With New Wage Increase, Venezuela Braces for Worsening Inflation, Layoffs

Venezuela’s national minimum wage was raised 50 percent this week, but experts warned President Nicolás Maduro the increase could result in closures to small businesses.

During a national radio and television broadcast, the president said the minimum wage will be set at VEF $22,076 (US $2,218) monthly, while the food bonus will be VEF $42,480 (US $4,269).

Maduro has bragged in the past about the 14 increases in minimum wage made over the last three years, but fails to address that the country faces the highest inflation in the world.

Economists predict the price of products will increase as salaries rise, except that many companies must face price controls set by the government.

Before the adjustment was announced by Maduro, Venezuelans spoke out through Twitter with the hashtag #AumentoIrreal.

The raise won’t even cover 20% of the cost of the basic food basket, will bring more hunger and misery for our people.

Each day we suffer more, there’s no production, no food, no security, no jobs… Maduro, resign now.

Francisco Martinez, President of Fedecamaras, the largest confederation of employers in Venezuela, said the wage increase may not only lead to massive firings, but could also trigger the closure of many businesses.

Martinez systematic increases “are a recognition of the failure of the economic model… all it does is generate inflation.”

He further criticized wage increases that “are not accompanied by any structural measure.”

Employers criticized the decision as “surprising,” while denouncing the government’s failure to comply with the International Labour Organization (ILO).

Economist and President of Datanalisis Luis Vicente Leon said without a change to the economic model, the announced wage increase will only worsen the inflation problem.

“Workers need constant raises to live among overflowing inflation,” he said. “But compulsive increases without changing the model makes the problem worse.

Leon stressed that “the decreed increase in wages does not compensate for past inflation and generates future inflation.”

Economics experts recommended opening markets, increasing production and stabilizing prices so increases have positive effects on the pocketbooks of Venezuelans.

While private enterprise must comply immediately with minimum wage increases and food tickets, public agencies have delayed bonus payments for food and increases in the salary since last February.

The government is reportedly indebted to more than two million employees, as there are institutions that have not paid the wage scale increases of 20 and 30 percent installed in February and May.

Someone must have translated this into Spanish for the illiterate thug, maduro.

“Directive 10-289
In the name of the general welfare, to protect the people’s security, to achieve full equality and total stability, it is decreed for the duration of the national emergency that:
Point One. All workers, wage earners and employees of any kind whatsoever shall henceforth be attached to their jobs and shall not leave nor be dismissed nor change employment, under penalty of a term in jail. The penalty shall be determined by the Unification Board, such Board to be appointed by the Bureau of Economic Planning and National Resources. All persons reaching the age of twenty-one shall report to the Unification Board, which shall assign them to where, in its opinion, their services will best serve the interests of the nation.

Point Two. All industrial, commercial, manufacturing and business establishments of any nature whatsoever shall henceforth remain in operation, and the owners of such establishments shall not quit nor leave nor retire, nor close, sell or transfer their business, under pentalty of the nationalization of their establishment and of any and all of their property.

Point Three. All patents and copyrights, pertaining to any devices, inventions, formulas, processes and works of any nature whatsoever, shall be turned over to the nation as a patriotic emergency gift by means of Gift Certificates to be signed voluntarily by the owners of all such patents and copyrights. The Unification Board shall then license the use of such patents and copyrights to all applicants, equally and without discrimination, for the purpose of eliminating monopolistic practices, discarding obsolete products and making the best available to the whole nation. No trademarks, brand names or copyrighted titles shall be used. Every formerly patented product shall be known by a new name and sold by all manufacturers under the same name, such name to be selected by the Unification Board. All private trademarks and brand names are hereby abolished.

Point Four. No new devices, inventions, products, or goods of any nature whatsoever, not now on the market, shall be produced, invented, manufacturered or sold after the date of this directive. The Office of Patents and Copyrights is hereby suspended.

Point Five. Every establishment, concern, corporation or person engaged in production of any nature whatsoever shall henceforth produce the same amount of goods per year as it, they or he produced during the Basic Year, no more and no less. The year to be known as the Basic or Yardstick Year is to be the year ending on the date of this directive. Over or under production shall be fined, such fines to be determined by the Unification Barod.

Point Six. Every person of any age, sex, class or income, shall henceforth spend the same amount of money on the purchase of goods per year as he or she spent during the Basic Year, no more and no less. Over or under purchasing shall be fined, such fines to be determined by the Unification Board.

Point Seven. All wages, prices, salaries, dividends, profits, interest rates and forms of income of any nature whatsoever, shall be frozen at their present figures, as of the date of this directive.

Point Eight. All cases arising from and rules not specifically provided for in this directive, shall be settled and determined by the Unification Board, whose decisions will be final.”

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