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Research firm Ecoanalítica claims reduced unemployment is not attributable to new jobs

Made up jobless rate

The official National Institute of Statistics (INE) reported lower unemployment figures based on a drop in active population

Wages have depreciated in the face of significantly increased labor availability (Photo: Cheo Pacheco / El Universal)


The National Institute of Statistics (INE) at the end of November disclosed official unemployment rate at 10.9 percent, a decrease of 1.9 percentage points compared to the same month in 2004 and a drop of 0.5 percent compared to October this year.

However, a study conducted by research firm Ecoanalítica concluded that such a fall in unemployment is attributable to numeric maneuvers mostly.

Quoting INE, Ecoanalítica reports that employment went up from 10,336,032 people in November 2004 to 10,689,090 people in November this year. In October, however, employment amounted to 10,861,812 people, thus reflecting a loss of 172,722 jobs in November. Then, how is it possible to record a 0.5 percent drop in unemployment in November compared to October this year?

"There is only one possible explanation: a reduction in active population," says Ecoanalítica. The firm asserts that such an indicator -which measures the number of people over 15 years old with capacity and availability to work- plummeted in October by 257,707 people, according to INE.

Therefore, the reduced unemployment figures INE reported in November compared to October are not attributable to the creation of new jobs, but to a lower number of people looking for a job.

Ecoanalítica explains the effect of reduced active population on employment rates. According to the research firm, if the active population had continued to grow by 400,000 people a year -as it usually does-, the number of jobless people in Venezuela would have remained unchanged in 2005, and unemployment rate would currently amount to 12.8 percent.

Poor wages
Reduced job generation not only affects unemployed people, but it also has an effect on the persons who have a job, as wages tend to depreciate in the face of higher labor availability.

Taking into account the effects of inflation on wages, Ecoanalítica states that "when comparing real wages in the private sector during the third quarter of 2005, we found that they have remained unchanged since the fourth quarter of 2003, and even worse, workers in the private sector have a purchasing power amounting to less than 75 percent of purchasing power in the last quarter of 2000."

Purchasing power has also dropped in the public sector, with the largest reduction in 2001-2003, but a rebound has been observed in the last two years, said the report.

Workers with a minimum wage are the only group with a reason to celebrate. Following successive increases, minimum wage has soared from VEB 190,080 (USD 88.63) in 2002 to VEB 405,000 (USD 108.88) this year, and purchasing power has grown by 16.4 percent.

Translated by Maryflor Suárez R.

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