Venezuelan Government Announces May Day Bonus Hikes, Wages Remain Frozen

Caracas, May 1, 2024 (venezuelanalysis.com) – The Nicolás Maduro administration increased the public sector non-salary bonuses.

The Venezuelan president made the announcements at the end of a large-scale march organized by the ruling Socialist Party and pro-government trade unions.

Starting this month, Venezuela’s minimum income for public sector workers will grow from US $100 to $130. The amounts are paid in bolívares but pegged to the official exchange rate set daily by the Venezuelan Central Bank. 

Maduro did not clarify at the time how the increase was broken down. National Assembly Deputy Francisco Torrealba later explained that the so-called “Economic War Bonus” will be adjusted from $60 to $90 and that food bonuses will remain at the present rate of $40. 

While private sector workers get food bonuses from employers, pensioners and public administration retirees do not. The latter currently perceive $70 a month of economic war bonus and the former $25. Authorities did not specify whether those amounts will be updated as well.

The minimum wage has remained frozen at 130 bolívares since March 2022. It was worth $30 at the time but has since devalued to around $3.6. Pensions are pegged to the minimum wage.

“We have been raising incomes slowly but surely,” the president said in a broadcast from Miraflores Palace, recalling the losses caused by sanctions on the country’s revenues. “We’re going to make an extra effort to grow workers’ pay further in the second semester of 2024.”

Maduro said that Washington’s reimposition of oil sanctions on April 18 meant an immediate $2 billion hit for Venezuela’s export revenues. He vowed that the Caribbean nation would continue its economic recovery in spite of the US’ coercive measures. Trade union representatives announced a signature-collection campaign to demand the lifting of sanctions.

“The Biden administration wants to impose a colonialist model,” he stated. “We will never accept having to ask another country for a license to produce and export crude!” Following a wind-down period that expires on May 30, the US Treasury Department has warned corporations to seek permission before dealing with Venezuela’s oil sector under threat of secondary sanctions.

In his address, the Venezuelan president went on to paint a positive picture of the nation’s economy, hailing a growth in oil production and retail activity as well as the stability of the exchange rate and a significant increase in tax revenues. According to Maduro, the SENIAT tax authority collected $3.1 billion in the first four months of 2024, a 78 percent increase compared to 2023.

Finally, Maduro and Vice President Delcy Rodríguez announced an upcoming legislative proposal to levy a special tax on private sector earnings to boost pensioners’ living conditions. The National Assembly will discuss it on Thursday.

Rodríguez stated that the project has been agreed to with business guilds and represents a “social justice” instrument. She mentioned the creation of a pension fund and the financing of a new “Grandparents of the Homeland” social mission focused on the country’s elderly population.

Apart from the massive pro-government march, May Day also saw a concentration of center, right-wing and a minority of leftist trade unions in Caracas’ Plaza Venezuela. The different groups raised demands mostly centered on the improvement of salaries to cover living expenses and the restitution of collective bargaining rights.

The demonstration had a moment of tension when a motorbike caravan that was headed to the other march clashed with protesters. Police forces intervened to stop the situation from escalating.

The Maduro government’s reliance on non-wage bonuses has sparked debate and criticism within some Chavista sectors. Grassroots collectives argue that since bonuses do not affect other labor benefits, including severance settlements, vacation pay and social security contributions, the policy favors private employers and fosters inequality.

Several analysts have likewise contended that economic policy-makers are wedded to a monetarist outlook that seeks to tame inflation by freezing social spending and working-class incomes. 

In recent years, the Maduro administration has adopted a liberal turn in its economic approach, looking to bring down inflation and offer concessions to private investors in a bid to jumpstart the South American country’s economy.

Venezuela’s inflation has registered 13 straight months of single-digit figures, including below 2 percent in the first three months of 2024. Accumulated 12-month inflation currently stands at 67 percent, the lowest since late 2014.