Venezuela's economic downturn has completely reshaped the labor market. Against a backdrop where the private sector is sapped by recession, lack of formal jobs is the first symptom of the economic crash.

While the unemployment rate has not significantly heightened, despite a sinking Domestic Gross Product (GDP) at 3.5 percent in the first half of 2010, the informal sector of the economy has soared indeed. This shows that people's own initiative has been lately the only driving force able to create jobs.

National Statistics Institute (INE) found that the informal sector of the economy climbed by one percent in one year to 45 percent in July, compared with 44 percent in July 2009. At July, 5,370,797 people were working in poor conditions.

Micro-enterprises froze their employing capacity and, instead, they are vanishing, according to the data. The number of employers at this sector plunged 8.5 percent over the past 12 months, from 331,493 in July 2009 to 303,306 ending last month.

Not only does the amount of enterprises diminish, but also their share in the labor market. According to the INE, employers of informal businesses -those with less than five employees- accounted for 2.5 percent of the country's labor force in July, compared with 2.8 percent last year.

The workers of such enterprises have been adversely affected as well. From July 2009 to July 2010, the payroll of informal sites dropped by 4.5 percent to 1,251,556 people below 1,310,476 one year ago.

Like in the case of employers, there are fewer employees -from 11 percent in July 2009 down to 10.4 percent same month, this year.

As appears from the data supplied by the INE these employees moved to even a more informal reality. The group of non-professional people working on their own rose 8.2 percent over the past 12 months. That is, from 3,464,619 in July 2009, to 3,751,335 in July 2010.

These workers do not depend on a monthly wage, but on fees in order to survive. Theirs are the most untoward conditions in the labor market. The INE considers that only non-professional people working on their own form part of the informal sector of the economy. Free-lance professionals are regarded as part of the formal sector of the economy.

Translated by Conchita Delgado