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CARACAS, Venezuela—In March 2017, the Venezuelan Supreme Court issued two binding judgments that diminished the power of the National Assembly and granted its power to the executive branch, headed by President Nicolas Maduro. The Court’s decision not only was a direct hit to democracy, but also worsened the ongoing sociopolitical and economic crises.
Since the Court’s declarations, inflation rates have skyrocketed, making the black-market dollar go from 3,451.75 Bs (Bolívares) to 21,105.95 Bs (about 611 percent) in four months. According to the National Assembly, inflation reached 176 percent in July 2017. That makes Venezuela one of the top three countries with the highest inflation.
“Over the years, the central government took control of the economy—imposed increasingly strict exchange and price controls and expropriated lands, farms and key industries of basic goods,” said Alessandra Soler, a young lawyer who has been working at the NGO Civilis Human Rights for the past three years.
In Venezuela, the majority of the country’s income comes from oil revenues. With oil barrel prices dropping from $100 in 2014 to $40 in the same year, the country’s economic crisis has worsened. The lack of economic planning, defective public policies, deficient institutions, rampant corruption, and the lack of rule of law have aggravated the situation.
“The government replaced the experts in their respective areas with regime loyalists, whose main task was to maintain political control over the workers and consumers,” Soler said. “Many had no previous experience in the positions they now hold. Therefore, national production fell spectacularly. The crisis was foreshadowed long before the oil prices fell. It just made it worse.”
For example, the country’s pharmacies and supermarkets face a constant shortage of products. Even when products are available, the prices end up being far up higher than most Venezuelans can afford.
Carlos Santos [not his real name], a 27-year-old, who has been working in the international marketing division of a transnational company for three years is a clear example of the “new normal” for Venezuelans his age.
“My division was cut by 50 percent this past year because our sales dropped 70 percent,” Santos explained.
His monthly income consists of 500,000 Bs—about $24 a month using the black-market exchange rate, the only one Venezuelans have access to. A National Statistics Institute (INE) monthly cost of living estimate is $25 per individual in order to cover basic needs. But the official minimum wage is about $16 per month.
“We receive a bonus once every three months,” Santos said, “but even with that I’m not able to do much.”
Santos is one of a group of professionals who cover a wide spectrum of areas such as communications, engineering, and business. Since finishing their higher education studies, they have not been able to become independent from their parents because of their inability to afford living expenses, and they are looking to migrate to another country.
Business owners are also suffering from instability in the country.
Alberto Machado [not his real name], who comes from an upper-class family, is the CEO and owner of his construction business and still experiences financial difficulties. In a country where prices are regulated by the black-market price of the dollar, it is difficult to do business because prices fluctuate constantly.
“I took advantage of my family’s business structures and began my own,” Machado said. “My business is doing really good even when the situation of the country is as bad as it is, but I can’t plan for the far future because I don’t know at what price I will be able to buy/sell my products.”
Machado is part of a very small elite class that continues to get smaller.
“Even though I have my own company and I do relatively good,” he said, “I can’t live on my own.”
Machado lives in the pool house annex of his parents’ property and while he pays for basic services like water, electricity, cable, and food, he is unable to move out and live on his own if he wants to keep the same lifestyle.
“I could rent an apartment in a cheaper zone, but even then, I wouldn’t be able to support a family,” he said.
The rise of the prices and the lack of resources is not the only problem Machado faces. He told us that in May 2017 some people broke into the storage unit next to his.
“I have to regularly check mine to make sure nobody has broken in. I also had to hire security for the storage,” he explained. Machado also rides around in a bulletproof car because the storage unit is located in an industrial part of the city that is considered unsafe.
Given that for many the formal economy is not a feasible option anymore, there has been an increase of participants in the informal economy.
“Bachaquear” is now a thriving business. Bachaqueros are those who buy and resell basic products that have become scarce. For example, you can buy one kilogram of corn flour for about 25,000 Bs. from a bachaquero, but if you are able to find it in the supermarket (which is unlikely), its price is 2,130 Bs.
María León [not her real name], a 39-year-old woman, is not a bachaquera but is a part of the informal economy network. She is a single mother of two who works selling coffee outside a popular shopping center alongside many other informal workers. “We take it day by day,” León told us, “I want my kids to receive a good education, so taking them out of school is not an option.”
Every morning, around seven, she arrives carrying her four pots of coffee (plus milk, sugar, and cups), and leaves around two in the afternoon to take care of her kids. León sells between three to four pots of coffee per day. Each pot generates a net income of about 33 cents, which means she makes about $1.30 on her best days.
If she works 20 days in a month this means that she makes about $26 a month (if every day is a good day). Her family consists of three people, and her income sustains the household. She needs about $75 per month to cover the expenses of her family, and this sum does not include the school fees of her two kids.
“I only focus in what I have today and what I need for tomorrow,” León said, “Each day I just hope I make enough.”
Similarly, Pablo Romero [not his real name] who works near María, sells cigarettes individually. “What I make here is not enough to live or support my family,” he said, “but it gives me enough to have cash for the day.”
The informal economy is an illegal practice under Venezuelan laws. Therefore, people like León and Romero are on the lookout for the police.
“They come and not only do they make us go, but [they] also take our merchandise,” Romero said. “But it is not as bad: in other places, they have to pay police to let them have their business.” He explained how a police unit from another sector charges the sellers an amount to let them stay. Extortion by the police is a common practice.
No one, it seems, has it easy.
These people come from different socioeconomic classes and all find they have trouble leading affordable lives.
The country lives under constant food and medicine shortage, an increasing inflation rate, and growing unsafety conditions. The UN Human Rights Declaration claims that it is the state's responsibility to provide access to food and healthcare to its citizens. Yet Soler explains, “The government denies there is a humanitarian emergency in food and health. Citizens' hardships and suffering are part of an ‘economic war’ waged against Venezuela to ‘generate a crisis to oust the government.’”
While the food shortage has caused at least 10 percent of the population to eat from trash (data provided by national NGO Caritas Venezuela), the medicine shortage has caused many to die from the lack of proper medical treatment. In September 2017, Freddy Ceballos, president of Ferfaven (Venezuelan Pharmaceutical Federation), announced that there is an 85 percent of medicine shortage throughout the country. Many are suffering while the government has yet to implement measures to help fix the situation.
“The Executive declared a State of Exception (the ability of the Government to transcend law in the name of public good) in January 2016 that still remains in place, undermining civil, political and economic rights and guarantees,” Soler said, “under the excuse that such disproportionate and unconstitutional measure is necessary to win the ‘economic war.’”
Venezuela has become a country of survivors. The high cost of living, the continuous shortages, the street violence, and the officials’ corruption are daily challenges for most citizens. Political tensions continue to create an unstable panorama, and no one seems to be closer to finding a solution.
Notes: Names have been changed to protect sources’ identities. Estimates of the prices and exchange rate were calculated on September 9, 2017.