Yes, but no… Let’s start by clarifying some very basic, borderline technical issues.
If tradition had been followed, on May 1 President Nicolás Maduro would have announced an increase of what we define as the integral minimum salary, that is wage plus the food bonus, with the latter going from 45 to 989.2 bolívars [the Venezuelan currency]. In US dollars, and taking as a reference the official rate of April 28, the food bonus would have increased from $1.81 to $40 per month. Accordingly, the integral minimum salary would have increased from 175 to 1119.20 bolívares or, in other words, from $7.07 to $45.26 per month.
However, strictly speaking, there was no salary increase, since the “normal salary”, defined in such terms in the Organic Law of Work and Workers (LOTTT), remained at 130 bolívars or $5.25 per month, according to the official rate.
This circumstance explains the government’s use of the term “indexed minimum vital income”, which would result from merging the food bonus and the so-called “economic war bonus” (equivalent to 741.9 bolívars or $30). All this with the additional commitment of indexing the total amount to the official bolívar-US dollar exchange rate.
An important detail is that private sector workers do not receive this “economic war bonus”, while public sector retirees will receive the equivalent of $49 per month and pensioners $20.
In short, as of May 1, all public sector workers will earn a minimum income of (the bolívar-equivalent of) US $70, regardless of what their salary was before.
The first point that jumps out is the government’s decision to continue to rely on bonuses or, in other words, to keep wages frozen. Such a decision represents an intensification of the orthodox monetarist economic policy adopted in 2018, which subordinates wages to the objective considered as the priority: overcoming hyperinflation.
Somewhat paradoxically, this economic policy takes place in a post-hyperinflationary context and after closing 2022 with 344.8% annual inflation, the lowest since 2016 when it reached 302.6%, according to Central Bank figures.
One way to mathematically illustrate the economic, political, and social implications of this governmental choice is to determine the percentage of the integral minimum wage taken up by bonuses: on the eve of May 1, it amounted to 25.72%. After the presidential announcements, the figure was reduced to a huge 88.39% and will continue to be rise with each devaluation of the Venezuelan currency.
In other words, as of today, nearly nine-tenths of the integral minimum salary is excluded from the calculation of social security and other benefits. In this regard, it is worth remembering that, according to Article 105 of the Labor Law, the food bonus is part of the “non-remunerative social benefits” (“unless otherwise stipulated in collective bargaining agreements or individual labor contracts”). Of course, in the case of the minimum vital income, although indexed to the US dollar, the percentage is equal to zero: it is 70 dollars (or its equivalent in bolívares) with no impact on social security contributions and other benefits.
This bonification of wages constitutes a 180-degree shift from the position taken in March 2022. On that occasion, in a meeting with workers from all over the country, President Maduro said: “You propose that we take a step to ‘salarize’ bonuses. I agree and approve it. We are going to ‘salarize’ the bonuses given to the working class”.
A circumstance that has largely gone overlooked is that the recent presidential salary announcement could very well be considered the result of an agreement from the so-called Social Dialogue Forum, which brings together government, trade union and employer representatives, with the mediation of the International Labor Organization (ILO).
Last February, Carlos Fernández, president of the Fedecámaras business guild, informed that the tripartite panel had agreed on the creation of a “technical group” whose purpose was to “set up the method for establishing the minimum wage”. Days later, Jorge Roig, former president of Fedecámaras and member of the ILO administrative council, declared himself in favor of “emergency” measures regarding wages, which would allow employers to “pay better salaries” but without affecting social benefits.
In mid-April, referring to the “method” to establish the new minimum wage, Roig stated that the goal was to define a “formula that allows [wages’ purchasing power] to be maintained, in spite of high inflation. Of course, the center of everything is defeating inflation and having an economic macro-stabilization program. But, in the meantime, it is necessary to create a formula that affects inflation as little as possible” and allows “the recovery of the purchasing power”.
On the eve of May 1, Roig insisted on this point. According to a press release: “As for bonuses, the position of Fedecámaras is that, given that there is a state of emergency, workers can be given higher bonuses without this having any effect on the calculation of social benefits”.
