Caracas, May 2, 2023 (venezuelanalysis.com) – Venezuelan President Nicolás Maduro presented a number of labor-related measures during the traditional Workers’ Day march in Caracas.
The government will raise the monthly food bonus for workers from US $2 to $40, while the so-called “economic war bonus” was set at $30, setting a $70 income floor for state employees. Both benefits will be paid in bolívars (BsD) but will be pegged to the US dollar in order to maintain their value in case the currency devalues.
However, there was no minimum wage increase, with the amount remaining at the 130 BsD ($5.25 at the present exchange rate) set in March 2022. At the time, it corresponded to roughly $30 but the exchange rate devaluation over the subsequent months saw over 80 percent of its value erode.
The economic war bonus was established in early 2023 and had been set at the bolívar-equivalent of $30 before rising to $45 in April for public sector workers. Retirees from the state apparatus and pensioners earned $30 and $15 in April, respectively. The latter two groups are not eligible for the food bonus, and pensioners had the economic war benefit upped to $20 a month according to reports.
The Venezuelan president additionally promised new collective bargaining agreements for the public sector, a tax reform to target high earners and corporations, and a special plan to assign 50 oil wells whose proceeds will be exclusively destined to fund social security.
Maduro called the measures a “resistance plan” and pledged that “sooner rather than later” there would be a recovery of Venezuelan salaries.
“In recent months we have been studying how to improve incomes so that we can achieve a financial strength that will allow us to strike a decisive blow in rescuing Venezuelan workers’ wages,” the President told a crowd at the end of a march convened by the government-aligned Bolivarian Socialist trade union confederation (CBST).
May Day salary hikes have become customary over the years and the steady loss of working-class purchasing power since the last increase led to rampant speculation in press outlets and social media.
Nevertheless, trade union sources told Venezuelanalysis prior to May Day that an adjustment was not on the cards. The Labor Ministry has set up a working group with a number of trade unions of different political affiliations to establish salary policies with mediation from the International Labor Organization (ILO). Though the meetings have stretched for months, the different parties have yet to establish a “methodology” to compute salaries.
Apart from the CBST mobilization, an earlier march took place as well in the Venezuelan capital featuring several other trade unions of right-wing, social democrat and left-wing tendencies.
One growing demand has been for the government to “index” wages, with some sectors calling for remunerations to be set in US dollars. The National Working Class Struggle Front (FNLCT) has proposed an indexation to the basic food basket.
Economist and National Assembly Deputy Tony Boza, one of the main indexation proponents, argued that the way forward is to index salaries to protect them from inflation, and that raising the weight of bonuses was a “step backward.”
Adelmo Becerra, a representative from SINTRAINCES, a union organizing workers from the Socialist Education and Training Institute (INCES), told Venezuelanalysis that Monday’s announcements fell short of “conservative expectations” that the government would at least bring salaries back to the $30 level of March 2022.
“Today’s announcement left wages and wage scales untouched,” he explained. “The bonuses are not ‘salaries’ in the sense that they are disconnected from a number of other benefits. They do not contribute to vacation subsidies, social security contributions, overtime and severance calculations.”
Becerra, who also belongs to the FNLCT, claimed that the Venezuelan private sector, and the Fedecámaras business guild, are the “major winners” from the latest wage policies.
“There is a consolidation of a policy that minimizes social security and other benefits to a minimum while also making it much cheaper to fire workers,” he expressed. “It is a paradise for businesses, while workers are left to barely cover their living expenses.”
The Venezuelan economy remains heavily burdened by crushing US sanctions that target a number of sectors and especially the oil industry. The Maduro government has consistently denounced Washington’s unilateral measures and demanded their lifting.
Nevertheless, a crude output recovery coupled with high market prices spurned a recovery that saw the country’s GDP reportedly grow by more than 15 percent in 2022.
Despite the upward trend, economic activity began to slow down again as inflation picked up in the second half of the year. The opposition-aligned Venezuelan Finance Observatory (OVF) measured an 8.3 percent economic contraction in the first trimester of 2023. For its part, the Venezuelan Central Bank has not published GDP data since 2019.
The Caribbean nation was likewise rocked by a corruption scandal in recent weeks that allegedly saw $3 billion siphoned off from the oil industry via a cryptocurrency scheme. There have been more than 60 arrests so far as part of a wide-reaching probe.