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Chavez's policies fail Caracas' poor

Street vendor Moises Jaimes arranges decorative foam sheets in Caracas on Feb. 27. PHOTO: AP

Street vendors seem to encroach on every broken sidewalk, every open plaza, every grimy corner of downtown Caracas, most of them grinding out a living on the pavement for lack of a better option.

Venezuelan President Hugo Chavez has cast himself as a defender of this poor underclass, upholding their right to work on the street while promising his leftist revolution will bring more dignified employment.

Eight years into his rule, their existence has become an uncomfortable reminder that the president's policies -- like those of his predecessors -- have failed to create enough stable, productive jobs despite a growing economy boosted by oil revenues.

Street peddlers, pirate taxis, maids and others toiling in Venezuela's informal economy account for 45 percent of the labor force -- at last count, 5.5 million people, according to the government's March employment statistics. The street sellers are the most visible face of this formidable off-the-books economy, a phenomenon common across Latin America.

Many street vendors remain loyal to Chavez, saying he has brought benefits -- if not jobs -- to their downtrodden neighborhoods: subsidized food, basic health care and education.

"Before the president arrived, the police would beat us," said Ervert Anillo, a 35-year-old fruit seller.

The street sellers peddle staples like sugar and flour below government-set prices -- sometimes still in packaging from subsidized state-run markets.

While Chavez's increasingly heavy hand on the economy has frustrated formal businesses with restrictions such as price and currency controls, the street-level economy is ruled by supply and demand. Vendors haven't benefitted from Chavez's 20 percent minimum wage hike, and take home only as much as they hawk.

Ana Rosa Gutierrez, 79, spends two hours each night sewing under an exposed light bulb in her red brick-and-tin home in a shantytown east of Caracas. Six days a week, she rides a rickety minibus into the city to sell her clothes.

"I raised four children like this," she said, pointing at T-shirts and blouses hanging from her makeshift stall.

On a good day, she might make the equivalent of US$10.

"It is capitalism in its most savage form," said Isabel Pereira, a Caracas economist.

Chavez insists his socialist policies are curing the country's capitalist ills, including endemic unemployment. Government statistics indicate some headway: Last year the number of formal-sector jobs increased by 570,000 -- about 10 percent. Poverty also is declining, according to government statistics.

Yet overall unemployment has barely budged. It averaged 10 percent last year, compared to 11 percent in 1999.

Critics note that the state payroll has grown dramatically and the government has changed the way it measures the jobless rate by excluding participants in state social programs.

And this during one of Venezuela's greatest oil bonanzas ever -- a boom that has helped the economy grow by 10.3 percent last year, the fastest in the region.

Venezuelans overwhelmingly re-elected Chavez in December, and since then the authorities have bulldozed street stalls in parts of Caracas, moving vendors to state marketplaces and coaxing others away from the informal economy with job training and cash handouts up to US$250.

The government insists it is using petrodollars to diversify the economy, funding cooperatives in fledgling industries from cement production to cacao farming.

But critics say Chavez's economic policies are hindering job creation and entrenching the informal economy, scaring businesses with threats of expropriation while new regulations make it harder to turn a profit.
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