Venezuela’s Minimum Wage to Increase 26.5% in 2011

As is Venezuelan President Hugo Chavez’s custom in the lead up to May Day (May 1st), yesterday he announced a national decree that increases the minimum wage by 26.5%.

By Tamara Pearson – Venezuelanalysis.com

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President Chavez explaining the wage increases last night (Prensa Miraflores)
President Chavez explaining the wage increases last night (Prensa Miraflores)
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Mérida, April 26th 2011 (Venezuelanalysis.com) – As is Venezuelan President Hugo Chavez’s custom in the lead up to May Day (May 1st), yesterday he announced a national decree that increases the minimum wage by 26.5%. He also announced that food ticket benefits will now apply to all formal workers.

The minimum wage will increase from the current Bs 1,224 to Bs 1,407 on 1 May 2011 and to 1,548 by September, translating to an increase of 15% and 10%, respectively. With the second increase compiled on to the first, the total wage increase for 2011 is 26.5%. At the formal exchange rate of 4.3 Bs per $US, these wage increases equate to $US 327 per month in May, then $US 360 in September. These wages do not include the food tickets that workers also receive.

The minimum wage is a standard Venezuela uses, being the minimum full time wage that all public and private entities must pay, the amount that pensioners receive, and the method for calculating other wages. An administrative worker, for example, might receive two minimum wages per month, and in December last year the Salaries, Pensions, and Retirement of Senior Officials of Public Power Law was passed, setting the highest wage any public worker can receive, including the country’s president, vice-presidents, and ministers, at 12 minimum wages.

The wage increase also applies to retired administration workers receiving all or a proportion of their previous salary, and recipients of benefits through the various social missions. However, those earning more than one minimum wage don’t automatically receive an increase.

“I announce the increase of the minimum wage once again, for the twelfth year in a row. Here we don’t cut wages or pensions,” Chavez said, referring to measures taken in some European countries and in the United States.

“We have been working a lot, calculating, examining how we can sustain the decisions from an income point of view, and make them sustainable ... and looking at how to continue evaluating the standards of living of workers and the Venezuelan family,” he continued.

Chavez also announced that there would be reforms made to the Law of Food for Workers, originally passed in 2004, so that instead of only benefiting workers who earn three minimum wages or less, and to companies who have more than 20 workers, it will now apply to all workers, even if the company just has one employee.

He also added that the reform includes the obligation to pay food tickets to workers who are on leave, including women on maternity leave. Chavez is able to make the reform to the law through the enabling law passed by the National Assembly at the end of last year.

Food ticket values are independent of wages. A teacher on a minimum wage, for example, typically receives Bs 400 ($US 93) per month worth of food tickets, which can be redeemed in government food outlets and cooperating private supermarkets and shops.

According to Elias Eljuri of the National Statistic Institute (INE), the extension of the provision of food tickets will benefit “two million Venezuelans who work in companies of less than twenty people”.

Chavez made the announcements yesterday on the national television and radio networks from the Miraflores presidential building and said that in the lead up to May Day and the traditional mass march in Caracas, he would be making more related announcements.

The wage increase, without taking into consideration the food tickets, other work benefits and end of year bonuses, or other free services such as health, means that in U.S dollar terms Venezuelans will be receiving the second highest minimum wage in Latin America.

The minimum wages in other Latin American countries, according to YVKE Mundial, are: Argentina - 1,740 pesos (435 dollars), Chile - 172,000 pesos (350 dollars), Panama - 349 dollars, Brazil - 590 reals (350 dollars), Colombia - 515,000 pesos (280.50 dollars), Uruguay - 4.799 pesos (240 dollars), Peru - 600 sols (212 dollars), Costa Rica - 221.400 colons (429 dollars), Mexico - 1.723,8 pesos (132.60 dollars), Bolivia - 679 bolivianos (97 dollars), Nicaragua - between 1.717 and 4030 cordobas (78,2, to 183,5 dollars).

Last year, the same wage percentage increases were made, although the 10% came first on 1 May, then the 15% on 1 September. In 1998, before Chavez was elected, the minimum wage was equivalent to $US 118, according to AVN.

Inflation this year is at 27%, according to the BBC. Unemployment is down to 8% but 45% of workers are informal. While that is less than the 55% of workers with this status 12 years ago, such workers will not be affected by the increase.

Earlier this month, Venezuela’s pro-government national union umbrella organisation, UNETE, in a public letter written to the Ministry of Work and Social Security, called for a 40% increase in the minimum wage, citing inflation figures of 60.46% over the last two years and “important but not sufficient” gains made by working people under the current government.

The Venezuelan Communist Party (PCV) made a similar call regarding wages, requesting a 40% minimum wage increase as well.

Carlos Lopez, the national coordinator of the Bolivarian Workers’ Force, said that over the past years the wage has been increased by an amount equal to, or slightly above inflation. “This time its slightly below. However, there are other ways to continue [to achieve] wage compensation, such as through collective bargaining agreements,” he said.

For Lopez, the minimum wage decree by the government serves to “compensate” those workers who do not have collective bargaining agreements.

Further, Minister for Work Maria Iglesias criticised people in commercial sectors who increase the prices of “basic products every time the [government] increases the basic wage”.

Calling for a big turnout in the large May Day march expected in Caracas this Sunday, Chavez said, “Friends, workers who do so much, who construct and produce... we want critical participation, beyond the key currents, [we want] unity of the working class, of consciousness and historic responsibility of every worker.”

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