Wages and Salaries in Venezuela Surviving the Kobayashi Maru of Hyperinflation

Good evening, and welcome to the first post in the “Life in Venezuela” series — let me begin this series by addressing the elephant in the room: Our now miserly salaries and how they fare against the out of control hyperinflation we’re going through.

All work dignifies, honest work not only exalts the soul, it also allows us to be a force of good in this world — when we unleash all of our passion into doing something that we love to do we can accomplish great things as a result; even the most menial task can change a stranger’s life for the better. But what happens when your country enters a hyperinflationary spiral and there is no clear way to escape from its clutches? When you have to put your passions and dreams aside in order to survive against an unrelenting storm? This is our Kobayashi Maru.

It’s no secret that our economy is in shambles, it is the ultimate consequence of a myriad of bad managerial choices, excessive spending, and a complete lack of foresight on those responsible with safeguarding the economy — the dramatic drop in oil prices was just the icing on the cake, it all coalesced into a perfect storm. The rapid dilution of the Venezuelan Bolivar into worthlessness has made the situation even more catastrophic to each and every one of us living in this country; with each passing week, our already pulverized acquisitive power further evaporates, things like soft drinks, cookies, and ice cream have rapidly become luxury items only a few can comfortably afford.

What’s that? You want to raise the minimum wage so that people recover some of its lost acquisitive power?  [Laughs in Spanish] 

Raising the minimum wage without taking the necessary measures to repair our broken economy is like pissing in the ocean. Our Central Bank hasn’t published any official statistics since 2014, as a result, I am forced to dig and use a few “extra-official” numbers for this post. According to this 2015 news article, 75% of the Venezuelan work force earns the minimum wage. I have prepared the following chart that illustrates the futility of raising the minimum wage using my amazing PowerPoint skills along with my complete lack of formal education in the field of economy; this is a cycle that this country has been stuck with even since before I was born, a wheel that is now spinning faster than ever before:

Original Chart, donut steel.

If you want a simple glimpse of how futile this has been to quell the effects of hyperinflation just take a look at the evolution of the minimum wage during the past year.

Between May 01, 2016 and July 01, 2017 the Minimum Wage in Venezuela was raised six times;  it did done nothing but perpetuate the above-mentioned cycle:

I. May 01, 2016: a 30% raise –  Bs.15,051.00
II. September 01, 2016: raised by 50% – Bs. 22,577.00
III. November 01, 2016: 20% Raise – 27,092,00.  The “Alimentary Bonus” was raised 50% on that opportunity to Bs. 63,720. The total minimum integral income was at Bs. 90,812
IV. Jan 04, 2017: 50% raise of both minimum wage and pensions. Min wage was at Bs. 40,638.00
V. May 01, 2017: 60% Raise of minimum wage, pensions, and all work tables in public administration. Min wage was at Bs. 65,021.00
VI. July 01, 2017: Another 50% raise of minimum wage and pensions, Minimum wage became Bs.97,531.00 (this is the current amount)

So as of this moment, the current minimum integral income in Venezuela can be broken down as follows:
Minimum Wage (per month): Bs.97,531.00
Food Bonus*:  17 Tax Units per work day (A Tax Unit is currently Bs. 300,00 x 17 = Bs. 5.100,00 (per day) x 30 days = Bs. 153,000.00 
Total Minimum Integral Income: Bs. 250,531  — which translates to approximately Bs. 8,351 per day.

*Alimentary Bonus is essentially a glorified food stamp mechanism. Under normal circumstances these bonus can only be used to purchase food and a few other things through the use of tickets or a special debit card destined for such purpose. As a “Means to fight the economic war” This Bonus is now being paid in cash alongside your salary in some workplaces (most notably in the public sector) – the practice of trading these bonus tickets/currency for actual cash became a widespread phenomenon (someone would swipe your “cesta-ticket” card or trade physical tickets for cash, charging you a percentage as commission of course, no one’s gonna do it for free), many men and women had no choice but to do this just to get a bit more of cash, authorities have since then cracked down on this hard.

If we translate this to the current USD Black Market rates (Bs. 18,470.45 per USD), The large majority of Venezuelans earn only  $5.28 per month (or $13.56 if you include the food bonus). For the sake of disclosure, I earn in average between 150,000 to 250,000 monthly ($8.12 – $13.54) by doing freelance work (the flexible schedule I currently enjoy allows me to work on personal long-term projects, which is a nice plus).

