The IMF says unemployment in Venezuela is at about 30%
It claims it was 27% in 2017and that it will average 33% in this year.
How wild are these claims?
Torino Capital’s chief economist, Francisco Rodriguez, estimates unemployment to have been 7.9% in 2017 and says it will average 8% this year. Rodriguez was a key advisor to Henri Falcon, an opposition leader who ran against President Nicolas Maduro in May. Rodriguez travelled throughout Venezuela with Falcon during the presidential campaign and made numerous local TV appearances in which he promoted Falcon’s economic platform.
Rodriguez made the follow comment to me about unemployment in Venezuela:
I find a 30% unemployment rate highly unlikely if not impossible. Venezuela’s real minimum wage is very low (less than $2 until recently) and there is a huge informal sector. Both things make the labor market highly flexible and it is unlikely that you could get the conditions for excess supply of labor. In fact, the problem is the opposite: wages are so low that people don’t want to work and leave the labor force – including by emigrating.
In any case, anecdotally I find no one talking about unemployment as a problem in Venezuela. People complain about not getting paid enough, not about not finding a job. If unemployment numbers were 30%, you would imagine that unemployment would be a huge concern in public opinion studies. Back in 2000-2001 (before the strike), unemployment reached double digits and was cited as the main problem in the country in opinion surveys. In the latest Datanalisis survey, only 2.0% of respondents identify it as one of the country’s main problems.
In May, the IMF “issued a declaration of censure” against Venezuela for withholding economic data. It seems the IMF should censure itself over the unemployment estimates it has published for Venezuela, but I’ll gladly post any explanation here that the IMF deigns to provide for its unemployment figures.
Please recall that in April of 2002 the IMF immediately offered loans to the Carmona dictatorship which briefly took power after a military coup backed by other champions of democracy such as the George W. Bush administration and the New York Times editorial board. IMF spokesperson Thomas Dawson publicly stated that the Fund was “ready to assist the new administration [of Pedro Carmona] in whatever manner they find suitable.” Dawson is also a former U.S. State Department and U.S Treasury Department official.