Informal sector up 43.5 percent in January because of recession

The National Statistics Institute reported a rising number of people working on their own

Over five million people work in the informal sector of economy (File photo: Nicola Rocco)

Economy
The informal sector of the economy has become an exit route for workers hit by the aftereffects of the economic recession.

The data supplied by the latest monthly report of the official National Statistics Institute (INE) show that the number of people working in the informal sector of the economy increased to 43.5 percent in January, the highest since 2007.

This percentage means that 5,103,739 out of 11,742,513 members of the working population are underemployed.

The structure of that market has been adapted to the crisis. Informal businesses have gradually disappeared over the past few months and there are fewer employees in small businesses of less than five people. In the meantime, more people are working on their own.

The government agency found that one year ago, 10.7 percent of the labor was employed by small businesses. At the end of last month, the rate dropped to 9.6 percent, or 1,135,884 people; that is, 94,330 workers less than 12 months ago.

More people working on their own
But the percentage of employers in the informal sector of economy has also shrunk. The INE reported that in January 2010, they accounted for 2.8 percent of the working population, totaling 329,699, compared with 340,111 employers, or 3 percent, in 2009.

On the contrary, the number of workers on their own increased from 28.1 percent in January 2009 to 30.4 percent ending last month, according to the INE.

Most of the people working as street vendors form part of this group, totaling 3,564,676 at the end of January.

Venezuelan economy ended 2009 in recession, after recording a plunge of 2.9 percent of the Domestic Gross Product (GDP) during that period, as reported by the Central Bank of Venezuela (BCV). Last week, Minister of Planning and Finance Jorge Giordani vowed to correct the result, because the economic backlash was actually of 3 percent.

The consumption rate plummeted last year, resulting into shrinking production in the private sector.

Due to this situation, unemployment has gradually increased since May 2009. The INE specified that in January 2010, jobless amounted to 1,338,680, or 10.2 percent.

Unsuccessfully looking for a job in a market with a narrow labor supply caused by the economic crisis has prompted more people to work on their own and small businesses have been more affected than others. This, in some cases, has made them disappear.

The formal sector of economy also downsized. According to the recent INE report, the employment rate in this sector stood at 56.5 percent or 6,637,287 employees.

In 2010, the electricity rationing will join the recession unleashed by falling oil prices. In central-northern Carabobo state, there are reports of 25 percent of the production falling down. The Federation of Trade and Industry Chambers (Fedecámaras) estimates that ending this year, there will be a 40-percent setback.

The proposed reduction of working hours in some businesses to lessen the impact of outages could cut the payrolls. Last year, as reported by the INE, 137,790 people were jobless.

Translated by Conchita Delgado