VENEZUELA: Majority of Workforce Earns Less than Minimum Salary

By Humberto Márquez Reprint | | Print |

Humberto Marquez

CARACAS, Jul 15 1996 (IPS) - A majority of Venezuela’s workforce — 62.6 percent — earns less than the minimum salary, according to a study by the polling firm Datanalisis. That phenomenon has contributed to a sharp drop in demand for goods.

Of the South American country’s economically active population of slightly more than eight million, 11 percent are unemployed — according to official figures — while 50 to 52 percent of those who work do so in the informal economy.

In that sector, which according to humanitarian and social organisations is absorbing more and more women and children, workers do not receive social benefits, and many earn less than the minimum salary — as does a large segment of formal sector workers.

Union federations have denounced the government’s wage policy before the International Labour Organisation.

A total of 62.6 percent of workers have incomes of less than 110 dollars a month, according to Datanalyis, and another 21.3 percent earn from 110 to 170 dollars.

Unions estimated the cost of meeting the basic dietary needs of five people at 170 dollars in March. But that was prior to the launching in April of a structural adjustment programme, after which prices shot up and inflation reached 62.3 percent at the close of the first half of the year.

According to polling firms, in a classification scheme that breaks the population up into five categories, only the wealthiest socioeconomic groups — categories A and B — spend less than half of their income on food, while group C spends 62 percent, group D 77 percent and group E — the poorest sector of society — 81 percent.

The low incomes combined with continuously high inflation — 71 percent in 1994 and 57 percent in 1995 — have led over the past three months to a fall in demand for food, ranging from 25 percent for milk to 50 percent for fruit, as well as other goods and services.

Hardware stores and repair shops have registered a drop in household spending on repairs and equipment. Overdue bills are piling up in electric companies, also thanks to the rate hikes. Telephone use has dropped 11 percent.

New vehicle sales fell 40 percent in the first half of the year compared to the same period in 1995. And private clinics in Caracas have had a hard time because their patients have increasingly turned to self-diagnosis and over-the-counter products.

Publicity firms are alarmed at the dropping tendency of buyers to purchase according to brand-name. People are now shopping for food and detergents, for example, according to price and net weight.

Demand for luxury foods, such as expensive canned goods and cheese, has dropped more than 50 percent, and shoppers are turning towards the more affordable tuna and sardines, leaving other kinds of fish for better times.

Although food stores have declared a fierce price war in an effort to hold on to their clients, buyers are shopping more and more at low-priced open air markets organised by community organisations with State support.

It is still early to measure the impact of the crisis on the private education system, because the Venezuelan school year begins in October.

The Catholic Church leadership has warned that the middle class and the poor have been hard-hit by the present situation, and the episcopal conference has demanded that President Rafael Caldera implement urgent social measures to alleviate the impact of the crisis.