of civil servants.

But Borges, the head of a union which groups 1.2 milion public employees, called that promise dubious. “The Ministry of Health and other offices have already notified that they do not have the funds to pay salaries at the end of the month,” he stressed.

Governors and mayors in several states have warned that they will be in a similar predicament if they fail to receive their allotments from the central government.

The governors of the 23 states into which this nation of 23 million is divided and the country’s 316 mayors have been holding emergency meetings with the government since Tuesday, to try to keep the new budget cut from affecting their allocations.

The government was forced to postpone the budget cut it had planned to announce Wednesday when the governors and mayors warned that any reduction in their funds would force them to freeze activities and payments.

The government planned to reduce the funds earmarked for the states and municipalities by 146 million dollars, said Minister Izaguirre.

The head of the parliamentary Finance Commission, opposition Deputy Gustavo Tarre, said there was “fat that could be eliminated from the budget, without touching muscle tissue.” But he admitted that a consensus would be hard to achieve so close to the November regional and December presidential elections.

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