Some thoughts about the announcement of a “responsible wage increase” for May 1

Published at: 10/04/2026 06:00 PM

In a special message addressed to the nation, the president in charge of the Bolivarian Republic of Venezuela, Delcy Rodríguez Gómez, announced a series of decisions aimed at restoring the country's economic, labor and productive stability.

In that message, he emphasized that a real wage improvement would not arise from the decree, but from the strengthening of the productive apparatus and competitiveness, because “activating economic production tends to improve real wages in the long term, since increased productivity allows companies to generate greater value and pay better remuneration. This process encourages investment and technology, which results in higher-quality and better-paying jobs.”

Productivity determines wages; producing more with fewer resources (better organization, technology) is the basis for sustainable wage increases. By producing higher-value goods , companies can increase the income of their workers; this goes hand in hand with the Foreign Investment in Capital plan: machinery, technology and training increase labor productivity, allowing for better salaries.

The president in charge also explained that it is intended to avoid the risk of possible imbalances: “If wage increases are not supported by higher productivity, they can generate inflationary pressures or unemployment, especially in environments of low productivity.”

In this regard, the president of the National Council for Commerce and Services (CONSECOMERCIO), José Gregorio Rodríguez, during an interview on the Al Aire program broadcast by Venezolana de Televisión (VTV), stated that “we are absolutely in agreement that wage remuneration will be responsible and will be financed. At CONSECOMERCIO, we see that well,” he also mentioned that this union “is committed to the elimination of the unilateral coercive measures imposed by the United States and the European Union (EU) against the Central Bank of Venezuela (BCV)”.

As for non-monetary income (subsidies), he explained that the payment of such income is expressly borne by the State, so new forms of financing must be evaluated for them and thus reduce the current financial burden.

The Mexican economist and expert in monetary policy, Juan Ignacio Gil Antón, agrees with the president's view that “subsidies such as non-monetary income generate economic dependence, distort market prices, discourage productivity and can cause fiscal deficits. At the individual level, they generate dependence, while at the state level, their elimination can increase inflation and promote labor informality by reducing the need for formal employment, they also contribute to the increase of the fiscal deficit, since they can consume a large part of the budget, generating economic imbalances.

In this regard, the president mentioned the expenses generated by the economic war: subsidies to the Local Supply and Production Committees (CLAP), the Social Protein Plan and services such as electricity, water and fuel.

On the need to increase Gross Domestic Product (GDP), President (E) Delcy Rodríguez explained that “it is essential to overcome years of contraction, to diversify the economy beyond oil and to improve the quality of life. Boosting employment generation, increasing private consumption, attracting investment and strengthening resilience in the face of sanctions and volatility, the Venezuelan economy has demonstrated that it has the capacity to adapt to adverse conditions and financial sanctions.”

An increase in GDP seeks to reduce historical dependence on oil revenues, boosting non-extractive sectors such as agriculture, manufacturing, tourism and telecommunications, which creates a more robust economic system. In addition , it creates an ideal scenario for investment, because constant growth improves investor confidence, essential for the rehabilitation of critical infrastructure, including the electricity sector and the hydrocarbon industry.

With regard to pensions, the president in charge Rodríguez stressed that there is a crisis of sustainability and a structural imbalance; since “the number of people receiving pensions exceeds that of the workers who actively contribute to the Venezuelan Social Security Institute (IVSS). This creates an unsustainability of the model. Right now it's not financially viable, as more active workers than the current population would be required to sustain the system.”

The president in charge emphasized that “91% of total pensions are covered by the State, while only 9% come from private contributions. Added to this was the Amor Mayor Mission, which significantly increased the financial burden and that imbalance has been accentuated due to the massive emigration of the labor force.” Hence the need to create an incentive plan for young migrants: “We must build a new State institutionality: a digital, transparent, modern, efficient and professional State. I call on young people to join this effort, and I invite those who migrated in search of better life options.”

The president in charge added that “this structural change requires the talent and global vision of those young people who sought other life options outside of Venezuela. The central focus of this call lies in the need to incorporate the experience and technical capacities of young people who remain far from our borders.”

Referring to the issue of wage increases, Rodríguez stressed that “ wage increases without productive support and often indexed, trigger inflation by injecting inorganic money into the economy without increasing the supply of goods. This dynamic significantly destroys real purchasing power, since the rise in prices quickly exceeds the nominal adjustment received by the worker.”

Regarding the recognition of past errors, the Head of State in charge mentioned the impact of indexation, since “if these adjustments are not supported by a real increase in production, they will generate a vicious circle of costs and prices, accelerating inflation”.

The English economist advisor to Wall Street, Adam Hayes, agrees with this vision and explained that “this scenario is characteristic of economies at war, as it was in countries such as Germany, Italy or Portugal after the Second World War or in the 2008 European financial crisis, in which high inflation or hyperinflation was generated and consumption exceeded national productive capacity, aggravating the crisis. The issuance of money to cover wage increases without a real economic basis causes the currency to depreciate. Workers receive more tickets, but they buy fewer goods and services, deteriorating their standard of living.”

This is why wage increases not supported by productivity increase the amount of money without increasing production, resulting in higher inflation and a net loss of the worker's purchasing power.

The president in charge expressed interest in explaining the need to control inflation to recover the purchasing power of the worker's income; she stressed that it is necessary to “control inflation”, because “since 2018, wages have lost 86.2% of purchasing power, it is the economic priority, due to the social impact it generates: Inflation acts like a tax that confiscates income and affects lower income sectors and pensioners to a greater extent”. The increase in prices without an equivalent increase in income drastically reduces the purchasing power of the average family. It is the priority to recover purchasing power, since rising prices reduce the real value of money and family income.

To control inflation, it is necessary to increase national productivity, encourage economic growth through investment and create jobs that allow for labor balance. During her message, the president in charge emphasized the need to compensate for the damage caused by sanctions and correct internal failures to achieve collective prosperity and consolidate a fair distribution of wealth that would allow the population's standard of living to recover and protect the most vulnerable sectors.

In accordance with the above, Delcy Rodríguez presented a clear plan and a detailed road map: “the recovery of assets and resources blocked abroad will be immediately used to boost the production of the hydrocarbons and mining industry, which allows and guarantees an increase in salaries to our workers, as well as the rehabilitation of basic infrastructure, electricity, water, roads, schools, hospitals; as planned in the two funds that we have created where those resources will go, once the blockade and sanctions cease.”

Mazo News Team