Venezuela’s Maduro Announces 18-Fold Increase to Minimum Wage

(Bloomberg) -- President Nicolas Maduro announced a 18-fold increase in Venezuela's monthly minimum wage to roughly 126 bolivars ($28) by pegging it to the value of half a petro, the government's cryptocurrency.

“You proposed to set the workers' basic minimum wage to half a petro, approved!” said Maduro during a televised speech he gave before an assembly of 10,000 government workers. “And that pushes all salary tables upwards.”

The money to finance the increase, the first in almost a year, comes from “months” of saving tax revenue, which Maduro claimed has been rising substantially. He said he's instructed Vice President Delcy Rodriguez to hold talks with the private sector so that workers see the pay boost this month. The raise also applies to social security pensioners.

After seven years of recession and a long bout of hyperinflation, Venezuela found some economic stability last year following Maduro's decision to unofficially dollarize the economy, ease restrictions on the private sector, and dramatically cut the fiscal deficit partly by keeping pay for government workers in check. The minimum wage was last increased in April 2021 to the equivalent of roughly $2.

Maduro acknowledged that the private sector already pays much higher salaries, so he's proposed feasibility discussions to find a “sustainable” way to continue to increase salaries.

“I think it's something the government can afford,” said Henkel Garcia, director of local financial firm Econometrica. “But if they go back to financing salaries with money printing, the ghost of hyperinflation is likely to come back.”