By Ewan Robertson
Venezuelanalysis

Mérida, Venezuela – Venezuela’s national minimum wage is to increase 32.25% in 2012, announced Venezuelan President Hugo Chavez on Saturday [Apr 7, 2012].

In a televised address from Miraflores presidential palace in Caracas, Chavez explained that the wage rise would take place in two phases.

• On 1 May the minimum monthly salary will increase by 15%, from 1,548 bolivars (US $360) to 1,780 bolivars (US $414).
• Then on 1 September the wage will increase a further 15% to 2,048 bolivars (US $476), a net rise of 32.25%.

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The wage increase means that in dollar terms Venezuela will have the highest minimum wage in Latin America. Including legally guaranteed monthly food tickets, currently valued at 977 bolivars (US $223). The wage rise will represent a gross minimum income of almost US $700 for formally employed workers in Venezuela.

The measure also looks set to rise above inflation, at 27.6% in 2011 according to the Venezuelan Central Bank. With net inflation of 3.5% in the first three months of this year, the government is currently on track to meets its target of 20 – 23% annual inflation for 2012.

Chavez stated that the wage increase will cost the Venezuela state 20,055,678 bolivars (US $4,664,000), which will be paid for with oil income and taxes.

“This leap forward in favour of the workers forms part of the project of redistribution of national income to achieve substantive equality,” he said.

The increase will benefit 3,903,408 public sector workers, as well as private sector workers and Venezuela’s 2,500,000 pensioners through the social security system and new “Greater Love” social program.

The Venezuelan president also cited figures which demonstrated that the number of workers receiving the minimum wage in the country’s formal economy had fallen from 65% in 1999, when his administration entered office, to 21% in 2010.

According to Venezuela’s National Institute of Statistics, unemployment was 9.2% for February. Of those employed, 41% work in informal employment, down from 55% when Chavez entered office.

In 2011 the minimum wage increased by 26.5%.

“Every year without fail the [Bolivarian] Revolution has decreed an increase in the minimum salary, as a way of solidly constructing social justice. It is one of the reasons why Venezuela is the country with the lowest indicator of inequality in this continent,”

emphasised Chavez in his address.

The Venezuelan head of state also outlined advances in drafting the new Labour Law, which is expected to be passed by presidential decree on 1 May.

Chavez said the law will contain provisions for a new Social Benefits Fund, which will guarantee that money destined for benefits payments to workers is not diverted to other ends. The Fund will be supported by Venezuela’s state oil company PDVSA, through a new body PDVSA Social, which will receive 4% of PDVSA dividends.

Reactions

Venezuela’s pro-government umbrella union the National Union of Workers (UNT) indicated that the 32.25% wage increase is close to their own suggested rise of at least 33.59%.

UNT coordinator Marcela Maispero stated that the rise does not solve all issues regarding salaries in Venezuela.

“It is necessary to do more to give workers a salary that allows them to live with dignity and cover basic material, social and intellectual necessities,” she said.

Alternative news website Aporrea drew attention to the issue of salaries above minimum wage, as it was not announced whether they would also see similar increases as part of the rise.

Venezuela’s business federation Fedecamaras criticised the salary increase as “an isolated measure” that would not raise citizen’s buying power in the context of an “adverse climate against private investment”.

The wage increase comes among various government policies to guarantee living standards and combat inflation in Venezuela, including the introduction of regulated prices for 19 basic household and bathroom items on 1 April this year.

 

Source: Venezuelanalysis