Venezuela to Raise Minimum Wage 18-Fold By Pegging it to Half a Petro

The South American nation has seen economic struggles for years, whether prompted by hyperinflation or simply low salaries. Now, though, the president – Nicolas Maduro – announced a positive development for the locals in the form of an 18-fold increase in the monthly minimum wage.

18x Salary Increase Due to the Petro

Long before El Salvador legalized bitcoin, Venezuela already had a compelling history with the cryptocurrency industry. At one point, it was among the most advanced nations in terms of digital asset adoption and even dabbled with starting to receive such payments back in 2019.

While those plans are yet to become official, the country actually created its own cryptocurrency – Petro (PTR) – which the authorities claimed was backed by Venezuela’s oil, natural gas, and mineral reserves.

Although the asset has so far failed to gain any real traction, besides being airdropped to doctors amid the COVID-19 pandemic, President Maduro attributed the upcoming 18x wage increase to it.

During a televised speech he gave before 10,000 government workers, the nation’s leader said the minimum monthly salary will become 126 bolivars ($28), which has become possible by pegging it to the value of half a petro.

“You proposed to set the workers’ basic minimum wage to half a petro, approved! And that pushes all salary tables upwards.” – he said.

President Maduro

The raise will also apply to social security pensioners, and Maduro said he had instructed Vice President Delcy Rodriguez to implement the pay increase this month.

Has The Bolivar Stopped Plummeting?

Venezuela’s national currency lost more than 90% of its value against other fiat currencies in the past several years as hyperinflation officially began in 2016 and was labeled the worst such case in recent history. In some extreme instances, the inflation numbers went above 1,000,000%, like in 2018.

This prompted Maduro’s administration to initiate a new monetary reform by revaluing the bolivar at a ratio of 1 to 1,000. Thus, they created a new currency – the sovereign bolivar – with the new denomination of 2, 5, 10, 20, 50, 100, 200, and 500 banknotes.

While the new currency might not have been the success that Maduro envisioned, the rising oil prices (Venezuela has the most oil reserves in the world) and the increasing exports of rum and cocoa – have helped the bolivar stabilize lately.

Nevertheless, a recent study showed that at least half of all payments in the country’s capital Caracas were still made using US dollars.