Venezuela: President Maduro Announces 30% Minimum Wage Increase

Source:  TeleSUR
October 15 2015

Venezuelan President Announces 30% Minimum Wage Increase

The increase will come into effect on Nov. 1. This is the 30th minimum wage hike over the last 15 years.

maduro announces increase in minimum wage​Venezuelan President Nicolas Maduro announced a 30 percent increase to the country’s minimum wage and food stamps Thursday in Bolivar state.

“What else can you say?” asked Maduro. “Only in the revolution.”

The increase will be implemented on Nov. 1. This is the fourth minimum wage increase this year, and the 30th minimum wage increase over the last 15 years.

According to Maduro, Venezuela’s minimum wage has nearly doubled over the last year, which is higher than the level of inflation.

Inflation

“In times of capitalism and liberalism, inflation rose to 100 percent and there was still no minimum wage increase,” said Maduro.

Maduro made his announcement from the Sidor steel plant in Bolivar state, Venezuela’s largest steel corporation. The company was privatized in 1997 under then President Rafael Caldera, and then renationalized by former President Hugo Chavez in 2008. Venezuelan workers greeted Maduro at the plant.

During his speech, Maduro criticized the privatizations of past governments and fiscal adjustment policies of the International Monetary Fund. In particular, he commented on the release of a recording of a call between the president of Venezuela’s largest beer manufacturer and a Venezuelan Harvard economics professor who are looking to implement a “fiscal ajustment plan for Venezuela” with loans from the IMF and World Bank.

Counterrevolution

“In Venezuela, what we have here is not an opposition. It’s a counterrevolution,” said Maduro. “What they do is conspire. They are against the constitution, and that’s why you see some of them negotiating over the country with the International Monetary Fund.”

Source:  Venezuelan President Announces 30% Minimum Wage Increase  TeleSUR

One thought on “Venezuela: President Maduro Announces 30% Minimum Wage Increase

  1. President Maduro is right to say that there is no credible opposition in Venezuela instead there is a counterrevolution to the peoples’ revolution.

    This counterrevolution in Venezuela essentially opposes every single policy action initiated by the revolutionary government to benefit the working people and the poor in that country. The counterrevolution even lacks the political cleverness to occasionally extend support for some measures like the minimum wage that benefit those who labor for a living in an economy where for some time now the cost of living or inflation has been outstripping the incomes including the minimum wage of the working classes.

    The fact is that these strident counterrevolutionaries only know how to defend their narrow class interests of power and privileges shouting the customary empty phrases of “free markets”, ” free enterprise”, “human rights violation”, ” totalitarian government” among others that ruling classes globally typically use when they see their class interests threatened as they are in Venezuela.

    Surely, the fact that the minimum wage has been increased 30xs in the last 15 years and 4xs in this year alone is undoubtedly a response on the part of the revolutionary government to improve the purchasing power and material standard of living of the working people. That is at least the policy objective of the revolutionary government in Venezuela.

    Unfortunately, the so called pro-US opposition in Venezuela rejects any attempts of the Maduro government to intervene in so- called “free markets” to set prices such as minimum wages to benefit working people. However, it is equally important to recognize that ultimately the optimal long term cure for escalating cost of living increases or inflation is to have proportional increases in incomes including minimum wages that are premised on productivity increases in any country whether it is Venezuela, the US, South Africa or Jamaica.

    As such any failure to either increase wages, including minimum wages, without regards to the productivity of workers could be detrimental to their purchasing power and standard of living in the short and long term if suitable incentives such as skills training etc are not given to boost their productivity. Thus, if productivity rises slower than wage increases in Venezuela or elsewhere, inflation or cost of living will worsen workers purchasing power and so workers will suffer what economists call money illusion which means they will believe they are better off because they have more money in their pockets though they are not because their more money buys less because of inflation. The opposite is equally true, namely, that if workers’ productivity increases faster than wage increases, governments and private companies would have more wiggle room to increase workers compensation without worsening the purchasing power of working and poor people.

    So in concluding, I agree with President Maduro that politically Venezuela certainly has a counterrevolution masquerading as an opposition with Washington’s full backing to discredit and ultimately overthrow the revolution. There is NO doubt about the latter fact.

    However, though I also am firmly in support of the minimum wage and increasing it to benefit working people, I believe that the economics of the minimum wage can be more tricky than meets the naked eyes in the context of inflation.

    The rule of thumb to sustain long term viability of the purchasing power of the wages, including the minimum wages of Venezuela’s working people, has to be guided by the relationship between the changes in their productivity and their wages as discussed earlier. Short of this axiom, I believe that celebrations of increases in minimum wage increases short of sustained productivity increases could be short lived as it could lead to increased cost of living. President Maduro is also right about capitalism’s tendency to have worker productivity rise much faster than wages increase. The latter has been the case in the US since about the mid 1970s where wages including minimum wages have been declining or stagnant though productivity has been increasing in the economy. Either deviation from the already stated relationship between changes in productivity and wages, whether in Venezuela or the US, is detrimental to workers and the poor and requires policy caution perhaps even more so for a revolutionary government like that in Venezuela which seeks to transform society from capitalism to socialism. Clearly, the latter transformation is impossible without the support of working people and the support of workers is impossible without a sustained improvement in their overall living standards which includes the long term increase in purchasing power of their wages, some of which will be the minimum wage. The long term credibility of revolutions and revolutions depend both on the short and long term conditions of working people though perhaps more so on their long term material conditions.

    “Peace begins when the hungry is fed”

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