Maduro’s economic program and the deterioration of the real wage
By Omar Vazquez Heredia | Original text in Spanish: Aporrea, 22/02/2019. Photos by Oswaldo Pacheco Guzmán
On August 17, 2018, Nicolás Maduro announced a set of state measures included in the so-called Recovery, Growth and Economic Prosperity Program. Within this framework, he decreed an increase that brought the minimum wage to Bs.S. 1,800, and promised its anchorage to the so-called Petro. It’s important to review the negative consequences of these economic measures for the working people at a time when, faced with the intervention offensive by the government of the United States and the right-wing opposition, Nicolás Maduro’s government hypocritically asks for the support of the working class.
These last two state measures were aimed at trying to disguise the evident anti-worker and anti-popular character of an economic package that implied an increase in the value added tax (VAT); the exoneration of income tax for oil transnationals and of tariff rates for the importing bourgeoisie; the increase in the tariffs of public services; the announcement of an increase in the price of gasoline; the financing of partial payroll payments for a sector of private business; the establishment of the elimination of the fiscal deficit as a central objective; and the imposition of wage tables to cut the integral salary of State workers by eliminating a set of labor conquests obtained through their collective hiring.
After six months, an analysis of the balance sheet and results of Nicolás Maduro’s anti-worker and anti-popular package displays the correct characterization made by the Socialism and Liberty Party (PSL) and other organizations of the left opposition: the impoverishment of the purchasing power of working class salaries continued to deepen. There was neither recovery, nor growth, nor prosperity; it was yet another deception by a government that is subordinated to the needs of transnational and local capital, prioritizes the payment of its foreign debt, hands over common goods such as the Orinoco Mining Arc, offers overexploitation wages to its work force, assigns oil fields to foreign and local oil companies through contracts with PDVSA, and has partially privatized state companies in association with transnational and local capital.
In the last six months, the minimum wage has suffered an enormous decrease with respect to the official exchange rate. In other words, the devaluation of the official dollar imposed by the government of Nicolás Maduro was much greater than the increase in the minimum wage. On August 17, 2018, the minimum wage was Bs.S 1,800, and the official dollar was Bs.S 60, so a worker earned 30 official dollars per month. On February 20, 2019, the minimum wage was Bs.S 18,000 and the official dollar is Bs.S 3,298.39, so a worker earns only 5.45 official dollars per month. In percentage terms, in the last six months, the government raised the minimum wage by 1.009% and the official exchange rate by 5.397,31%. This gap between the government’s minimum wage increases and the official exchange rate shows that it is the working class who pays for the attempt at macroeconomic adjustment implied by this anti-worker and anti-popular package.
The government increased the wages of its workers by 1,000%, but now for every dollar it obtains from oil income it receives 3,238.39 Bolivares more ––a greater amount of Bolivares to finance the repressive apparatus and the corruption among the government’s hierarchs. Now, families require many more minimum wages to acquire the basic monthly basket. According to Cendas, the basic monthly basket for August 2018 cost Bs.S 20,817 while the minimum wage was set at Bs.S 1,800. In January 2019, the monthly basic basket cost Bs.S 907,289.28, and the current minimum wage is Bs.S 18,000. Therefore, significant price increases that occurred during the course of February notwithstanding, a family requires at least 50 minimum monthly salaries to acquire the goods and services necessary to live for one month. It is obvious that the purchasing power of the salary continues to deteriorate despite the government’s nominal increases.
Furthermore, Nicolás Maduro lied: the minimum wage is not anchored to the Petro electronic coin. In reality, the government created a dual Petro quotation. On the one hand, the unit of account that refers to the minimum wage is half a petro, that is, Bs.S 36,000. On the other hand, a different unit of account is anchored to the price of the official dollar, which is at 60 dollars per Petro. As the official dollar price for February 20, 2019 was established at Bs.S 3,298.39, that Petro is traded at Bs.S 197,903.4. If there were only one Petro, the minimum wage would already be Bs.S 98.951. Why are there two Petros then, or a dual Petro? To avoid salary increases tied to increases in the Petro rate, as a consequence of the devaluation of the Bolivar at the official currency exchange rate. The government can devalue the Bolivar without increasing the minimum wage, and create a Petro that increases its price with the devaluation of the Bolivar as a way to reduce the demand for dollars in the exchange market, by trying to offer a greater margin of profitability for those large holders of Bolivares (the capitalists) who buy that type of Petro. However, the instability and distrust in the government, its arbitrariness in fixing the value of the official dollar and therefore of that Petro, and the accelerated growth of the dollar in the parallel market, caused the failure of this economic policy.
This balance sheet only reinforces the need to continue organizing and promoting the autonomous mobilization of the working people against Maduro’s anti-worker and anti-popular package. The working class must continue fighting for wages that amount to the basic basket and are indexed to inflation in order to defend the value of its labor force (its only commodity), and must also demand the fulfillment of its collective contracts, as well as constitute itself with political independence as an alternative in the dispute for power, autonomously organizing protest actions. This, without subordinating itself to the interventionist strategy of the right-wing opposition led by Juan Guaidó and the National Assembly, directed by the government of the United States, which only aims to achieve the backing of the country’s high military hierarchs so that they break with Nicolás Maduro through a pronouncement or military action.
This autonomous mobilization of the working people for concrete demands must include the conquest of a popular economic plan that implies the suspension of the foreign debt payments, the repatriation of the millions of dollars stolen and taken abroad by high bureaucrats and businessmen, the reduction and elimination of the repressive and sumptuary spending of the State, a reform to establish a progressive tax system, and the complete nationalization of the oil industry, so that with the recovery and reorientation of those economic resources we might develop a national plan of massive importation of goods for productive consumption and final consumption that supplies the internal market.