Venezuelan government claims the drop in joblessness proves its policies are working

Caracas Daily Journal (Jeremy Morgan): Figures from the National Statistic Institute (INE) show that unemployment fell below the one million mark during the second half of last year, continuing the downward trend seen since the economy started to crawl out of the deepest recession in modern Venezuelan history four years ago. The number of people still out of work totalled 932,448, marking a decline of 7.5 percent compared with the same period of 2006, INE said.

The institute calculated the national work force at 11,503,869 people, out of which 55.9 percent were in regular jobs in the "formal sectoers" of the labor market.

The number of people working in the state sector grew by 106,839 people to 1,971,595 during July-December last year, while jobs in the private sector increased proportionally more slowly by 280,105 to an estimated 11,223,764, according to the INE survey, which was based on a sample of 116,562 people aged over 15 and 38,924 homes.

The private sector has repeatedly urged the government to alter its approach to economic policy, in particular the controls imposed on foreign exchange and prices for household essentials. The government insists that it has a duty to manage the economy in the interests of the poorer sectors of Venezuela's population of something over 26 million people. It claims that its economic policies have scored a success in sharply bringing down employment.

Skeptical economists tend to attribute the rise in job opportunities to the spin-off from sky-high world oil prices. They also question the validity of INE's statistical approach, arguining that the institute has no accurate way of counting heads in the unregulated "informal sector."

Unofficial estimates suggest that a little under half of the people in some sort of work earn their living in the informal sector. While the good news came on the jobs front, it also emerged that the authorities seemed to have gotten a grip on the amount of money circulating in the econmy.

The Venezuelan Central Bank (BCV) reported that money supply fell to Bs.F149.34 billion during the first half of this month, compared with Bs.F149.67 billion in mid-January and a peak of Bs.F154.79 billion in mid-December. However, money supply was 31 percent higher in February compared with a year before. The comparable figure in February last year was 64 percent.

Consumer spending and money supply have a tendency to rise during the run-up to the festive season. In overall terms, people still have little incentive to save be-cause of "negative" interest rates that come nowhere near matching, let alone exceeding, the rate of inflation. While inflation is officially estimated at 22.5 percent for last year, the minimum interest rate on commercial bank deposits was just 11 percent.