In a previous article, I referred to the climate of gradual and relative economic “normalization” that followed the implementation of the orthodox monetarist policy towards the end of 2018. In 2021, the most visible signs of the new situation seemed to take hold: de facto dollarization, restocking, imported products everywhere, multiplication of bodegones [high-end stores], reopening of bingos and casinos, construction of large office buildings in the east of the capital, and so on. In addition, hyperinflation came under control.
Parallel to the economic “normalization”, the drastic reconfiguration of the class structure of Venezuelan society or, to put it in more conventional terms, of the labor market, became more pronounced: exponential increase of the informal economy and, therefore, the weight of the sub-proletariat (although they are not exactly the same thing), massive economic migration, devaluation of wages, deregulation and de facto labor flexibilization, increased poverty, misery and inequality.
After the chaos generated by the exacerbated internal political conflict and spurred by the imposition of economic “sanctions” by the US Empire and the European Union, a “normalization” ensued, with its winners and losers, with a minority that secured salvation and a large majority doomed to purgatory. It is in this context that the wage increase of March 15, 2022, takes place: then, the integral minimum wage went from $2.24 to $29.95 per month.
More remarkably, the 2022 wage increase, although of modest proportions for almost any country in the world, for the Venezuelan working class meant the interruption of four consecutive years during which the minimum wage did not stop depreciating: from $141.62 in 2017 to $44.16 in 2018, $6.78 in 2019, $3.04 in 2020 and $1.94 in 2021 (average values). In contrast, in 2022, the average annual value of the integral minimum wage was $22.47 per month, an increase of 1058.02% over the previous year. The government’s spokespeople called it an economic “miracle.” Everything seemed to indicate that the losers and the unsaved had reasons for optimism.
However, the same salary that on March 15, 2022, was equivalent to $29.95 became $10.01 in December and, as I explained at the beginning of the article, around US$7.07 in April of this year, barely above the 2019 average. In the very short span of thirteen months, the Venezuelan working class’ wages experienced a four-year regression.
The presidential May Day announcement was also preceded by the revelations of a new corruption “scheme” involving senior officials of state oil company PDVSA and other key public enterprises, as well as real estate developers, among others. There has been much speculation about the amount of public money that has been stolen and there is no conclusive official version. In any case, everything indicates that it is in the billions of dollars. Some details of the “plot”, which I will not go into here, are particularly sordid and even scandalous.
Precisely for this last reason, it seems important to me not only to highlight the strong popular outrage that persists because of the corruption scandal, which I am not sure has been properly evaluated, but to go a little further, to where the outrage cannot reach.
For example, it seems to me a good time to question, with all the responsibility and frankness demanded by the current circumstances, whether said corruption “scheme”, far from being a mere accident, is not a logical consequence of the economic “normalization” that took its first steps in 2019 and seemed to take hold in 2021.
We need to wonder about the viability of a society where a handful of “winners” grossly flaunt their wealth under the helpless gaze of impoverished majorities who feel abandoned to their fate. Is it really necessary to ask whether the magnitude of the money stolen is not directly related to the opacity and discretion in the management of public resources, defended tooth and nail by government officials behind the need to circumvent the criminal economic siege against the country?
It is necessary to question why the discussions within the tripartite are not made public when what is at stake is something as important as the wages of the working class. It is necessary to question who takes responsibility for the fact that, in April, the integral minimum wage receded to the value of four years ago, when the “economic normalization” began. Will the heart of everything continue to be defeating inflation and tidying up the macroeconomic issues, will the working class take center stage again at some point?
Yes, but no…
Yes, the heart of everything has to be the working class. The opposite means resigning ourselves to live in a country where these, and other questions, are doomed to fall on deaf ears. And that cannot be an option.
Reinaldo Iturriza López is an activist, writer, and sociologist with a degree from Venezuela’s Central University. He is the author of several books, including 27 de Febrero de 1989: interpretaciones y estrategias and El chavismo salvaje.
Iturriza López, father of Sandra Mikele and Ainhoa Michel and Venezuelan baseball enthusiast, is a former Culture Minister and Communes and Social Movements Minister. He also headed the Audiovisual Production School at Ávila TV. He writes regularly for the blog Saber y Poder.
Translated by Venezuelanalysis.com.
The views expressed in this article are the author’s own and do not necessarily reflect those of the Venezuelanalysis editorial staff.