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Venezuela Ups Minimum Wage 50% in a Market Where Prices Double Every 17 Days

Venezuela’s socialist dictator Nicolás Maduro announced a new 50 percent increase in the nation’s minimum wage, a move experts say will only serve to contribute to the collapse of the bolívar currency and push the nation deeper into hyperinflation.

A 50 percent increase in the current minimum wage brings the lowest legal salary up to 40,638 bolívars a month: $12.14, according to CNN, using the inflation rate calculated by the website Dolar Today, which tracks the nation’s inflation rate based on market values and not official government statistics. CNN also notes that Maduro increased the minimum wage by 40 percent four months ago and is doing so again allegedly to prevent further decline in the nation’s financial structure.

Venezuela’s state-run television outlet boasted this week that, including this latest increase, the socialist government had increased the minimum wage by 536 percent in the past year. The official government explanation for the move is to “protect [workers] from the onslaught of the beastly economy war leveled onto the country for many years.”

The “economic war” is a term Maduro has used consistently in the past few years to refer to what he claims is a conspiracy by President Barack Obama and other Western leaders to attack the socialist government of Venezuela. According to Maduro, Obama’s “economic war” has included everything from mass looting incidents triggered by the nation’s growing famine to a supposed plot by Vice President Joe Biden to assassinate Maduro.

Those in Venezuela’s devastated business community warn that the rising minimum wage prices will do little to aid the economy. Dolar Today notes that the 50 percent increase represents an average of $0.13 more for each worker according to the black market value of the bolívar, just enough for one more coffee or pastry a month. This amount will gut many small businesses, however, already struggling to pay their salaries.

“The increase of the minimum wage by decree is not only a guarantee of more inflation, but more unemployment and shutting down of businesses,” economic analyst Asdrúbal Oliveros tells Dolar Today. Prices for difficult-to-find basic goods like flour and vegetable oil are already rising, a situation the government has blamed on the “economic war.”

Inflation, meanwhile, continues to skyrocket. The Spanish newspaper ABC estimates that Venezuela closed out 2016 with a 700 percent inflation rate. The Pan-American Post estimates the inflation rate to be currently around 830 percent. CNN predicted an increase in inflation to 1,660 percent by the end of the year, citing the International Monetary Fund. The Post noted in December that the current rate of acceleration of inflation is such that market prices double every 17 days, far too rapidly for minimum wage increases to keep up.

While Venezuela has been struggling with inflation for most of Maduro’s tenure, beginning in 2013, the rate of increase has sped up significantly. For reference, the estimated accurate inflation rate of the bolívar in mid-2016 was at 615 percent.

The government’s representatives in working class neighborhoods are nonetheless touting the wage increase as a success and threatening those who question it. “The working class will take the streets to defend President Maduro,” Bolivarian Socialist Workers Center president Willis Rangel told state-run media. “We will not allow these unpatriotic individuals… oppose this.”

The threat is especially concerning given the role that Chavista gangs, known as colectivos, play in the oppression of anti-socialist opposition. Colectivos target anti-Maduro protests, physically attacking peaceful protesters to keep them from attending subsequent rallies, and beat journalists covering the rallies to discourage them from giving visibility to groups opposing the government.

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