Venezuela Jobless Rate Falls to Eight-Year Low

by Theresa Bradley

Venezuela's unemployment rate fell to its lowest in almost eight years in November as oil-fueled government spending spurred economic growth and a boom in consumer purchasing.

The jobless rate dropped to 8.8 percent last month from 10.9 percent a year ago, the country's national statistics agency, known as the INE, said in a statement. The rate is Venezuela's lowest since January 1999, the first month for which the data is available. Unemployment was 8.9 percent in October.

Venezuela's economy swelled 10.2 percent in the past year on government oil revenue, driving a consumer spending boom that helped create 424,000 jobs in November. President Hugo Chavez's government plans to pour nearly half its budget into social and job creation programs next year, and aims to slash unemployment to 7 percent next month, INE President Elias Eljuri said in today's release.

``The economy is growing and that creates jobs, but what's up for debate is their quality,'' said Abelardo Daza, an economist at the Caracas consulting firm Lextrategy. Daza expects holiday spending to boost labor demand and help unemployment approach the government's 7 percent target, before rising again in January.

Almost three of every four jobs created last month belonged to the formal economy, entitling employees to pensions, severance and other benefits, INE data showed.

Still, about 47 percent, or 5.2 million, of all 11.1 million Venezuelans employed in November worked in informal positions, including street vendors and house cleaners, where most earned half as much as their formal-sector peers, Daza said.

``The challenge is to transition those informal jobs into formal employment and fight poverty,'' he said.

The surge in government spending has helped slash poverty rates among Venezuela's 26 million people by nearly a third since the end of 2003, according to the INE.

To contact the reporter on this story: Theresa Bradley in Caracas at tbradley7@bloomberg.net .