Amid Economic Chaos, Venezuela Raises Min Wage by 30%

By August 8, 2016Socialism

The economic situation in Venezuela is a complete disaster, to put it lightly. As if its financial crisis cannot get any worse than it already is, it appears that the country is now also headed for a beer shortage. Last Friday, the largest private Venezuelan beer company, which is responsible for supplying 80 percent of the beer consumed in the country, began shutting down its last remaining plant.

This comes at a time when Venezuela has already been dealing with a shortage of food, toilet paper, medicine and condoms. As a result, citizens are spending hours of their day in long lines, hoping to obtain scarce necessities for their families.

Early last week, Venezuela’s second largest city, Maracaibo, experienced mass rioting after the electricity was cut in order to conserve power.

The hydroelectric dams responsible for providing the country with electricity have essentially dried up, leaving the country in dire need of power. Though the government blames El Nino and political sabotage for the shortage, many attribute the real cause to poor planning and mismanagement of infrastructure.

See Also: In Venezuela, Extended Easter Holiday Represents Growing Energy Crisis and Shortcomings of Socialism

As far as of power-rationing is concerned, there seems to be no end in sight. Recently, President Maduro’s administration imposed a four-hour blackout in eight states across the country, which is set to last for 40 days. Though larger states, like Vargas and Caracas, have been spared from participating in these rolling blackouts, many Venezuelans are struggling to adjust to a world with limited power.

For, Pedro Tarazona, who sells meat just outside of Caracas, these rolling blackouts have resulted in major financial losses. Unaware of when the power would be shutoff, Tarazona stocked his fridge full of meat right before the electricity was cut. To make matters even worse, since many citizens use bank cards that require the use of electronic machines, Tarazona was also unable to sell any of the meat without having access to power.

The electricity crisis has grown so grave, the government has even decided to shift the country’s time zone forward by 30 minutes. By doing so, the government hopes to save power by giving the people an extra half of an hour of daylight.

In response to the economic woes plaguing the country, this weekend, President Nicolas Maduro announced that he would be raising the minimum wage by 30 percent. This news comes just after a 25 percent increase in wages was implemented in March. This is also the 12th minimum wage increase since President Maduro took office in 2013.

However, as the country’s economy continues its downward spiral, and inflation continues to rise, many are questioning the effectiveness of habitually raising the minimum wage. With many industries unable to fully operate without consistent access to electricity, there is not much a higher minimum wage can do to improve the lives of the Venezuelan people.

In fact, many Venezuelan business owners, already struggling to keep their companies afloat during this crisis, will have no choice but to lay workers off, only adding to the country’s economic problems.

The new increase was announced Sunday, to coincide with International Labor Day, or May Day, as it is often called. According to ABC News, the new increase will, “push the minimum wage to 15,051 bolivars a month. That is about $1,500 at the official exchange rate, but is around $13.50 at the current black market rate, which largely sets prices of goods for Venezuelans.”

Since past efforts to raise the minimum wage in Venezuela have proven themselves to be ineffective in improving the overall economy and the lives of its people, we cannot reasonably expect this wage increase to pull the country out of its deep depression, or do much to help the struggling Venezuelan people weather this economic storm.