Government of Venezuela goes back and will not link minimum wage to cryptocurrency Petro

The government of Venezuela went back and decided not to peg the value of the new minimum wage to the state cryptocurrency Petro. The information was disclosed in a publication of the Official Gazette, the country’s Official Gazette, on March 15. According to issue 6,691 of the Gaceta, the minimum wage was confirmed at 130 bolivars, four official bolivars than the previously predicted amount. However, the law states that wages will be paid in fiat, not Petro. This contradicts statements that Venezuelan President Nicolas Maduro made earlier this month, when he claimed the minimum wage would be raised to half a Petro. Maduro also said that the salary would be pegged to the price of cryptocurrency – which did not happen.

Reference and not ruler

In fact, there is only one mention of the state cryptocurrency in the text, which states that the salary is worth around 0.5 Petro. However, cryptocurrency here is used only as a reference unit, not as an official unit of account. That is, official salaries will continue to be counted in bolivars, not Petro. In practice, the price that will matter will continue to be that of the devalued fiat currency.

“The mandatory monthly minimum wage is increased throughout the entire territory of the Bolivarian Republic of Venezuela, for workers who provide services in the public and private sectors, establishing the amount of one hundred and thirty bolivars (130 VES) per month,” says Gaceta.

In Maduro’s speech, it was understood that half of the salary would vary according to the price of the Petro, but that was not what happened. The salary will continue to be fixed in bolivars and it is actually the price of the Petro that will vary. This means that the 0.5 Petro that corresponds to 130 bolivars today could be more or less. If the Petro loses value against the currency, the value in bolivars will serve as the unit of account.

reactions and explanations

The lack of clarity with the wage anchor in the Petro was a bucket of cold water in the country. According to Pedru Eusse, general coordinator of the National Front for Workers’ Struggle, the news was classified as “an immense disappointment”. For Eusse, the government’s new position represents a loss of wages. The expectation was that wages could rise in line with the appreciation of the cryptocurrency. Instead of a salary that fluctuates, Eusse said there will be a price freeze in disguise.

“We were frustrated to find that there is no such peg for the Petro, because this is not reflected in the official gazette. They promised they would anchor the salary at 0.5 Petro, which is an accounting measure that increases with oil prices. What we see now is a salary frozen at $30.”

$30 is the dollar amount of the new minimum wage based on the current rate. It should be noted that Venezuela carried out an economic reform that cut three zeros from the bolivar, whose inflation reached over 1,000,000% in the past. However, Franklin Rondon, representative of the National Assembly of Venezuela, defended the government. He reiterated that the Petro was only used as a unit of account, and that this does not mean that the minimum wage will increase with each appreciation of the cryptocurrency. Also Read: Does Volatility Really Matter? Read also: MATIC price presents an entry trigger for traders Read also: PF arrests couple who promised income with cryptocurrency trading robot