Venezuelan socialist Maduro’s latest populist ploy for fixing systemic economic woes: Raising the minimum wage.
posted at 5:21 pm on April 30, 2014 by Erika Johnsen
The protests against runaway inflation, political corruption, rampant crime, and mass shortages of even the most basic foodstuffs have ranged from roiling to simmering for going on three months now as the government of Hugo-Chavez-successor Nicolas Maduro has been flailing around in its injudicious attempts to address Venezuela’s many economic and social crises. In the past few weeks particularly the regime has been trying to tamp down on the unrest, and last week, the country’s Supreme Court imposed new regulations limiting citizens’ right to protest with some trumped-up permitting process:
Demonstrators carried signs on Saturday blasting a Supreme Court ruling this week that gives police the right to disperse protests that don’t have a permit. Opponents say the ruling is the latest attempt by the socialist government to muzzle dissent amid widespread discontent with 57 percent inflation and record shortages.
Protests that the government blames for more than 40 deaths have lost some of their momentum in recent weeks in the face of a government crackdown and an attempt at dialogue by some members of the opposition.
Perhaps even Maduro realizes, however, that merely further legitimizing the repression of what we in America would refer to as inalienable First-Amendment freedoms isn’t actually going to do anything to address Venezuelans’ motivations for protesting in the first place, and that maybe he should do something about the country’s economic meltdown. …But that’s about where the logic stops. Via the BBC:
Venezuela will raise the minimum wage by 30% on 1 May, President Nicolas Maduro has announced. …
The increase is below the level of annual inflation, which official figures put at 56.2% for 2013. …
In an address to workers from different key sectors, Mr Maduro said he hoped that “by the end of the year, we will be choking off and overcoming (…) inflation”. …
He said that on May Day, the minimum wage would go up from 3,270 bolivars ($520; £310) to 4,252 bolivars.
Critics say that while the new minimum salary amounts to $675 at the government-set exchange rate, it adds up to little over $67 at the black market rate.
This is after the government raised the minimum wage by 10 percent just a few months ago, by the way. It’s just so strange that, despite the state’s tightly-held deathgrip over so many aspects of the economy, nothing they do and no threats they make seem to do much of anything to bring supply and demand into harmony, nor to stop the greedy business executives Maduro is always blaming for waging an “economic war” against the regime via price-gouging, speculating, and hoarding, isn’t it? I mean, take pasta, for instance: The International Pasta Association ranks Venezuela as the world’s second-biggest consumer of that Italian staple, and yet, via the Financial Times:
But Venezuela’s foreign exchange controls have forced Empresas Polar, a giant food producer and the country’s largest private company, to close down its pasta production plant.
The company said its factory in the city of Maracaibo was “obliged to temporarily suspend operations due to a delay in currency payments.”
This from Polar’s statement:
The situation at Pasta Primor and at other Empresas Polar operations is known to the national authorities, with whom we have conducted numerous communications and meetings, in which they have been alerted in a timely and responsible manner about the risks of delaying the release of foreign currency to pay our debts with our suppliers, and the effects on the production of an item that is part of the basic diet of Venezuelans.
The closure will put more pressure on Venezuela’s scarcity index, which showed in January that one in four basic goods were not available from the country’s shops. (The central bank has stopped publishing that piece of data, so it is hard to gauge the current level of shortages.) …
Polar is far from alone. The government’s foreign exchange arrears to companies – dollars it has promised but failed to deliver for authorised imports and other payments – were almost $28bn at the end of last year according to the latest available data, says Ecoanalítica, a respected Caracas consultancy.
Hmm — a troubled political faction using a minimum wage hike to appease constituents without actually doing much else to substantively address the underlying problems bogging down the economy? I feel like I’ve heard this one before…
Breaking on Hot Air