Maduro Raises Minimum Wages to Combat Inflation
Venezuela’s Socialist President Nicholas Maduro hiked the minimum wage for the fifth time this year. The workers will still only make about $12 a month.
He claims the increase in wages will combat inflation. Interesting. It will actually increase inflation but that’s socialism, it doesn’t have to make sense.
Maduro announced on Sunday a 50 percent hike in the minimum wage and pensions, the fifth increase over the last year. That is supposed to protect workers from the highest inflation rate in the world.
The monthly salary is now 40,683 bolivars or $60. The black market rate is $12 a month.
“To start the year, I have decided to raise salaries and pensions,” he said on his weekly TV and radio program.
“In times of economic war and mafia attacks … we must protect employment and workers’ income,” added Maduro, who has now increased the minimum wage by a cumulative 322 percent since February 2016.
Venezuela’s Inflation Rate Is the Highest in the World
Prices are soaring and food is scarce. Common products can’t be found. There’s no toilet paper, feminine products, beer. Medicine is hard to find with undernourished children dying in pediatric wards in border hospitals.
The plunge in oil prices since 2014 combined with his dated refineries and socialist policies, has left Venezuela on the brink of total collapse.
Constant minimum wage hikes are more proof of his government’s policy failures. Maduro prefers to blame his enemies for waging an “economic war” against him.
The inflation rate was about 500% in 2016 and is expected to worsen in 2017.
They’re Mortgaged to the Hilt
Maduro’s government pledged a nearly 50 percent stake in Citgo, its U.S. refinery subsidiary, as collateral for a loan from Rosneft, Russia’s state-controlled energy company. The Citgo collateral deal is already being challenged in court by U.S. multinationals.
Russia could seize the assets if Venezuela fails.
Maduro’s party, the United Socialist Party (PSUV), is no longer the most popular party. Look what it took for that to happen and it’s still popular, just not the most popular. Once socialism has a foothold, there seems to be no turning back.
Inflation in Venezuela is expected to reach 720 percent this year. Shopkeeps weigh rather than counting the cash.
Venezuelans don’t know just how bad it is because the government refuses to publish figures.
Oil makes up a staggering 95 percent of Venezuela’s exports, and accounts for a quarter of the country’s economy, with oil-related revenues having historically supplied roughly half the government budget. When oil took a dive, so did they. Having one product to keep the economy going suppresses all other industries.
Venezuela had little else to fall back on, so a natural reaction would have been for the bolívar to collapse. But Mr Maduro, who succeeded Hugo Chávez following the revolutionary leader’s death in 2013, instead tried to control the exchange rate, creating a massive black market for currency.
Almost No Reserves
Venezuela begins 2017 with the lowest foreign reserves in 21 years.
“Basically, the government is burning through its international reserves to pay to service its debt,” said economist Jesus Casique. Currently, the country’s foreign debt is at USD $150 billion.
“I do not know where they are going to scrape together the financing. If you liquidate debt but simultaneously take on even more debt, you are mortgaging Venezuelans,” said Casique, noting that by 2015 USD $ 2.4 billion from the International Monetary Fund (IMF) had been withdrawn via Special Drawing Rights (SDRs).
Price control is one of the main reasons Venezuela is failing. The Socialists are doubling down and stepping up on the failed Socialist policies.
The new ministers of the country’s economic cabinet said there will be more radical wage and price control.
Maduro appoints friends to positions of power so nothing will change. Maduro appointed a drug trafficker as the Interior Minister in August of last year.
Meanwhile the People Don’t Have Basics
The people — including the middle class — are reduced to eating dogs and foraging through garbage when they are not standing in endless lines for sparse goods.
Venezuelan women are being sterilized on days reserved for just that with a waiting list of over 500 because, as one woman said, “Having a baby means having to suffer.”
The Panama Post reported that Ramón Muchacho, Mayor of Chacao in Caracas, said the streets of the capital of Venezuela are filled with people killing animals for food.
Muchacho tweeted that in Venezuela, it is a “painful reality” that people “hunt cats, dogs and pigeons” to ease their hunger. They are also collecting vegetables from the ground and trash.
Shortages are reaching 70 percent as they have managed to win the questionable distinction as the world’s highest level of inflation.
As long as that minimum wage keeps going up, they’re golden. Ain’t socialism grand?