Economic Indicators and Appropriate Yardsticks

In her VA column, Jessica Dos Santos argues that economic stability is welcome but there is a risk of prioritizing indicators over the people's well-being.
JDS economic yardsticks
The improved economic data has not translated into living standards, as Jessica Dos Santos explains. (Venezuelanalysis)

In his yearly “State of the Union” speech, Venezuelan President Nicolás Maduro assured listeners that the country’s economy had grown by more than 5 percent in 2023, exceeding the estimations from the United Nations Economic Commission for Latin America and the Caribbean (CEPAL).

Furthermore, accumulated inflation in Venezuela reached 190 percent in 2023, some 44 points below the 2022 mark of 234 percent. It was the lowest tally since 2015. Prices are still rising at one of the fastest rates in the world, but signs point towards a continued slowdown, alongside forecasts of modest economic growth in the near future.

Yet, at what cost? According to experts, this inflation deceleration is owed, at least in part, to a more stable exchange rate between our bolívar and the US dollar, since retailers use this to update costs and prices. The other part is the policy of freezing wages, first and foremost for the country’s public sector workers.

With this in mind, the government recently raised the “indexed monthly income” to US $100, comprised of the $60 “economic war bonus” and $40 in food bonus. Salaries, meanwhile, remained the same.

The choice to raise incomes without touching salaries means there is no increase in social security contributions, collective bargaining rights get erased and layoffs get cheaper. Not just that, but retirees only get a $25 monthly bonus to add to a pension that remains frozen at around $3.6 per month.

The Venezuelan Constitution’s Article 91 establishes that the state will ensure that all workers, from the public and private sectors alike, shall enjoy a “minimum living wage” that is to be adjusted on a yearly basis using the market basket as a reference. However, during these times of economic crisis and blockade, the policy of keeping wages low and raising bonuses has been a “temporary” solution.

It is one of many “emergency measures” or “escape valves” that have taken hold, with the government either actively promoting them or just looking the other way. As a result, they end up becoming de facto permanent, or lasting a long time.

Other examples that come to mind are dollarization, or the precariousness of the labor market hidden behind the veneer of “entrepreneurship.”

In this context, many Venezuelans are asking themselves if the recent easing of sanctions will lead to any real improvement to their living standards. And we’re not just talking about wages, but also public services, areas like healthcare and education, etc. Because the alternative is to have everyone continue walking the tightrope while the extra resources get channeled towards electoral campaigns or to shore up macroeconomic indicators.

Along the same lines, the government is targeting good figures, and in some ways needs them to present a compelling “invitation” to foreign investors. But at the same time, it does not seem all that concerned in ensuring that these improvements are truly felt in Venezuelans’ pockets and households. At the end of the day, it’s all about the yardsticks we’re using.

I recall that a few years ago, the Venezuelan right-wing would brandish Chile’s economic indicators whenever it could, but never mentioned that the top 1 percent there concentrate nearly half of the country’s wealth. Not just that, a mere nine families hold the equivalent of 16.1 percent of Chile’s GDP.

We would be wise not to fall into the same trap, though the signs are not good when I see our state media celebrating the success of this or that private company even though they benefit no one (apart from their owners). Another classic is hailing businesspeople for “creating jobs.” Public outlets hardly ever talk about state-owned companies anymore.

It is equally strange to see all the benefits offered to multinational oil companies such as Chevron, Eni or Repsol so that they’ll come back to Venezuela, not to mention the deals that look very different from their equivalents years ago. One example is the natural gas project with Trinidad and Shell.

One way or another, our struggles and the climate of uncertainty have made it so that we cherish the mere feeling of “normalcy”: the return of corporations, brands, artists, etc. A few years ago we would not have cared.

But I feel this is the profile of the cocktail that keeps us alive while also threatening to kill us. The US maintains its sanctions, or warns that they can return, to put the breaks on any recovery prospects. And on our side, the government turns temporary measures into permanent fixtures even if they mean growing inequality.

The truth is that we have spent years resisting the US-led economic asphyxiation, finding ways to get by, improvising where needed. If tomorrow Washington decides to undo the recent easing or levy new sanctions, we would probably just collectively shrug our shoulders and tell each other “here we go again.”

Still, when navigating in uncertain waters it is important not to lose our compass. What are the yardsticks we should use to decide if we’re going in the right direction? To throw parties because transnational corporations return, or new huge department stores open, is to forget about the very nature of this project. We know how easy it is for a select few to hoard wealth.

The last 25 years taught us that the people’s well-being, as well as collective achievements, is what’s worth celebrating. Solidarity is what allowed us to weather one storm after another. And that is worth way more than any macroeconomic indicator.

Jessica Dos Santos is a Venezuelan university professor, journalist and writer whose work has appeared in outlets such as RT, Épale CCS magazine and Investig’Action. She is the author of the book “Caracas en Alpargatas” (2018). She’s won the Aníbal Nazoa Journalism Prize in 2014 and received honorable mentions in the Simón Bolívar National Journalism prize in 2016 and 2018.

The views expressed in this article are the author’s own and do not necessarily reflect those of the Venezuelanalysis editorial staff.

Translated by Venezuelanalysis.