Sep 14, 2018
Venezuelan workers who earned a pittance are now earning a slightly larger pittance, thanks to a big increase in the minimum wage. What they may not have are jobs.
Starting this week, 7 million employees are guaranteed 1,800 bolivars a month -- worth about $20 at the black-market rate. President Nicolas Maduro intended the mandate as political boost, but it’s having the opposite effect as companies, already hit by Venezuela’s epic economic contraction, tell workers they can’t afford to keep them.
While there have been many similar moves in the past, never has one been so disruptive, arriving amid hyperinflation, depression and devaluation. Some employers are restructuring costs, rejiggering pay scales and negotiating settlements with workers. Others are simply dismissing people. Much of the action happens secretively as companies try to avoid punishment by the government, which has been jailing those it believes are flouting the rules.
Caracas garage owner Marcos Vizcaino, 56, said the increase was the final blow for the family business of two generations. He said the scarcity of spare parts, a sclerotic tax bureaucracy and hyperinflation had already complicated matters and resulted in less than a customer a day.
“I already told my four employees to go find other jobs,” he said. “I’ve decided to close. There’s no need for me to keep to losing money for a third year in a row.”
In two industrial and wholesale districts in Caracas, La Trinidad and Boleita, about half the businesses were closed last week, including several restaurants that depend on local workers. Weekday traffic resembled the leisurely flow of a Sunday.
“I have four salesmen; all have come in this morning,” said Manuel Rosas, 55, who owns a shop that sells spare parts for Chryslers. By 11 a.m., he had sent them all home because they had nothing to do.
The higher minimum wage, which Maduro announced last month, was among several bids to steady the rapidly failing state’s economy and stanch hyperinflation. The socialist autocrat also devalued the currency and lopped five zeroes off denominations of the bolivar bill, which has been rendered almost valueless.