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Editorial Commentary
VenEconomy:
Growth, employment and falsehoods
Hugo Chávez and his ministers are constantly boasting that the economy has grown for the fourth consecutive year and that non-oil GDP grew by 9.7% in 2007, for total growth over these four years of 59.6%.
According to Central Bank figures, this would seem to be true. But it is also true, that, according to the National Statistics Institute (INE) and the Central Bank, employment -one of the most reliable indicators for measuring a country’s economic growth and the wellbeing of its citizens- has only grown by 3.8% in the past four years. Besides, according to INE and the Central Bank, only 430,000 new jobs have been created since 2003, an average of 100,000 a year, and the growth of jobs in 2007 was only 0.2% or a niggardly 28,000 jobs more than in 2006.
This poor performance of the employment indicator is yet further proof that economic growth in the last few years is more artificial than a circus clown.
The growth of the economy in the times of Chávez has been based on the oil boom, which has allowed the populist president to transfer funds directly to the population via grants, social programs and other contrivances, which has produced growth driven solely by consumption.
In this “growth” of which the government so loudly boasts, there has been no increase in productive capacity or investment. In these nine years of “Bolivarian” government, no new industries or companies have been created that could generate new jobs. On the contrary, many companies have migrated to countries where, unlike Venezuela, there is legal certainty and investment is promoted, taking with them a contingent of highly qualified human capital; others, foreign companies such as PDVSA’s contractors and strategic alliances, the telephone company Verizon, and the electricity company AES, were kicked out of their businesses by the government’s fit of nationalization; and then there are the hundreds of businessmen working the land who have been forced to reduce their investments or abandon their properties because of confiscation, invasion, the lack of security, and a castrating labor legislation.
It is also clear that the government’s endogenous quest has not promoted production, created the conditions for investment or generated jobs. According to the 2006 Census, carried out to obtain information on the state of the cooperative system and its contribution to the productive apparatus, 67% of the 47,000 cooperatives studied are not producing, and of the 5800 cooperatives set up under the Vuelvan Caras schemes 1 and 2, only 49% are active and producing goods or services. It is to be presumed that the remaining 150,000 cooperatives not covered by the census are in a similar situation.Moreover, the few jobs generated by those cooperatives have a very low level of productivity and the workers do not have a fixed wage, longevity or severance benefits or any type of social security.
No doubt about it, growth with Chávez is nothing more than an illusion that will evaporate like the morning dew the day the government can no longer keep up its rate of spending of the last four years.And it is highly likely that this will happen this year.
VenEconomy is a Venezuela's leading specialized publisher in the economic and financial area. VenEconomy's Points of View on the issues of the day, as seen by VenEconomy during the last week. Petroleumworld does not necessarily share these views.
This commentary was originally published by VenEconomy, on 01/31/2007. Petroleumworld reprint this article in the interest of our readers. Petroleumworld does not necessarily share these views.All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld. All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld.
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Petroleumworld News 02/05/08
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