This weekend Venezuelan President Nicolás Maduro announced a 30 percent increase in the minimum wage. This marks the twelfth increase since he took over from Hugo Chavez in 2013, and comes on the heels of a 25 percent increase March 1. The minimum wage is now up to roughly $13.50 at the black market inflation rate. That’s not an hourly minimum, but $13.50 per month.
Due to disastrous economic policies and the recent fall in the price of oil, Venezuela’s economy, already teetering on the brink of a crisis, has plunged into full-fledged collapse in recent weeks. Venezuelans face dire shortages in everything from food to soap to toilet paper. Rampant inflation makes it hard to find the basic necessities they need to survive even when they spend hours in lines hoping to buy them.
Venezuela, once one of the richer countries in the Americas due to its oil, has had the ignominy of topping the Misery Index, a project from Cato’s Steve Hanke which scores countries on unemployment, inflation, lending rate and change in real GDP per capita.
There does not seem to be an end in sight to these troubles. The International Monetary Fund (IMF) forecasts an economic contraction of eight percent this year after the economy shrank 10 percent last year. Inflation shows no signs of abating either, as the IMF expects it to surge even further to 720 percent this year.
Instead of pursuing economic liberalization or structural reform, Maduro is doubling down on the same kinds of government interventions and price controls that led to the country’s current predicament.
Without appearing to recognize the irony of his statement, Venezuelan President Maduro lauded the minimum wage increase in an address on state television, saying “Only a president like Nicolas Maduro, son of Hugo Chavez (could achieve this).”
Aggrieved Venezuelans might agree, though not in the way Maduro would hope. The Washington Post reported that yesterday the opposition turned in a petition with 1.8 million signatures seeking a nationwide referendum to remove him from office, in what would be a final repudiation of the economic policies of his administration.