“Venezuela is in the final throes of a downward social and economic spiral borne out of a legacy of terribly misguided policymaking,” economist Michael Henderson said in a note to CNBC. “The announcement of a two-day working week for public sector employees lays bare just how ill-equipped the economy is to deal with temporary supply shocks.”
Venezuela’s economic problems hit a new peak this week as rolling blackouts and a two-day working week were introduced to alleviate an energy crisis.
Venezuela’s government announced earlier in the week that it was cutting public sector employees’ working hours down to two days a week for at least two weeks in order to reduce electricity consumption.
The country’s president, Nicolas Maduro, had already decided Venezuela’s 2.8 million state workers would have Fridays off through April and May. Daily four-hour power cuts around the country were also planned to further save energy.
The plans are a response to a drought that has left the country’s largest hydroelectric dam near its minimum operating level. But according to Michael Henderson, lead economist at risk consultancy Verisk Maplecroft, the plans indicate just how poorly the country is doing as a whole.