We all have low expectations for 2017. 2016 was the worst performing year for Venezuelans with a deadly combination of highest inflation ever recorded and with the largest GDP contraction we have ever seen. This, combined with an institutional crisis, has led the nation towards authoritarianism.
Like everyone else, companies expect even higher inflation, greater economic contraction and even more uncertainty about currency exchange.
PGA’s 2017 general report tells a story that is both terrifying and encouraging. For companies, the reality isn’t that different: an impossible economic situation mixed with a totally hostile environment means that doing business in Venezuela will be about the long game.
2017 is a year where the goal is survival.
122 companies from all industries and all sizes shared some of their expectations and strategies to survive 2017. Like everyone else, they expect 2017 to be even worse and to be a year with even higher inflation, greater economic contraction and even more uncertainty about currency exchange. This last point is crucial of course, half the companies in the study use DICOM’s rate as a reference. Only a meager 8% use DIPRO.
One of the biggest challenges facing companies in Venezuela is to retain talent and human resources. When high-skilled workers are offered decent salaries elsewhere, in nations with much better prospects, or when low-skilled workers can earn a day’s living by reselling goods, companies have to be really creative in order to be able to retain and afford employees. Among the strategies are the things you would expect, like wage increases, but with rampant inflation, companies can’t keep up. More and more companies are working towards providing their employees the flexibility they need to face the crisis. Whether it’s giving employees more time to stand in line to buy basic staples, or even dealing directly with certain distributors to buy products in bulk for staff.
Companies are working towards providing their employees the flexibility they need to face the crisis, like giving employees more time to stand in line to buy food.
Emigration is a way tougher problem to crack. Half the companies are implementing strategies to mitigate the impact of emigration. About 10% of them have started to offer compensation packages with some percentage in dollars, both for executives and key talent, and as many as 65% are considering it.
At the end companies are between a rock and a hard place. Desperate to preserve the human resources they need to keep operations going, but without the resources to do so. This leads to a serious dose of reality and an expectation for 2017 of shrinking workforce and many layoffs.
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