CARACAS, Monday May 09, 2011 | Update
Although the Venezuelan government has increased wages every year, purchasing power continues to tumble (File photo)
The impact of repeated economic crisis, the devaluations of the Venezuelan bolivar and the inflationary spirals that have hit the Venezuelan economy for the past three decades have prevented minimum wage from growing enough to improve Venezuelans' income. Its improvement, in real terms, has not been consistent over time and, although the purchasing power of the base salary increased by 14.8 percent in the last decade, the overall balance is negative.
The Central Bank of Venezuela (BCV) and the National Statistics Institute (INE) estimate that the purchasing power of the minimum wage has fallen 37.1 percent since 1980, even though the nominal wage has been increased by more than 20 percent on a yearly basis.
Official data show a 0.6 percent drop in the purchasing power of minimum wage between 2009 and 2010, which is consistent with a fall that has not stopped since 2006.
However, the BCV and the INE estimate that the Venezuelan minimum wage will report a 2.8 percent real increase in 2011, if the inflation rate ends the year at 23 percent.
In 2011, the Executive Office decreed a 26.5 percent nominal increase in minimum wage but it will be implemented in two tranches: a 15 percent increase as of May 1, and then a 10 percent rise as of September 1.
Venezuela's current minimum wage is VEB 1,407.4 (USD 327.30) and it will be increased to VEB 1,548.14 (USD 360.03) as of September 1.
However, Venezuela's minimum wage will tumble 3.7 percent in real terms at the end of the year compared with the minimum wage reported in 2006, the highest in the government of President Hugo Chávez and it will be 35.4 percent lower, in real terms, than the minimum wage in 1980.
Economic research firm Econométrica considers that the fact that the purchasing power of wage in 2011 is slightly above the level reported in 2010 does not necessarily mean that the workers receiving the base salary will have a better year or that wage increases will boost real consumption.
Translated by Gerardo Cárdenas
Suhelis Tejero Puntes