Venezuela Approves Wage Increases, Price Controls

Venezuelan president Jaime Lusinchi approved a general wage increase in the form of bonuses ranging from 20 to 30 pct and a 120-day price freeze on a basket of basic consumer goods.

Both measures, which take effect on May 1, were approved by the cabinet. They will be announced to the nation by Lusinchi in a televised address tonight but the text of the decrees was released this afternoon.

Businessmen, who met Lusinchi, opposed the pay rise, saying it will fuel inflation. The inflation rate was 11.5 pct in 1986 and private economists say it will be 25 to 30 pct in 1987.

The central bank said first quarter inflation was 6.3 pct.

The wage increase for public and private sector employees will be 30 pct on salaries of up to 2,100 bolivars a month. For salaries of from 2,101 to 6,100 bolivars 25 pct and for those of 6,101 to 20,000 bolivars 20 pct.

The measures were taken in response to a request from the Venezuelan confederation CTV for an increase to offset the loss in the purchasing power of workers’ salaries. It estimated the loss at 40 pct.

The general wage rise is the third granted by Lusinchi since his government took office in February 1984.

The wage increases are a bonus and will not be considered in calculating benefits or severance pay, the decree said.

At the same time, Lusinchi declared a freeze on lay-offs and firings for the next 120 days.

The price freeze applies to a group of 120 foods and other consumer goods declared to be “of primary necessity.”

It does not apply to prices charged by agricultural producers or to goods for which the price is falling.

The decree establishes fines of between 1,000 and 500,000 bolivars for merchants who violate the price control measure.