05/06/2014
On Wednesday, on the eve of Labor Day, President Nicolás Maduro announced that the minimum salary and retirement pensions would go from Bs.3,270.30 (about $66), as decreed since January of this year, to Bs.4,251 ($85) starting on May 1. This way, a second salary increase totaling 40% (10% in January and 30% in May) took place in barely four months.
This far from being good news, is bad news for everybody.
For starters, it is bad news because soaring inflation will make this increase nothing in a very short period of time due to the current high prices of food and other basic goods and services.
For March of this year, prices of the basic food basket for a family of five members was at Bs.17,572.50 (about $352) from Bs.7,688.89 ($154) during the same period a year ago. That is to say, Bs.13,321.50 ($266) higher than the minimum salary effective May 1, and also meaning that 4.1 times the new minimum salary are required for a family of five members to pay for the new prices of the basic food basket. And even if a family hypothetically reaches that kind of income, it won’t do any good since general shortages have taken away from shelves nearly 20 of the 58 products that comprise the food basket; that is to say, even if people have the money, they will not be able to buy the corn flour to make their arepas, or bread, or butter, or sugar, or milk or vegetable oil, or lentils, peas or pasta; also personal hygiene or washing products such as common soap have vanished, just to mention a dozen of basic items.
It is also bad news because this increase has nothing to do with productivity levels, neither those of workers nor companies. The Venezuelan Castro-communist Revolution eliminated all kinds of planning that sustained and made the productivity of companies grow. Since the late Hugo Chávez came to power, it has been the own Government the only to estimate and impose salary increases on the national work force and does it annually, biannually or three times a year (as apparently will do this 2014.)
In addition, because this policy introduced by the Revolution to increase salaries unidirectionally and by decree every time it feels social unrest is at boiling point, prevents private companies from planning wage increases based on their assessment on effort, quality of work, and overcoming of their own workers. And because what it promotes is a labor market where financial remuneration, or a good labor environment necessary for the personal development of employees cannot be found, one where the country loses everything for having a mediocre and impoverished work force without the slightest possibility of future development, and in many cases, with more Venezuelans every day pinning their hopes on a better future beyond borders.
And lastly, it is bad (real bad) news because the no relation between wages, economic growth, productivity and competitiveness will make these salary increases bring more inflation and poverty for the already battered Venezuelan population.
source
On Wednesday, on the eve of Labor Day, President Nicolás Maduro announced that the minimum salary and retirement pensions would go from Bs.3,270.30 (about $66), as decreed since January of this year, to Bs.4,251 ($85) starting on May 1. This way, a second salary increase totaling 40% (10% in January and 30% in May) took place in barely four months.
This far from being good news, is bad news for everybody.
For starters, it is bad news because soaring inflation will make this increase nothing in a very short period of time due to the current high prices of food and other basic goods and services.For March of this year, prices of the basic food basket for a family of five members was at Bs.17,572.50 (about $352) from Bs.7,688.89 ($154) during the same period a year ago. That is to say, Bs.13,321.50 ($266) higher than the minimum salary effective May 1, and also meaning that 4.1 times the new minimum salary are required for a family of five members to pay for the new prices of the basic food basket. And even if a family hypothetically reaches that kind of income, it won’t do any good since general shortages have taken away from shelves nearly 20 of the 58 products that comprise the food basket; that is to say, even if people have the money, they will not be able to buy the corn flour to make their arepas, or bread, or butter, or sugar, or milk or vegetable oil, or lentils, peas or pasta; also personal hygiene or washing products such as common soap have vanished, just to mention a dozen of basic items.
It is also bad news because this increase has nothing to do with productivity levels, neither those of workers nor companies. The Venezuelan Castro-communist Revolution eliminated all kinds of planning that sustained and made the productivity of companies grow. Since the late Hugo Chávez came to power, it has been the own Government the only to estimate and impose salary increases on the national work force and does it annually, biannually or three times a year (as apparently will do this 2014.)
In addition, because this policy introduced by the Revolution to increase salaries unidirectionally and by decree every time it feels social unrest is at boiling point, prevents private companies from planning wage increases based on their assessment on effort, quality of work, and overcoming of their own workers. And because what it promotes is a labor market where financial remuneration, or a good labor environment necessary for the personal development of employees cannot be found, one where the country loses everything for having a mediocre and impoverished work force without the slightest possibility of future development, and in many cases, with more Venezuelans every day pinning their hopes on a better future beyond borders.
And lastly, it is bad (real bad) news because the no relation between wages, economic growth, productivity and competitiveness will make these salary increases bring more inflation and poverty for the already battered Venezuelan population.
source
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