Now let’s compare the prices of a few miscellaneous items and how many days of work you need to spend if you want to buy them:

A receipt dated July 18, 2017 for two packs of Cefadroxil – a broad spectrum antibiotic, for a total of Bs. 92,000.00. these two packs eat your minimum wage of Bs. 97,531.00. (This image was obtained from Twitter, I took the liberty of censoring the poster’s name and ID number)

Flips, a guilty pleasure of yours truly that I no longer regularly purchase due to obvious reasons (This cereal is similar to Kellogg’s Krave). This picture was taken on early August 2017. Bs. 10,411.92 for a single box, you need 1.2 days worth of minimum wage to purchase it.

One Kilogram of “Las Llaves” clothes detergent. Bs. 12,950.00 for a single bag.  1.55 days worth of minimum wage to purchase it.

Now let’s check a simple house appliance that we all take for granted, nothing too fancy, let’s say…a Blender.

Not even a month’s worth of minimum wage is enough to buy this ordinary blender.

Screw it, let’s go crazy! Let’s buy a Nintendo Switch right now!

Oh…

The Household Food Basket (Canasta Básica Familiar) is a type of metric used by Cendas-FMV to determine the basic average expenses required to properly feed a family. According to their July 2017 report, You need Bs 1.443.634,25 to cover the basic monthly food expenses for a family of five. Now you see the futility of it all, everyone here works just to barely feed themselves and their family; for the large majority of the populace there is no room for any superfluous expense, no movie nights, no vacations, nada. A new school year is about to begin in this country, preliminary reports say that you need approximately a million bolivares to send a kid to school (uniforms, school supplies such as pencils, books, ruler, compass etc.)

So, as it stands, no matter how much you love your work, no matter how good you’re at it, the reward for your month of hard labor is considered pocket change in the outside world. There comes a point when you need to ask yourself if all that hard work, effort, and all the sacrifices you make on a daily basis are worth $5.28-13.53 a month. You’re no longer working to have a good quality of life and to be able to indulge yourself in a few well-deserved treats, you’re merely working to survive.

This is the no-win scenario this article alludes to on its preface, we are forced to constantly “redefine the problem” like Captain Kirk himself did if we want to weather the storm and make it through the end of the month.

The broken economy and draconian controls that have been imposed have paved the way to the lucrative rise of “Bachaqueros” (Food Smugglers/Re-sellers) who avail themselves of the shortage of basic products such as toiletries, flour, oil, butter, etc. to sell them at a much higher price. (It’s your call, either you fork the dosh or waste countless hours waiting in line in a specific day of the week in the hopes to obtaining some of them).

Countless cases of gasoline smuggling in the border have been reported over the years, we do have the world’s cheapest gas prices, which is itself a cruel joke to us given that you now need to save for centuries if you want to purchase a regular vehicle, you’ll be long dead before you’ve saved enough to put down the initial payments.

Apparently, Venezuelans farming gold in Runescape is a thing nowadays, and people thought I was crazy when I said that the WoW Gold > Venezuelan Bolivar.

Even though I am seriously considering retiring from WoW because I am hella burnt out (Thanks, Legion RNG!) here’s another example: I sold four items on the Auction House on Sept 03, nothing out of the ordinary (Two pieces of gear and two neck enchants, another two enchants didn’t sell), and I made 140,898 gold, this translates to ~$13.80 using the current WoW token rates.

Many men and women are now forced to work two, three or even more jobs at once just to get a bit more money to support their families; young women now see prostitution as a lucrative endeavor, with some having no choice but to work on that field to cover the increasing costs of their college education. Taxis make way more than a teacher or a doctor. Hell, pretty much everyone makes more via freelancing these days vs being a wagecuck 24/7 (Yes, there are certain exceptions).

Everyone in this country has come up with their own solution to this Hyperinflation Kobayashi Maru. Ultimately, we have to stop believing in no-win scenarios and employ that remarkable sense of creativity and adaptation that we’re known for as the cornerstone of our survival and future.

Judau Astha knew what was up thirty years ago:

Comments? Questions? Criticisms? feel free to leave them bellow or contact me through other means.