Venezuelan gov't payroll grows at a rate of 310 people per day
Labor conflicts raise pressure on public finance
A rise in public-sector conflicts is due to a rapid increase in the number of employees. In the meantime, the State struggles to meet its duties amidst waning oil revenues. Petro-dollars are used also to cover losses in state-owned companies, pay for skyrocketing imports volume and heavily subsidized petrol prices and energy rates.
According to the National Statistics Institute (INE), as of the end of October 2002, the State had a roster of 1,345,674 employees and, by October 2012, that figure had soared to 2,463,759.
Over the past decade, public-sector employee numbers rose by 83% and, on average, 310 new employees were added to the payroll on a daily basis.
In Colombia 3.9% of jobholders work for the state; 8.4% in Peru and 19.6% in Venezuela.
Research conducted by Asdrúbal Baptista, a professor at the Institute of Higher Administration Studies (IESA), has evidenced that since 1950 the State has relied on oil income to hire more staff than it really needs.
Baptista claims that from 1950 to 2002, on average, 56% of public-sector hirings are "excess" and believes that "it is a genuine anomaly that can only be offset by the extraordinary income the State receives from being the sole proprietor of petroleum-related resources."
This "anomaly" has gotten worse over the past decade as Hugo Chávez's has, in addition to deepening the country's status as a petro-State, led an agitated process to take over private companies and develop "socialist factories" aimed at expanding the presence of the public sector within the economy.
But the outcome is negative as evidenced by infamous examples. After undergoing compulsory nationalization in 2008, steelmaker Sidor has generated losses of USD 580 million. La Gaviota, a corporation located in Sucre state, only produces 80 to 100 cans of sardines daily three years after the government took over, and the automotive sector has notoriously spiraled downward.
Further proof of the failure caused by the growth of the State in the economy is the fact that the domestic industry's production is lower than in 2008, imports are at an all-time high, and non-oil exports are lower than in 1997.
The State's inefficiency goes hand in hand with plummeting private investments for fear of a series of compulsory sales and few incentives in the midst of policies aimed at controlling prices and limiting access to foreign currency.
Recent figures published by the Central Bank of Venezuela (BCV) show that from 2007 to 2010 private investment fell 43%.
Translated by Félix Rojas Alva
President Nicolás Maduro is not only the heir to the throne, but also to an economic crisis which demanded urgent measures to rectify the course. The crisis showed up in two aspects: a 50% inflation estimate, and shortage of staples ranging between 70% and 98%. These issues might hit the President's poor popularity; considering his feeble electoral victory of 1% over his challenger.