CARACAS, (Reuters) – Venezuelan President Nicolas Maduro yesterday raised minimum wage by 30 percent to the equivalent of $4.30 at the black market exchange rate.
Despite the announcement, minimum wage in dollar terms is down about a third with respect to the last increase in September as roaring inflation and a depreciating currency eat away at salaries.
Maduro, who says his government is victim of an “economic war,” often celebrates repeated wage increases as a sign of social responsibility by his government. Critics call them evidence of an inflationary spiral that leaves workers with lower spending power.
“In the face of speculative attacks by the enemies … we will protect salaries, which is the formula of the revolution, until we can reach a new equilibria in a new economy,” said Maduro in a televised broadcast.
The new monthly minimum wage as of Nov. 1 is 177,507 bolivars, compared with the previous minimum wage of 136,544. The hike will affect both government and private sector employees. Maduro did not specify how the government would pay for the wage hike.
Venezuela maintains currency controls that sell dollars at the heavily subsidized rate of 10 bolivars per greenback. But the vast majority of citizens can only acquire them on the black market, where they currently fetch 41,290, according to widely watched website DolarToday.
During his speech, Maduro announced the release of a new 100,000 bolivar note, equivalent to more than two weeks of the new minimum wage.
The steady decline in the black market exchange rate – more than 99 percent since Maduro was elected president in April 2013 – has exacerbated a brutal economic crisis that has millions struggling to find or afford food.
The salary increase was also accompanied by a boost in mandatory meal tickets, taking total salary to 456,507 bolivars per month – just over $11 per month at the black market rate.
Workers frequently complain that their employers do not pay the full amount of meal tickets.