Venezuela Crisis hikes minimum wages by 50 percent to combat rising inflation

Economy - Himanshu Gill - Jan 10,2017

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venezuela crisis hikes minimum wages by 50 percent to combat rising inflation

Venezuela’s government announced a 50 percent hike in the minimum wages and pensions, in its latest efforts to cope with the country’s inflation crisis.

This will be the fifth minimum wage increase in last one year, adding up to a cumulative 322 percent. The new minimum monthly salary is set to go into effect on January 15 and will now be 40,683 bolivars or around $60 as per the official exchange rate set under state’s strict currency rules, or $12 in the black market.

President Nicolas Maduro said that the step will protect jobs and save incomes, but critics have warned that it may worsen the situation in Venezuela. The International Monetary Fund says inflation will reach 1,600 percent this year and 2,880 percent by the next year.

The opposition has accused Maduro of mismanaging oil-rich Venezuela's economy. However, Maduro focuses that he is facing an economic war by political foes and hostile businessmen.

The government has forced increasingly extreme measures to try and combat the economic crisis in the country, which has left masses with severe shortages of food and medicines.

Venezuela’s plunging currency and ever increasing inflation has made its banknotes virtually worthless. In December, Maduro also announced to print new notes in far higher denominations to replace the old ones, including a 20,000 bolivar note (200 times bigger than the largest note previously in circulation).

The country was hit by low oil prices in 2014, its key export. It has also faced severe shortages of food, medicine and basic goods and an inflation rate which is highest in the world.

Opponents accuse the president's incompetence and 17 years of failed socialist policies behind the crisis. They call for Maduro’s removal, who was elected in 2013 for a six-year term after the death of his predecessor Hugo Chavez.