In Venezuela, inflation and dollarisation deepen schism between private and state employees

Venezuela's gradual shift to the US dollar is widening inequality between its public and private sector workers, as those paid in foreign currency enjoy greater purchasing power while others face prohibitive prices, employees, pensioners and economists said.

Use of foreign currency has increased in the South American country since the government of President Nicolas Maduro relaxed economic controls in 2019, helping some businesses, but inflation of the bolivar, the official national currency, remains at 222% and recovery has been uneven.

State employees, whose salaries are paid mainly in bolivars and only sporadically increased, are the most affected. In the private sector, at least 63% of salaries are paid in dollars, according to the Venezuelan Finance Observatory, an independent economic research firm.

"We have been suffering from low wages for some time," said Seyyer Chacon, a 43-year-old nurse at a public hospital in eastern San Cristobal.

"I don't earn enough to change the oil in my car," said Chacon, who earns 250 bolivars a month, equivalent to about $55.

The low wages have led public employees and retirees in the OPEC member nation to hold weekly protests demanding greater pay outside of labour ministry buildings in various cities.

In the first quarter of the year there were 700 worker protests, 27% more than in the same period of 2021, according to the non-governmental Venezuelan Observatory of Social Conflict.

Specialists explained that the hyperinflation responsible for today's large transactions in dollars allowed a slight recovery in some activities but also deepened the differences between private sector and public sector salaries.

Nevertheless, the public sector does not generate enough foreign currency in order to pay higher salaries to its close to 2 million employees.

A limited government response has pushed some workers to leave their jobs altogether, said three union members who asked not to be named for fear of job security.

Staff shortages have affected the provision of basic services and the operations of state companies, the union sources added, including state-run oil company PDVSA, already battered by years of disinvestment, mismanagement, and US sanctions.

Venezuela's labour ministry did not immediately respond to a request for comment. The country's vice president, Delcy Rodriguez, said this week that when the country has more incomes, the well-being of workers will improve.

In Venezuela, public sector employees earn the equivalent of between $30 and $100 a month, according to the latest government salary revisions.

Meanwhile, private sector workers earn an average of between $106 dollars and $247 dollars per month, the Venezuelan Finance Observatory calculated in April.

Hernando Gonzalez, 23, has been working for two months as a waiter in coastal Maracaibo, where he earns a mixed salary of dollars and bolivars worth about $100.

Even his partial payment in foreign currency is not enough to ensure financial security.

"On weekends I work as a waiter at events, in bars of some nightclub in the city and other different jobs that continue to complement this job in order for me to survive the economic crisis," Gonzalez explained.

Meanwhile, pensioners receive the bolivar equivalent of a minimum wage – about $30 dollars a month.

"I buy these candies and sell them on the street in order to survive," said 67-year-old pensioner Alis Moreno while protesting with other retirees outside the labour ministry in Caracas.

Selling candies in the subway Moreno is able to make ends meet, earning between $2.50 and $5 per day. Although he explained it is not enough to fulfil his medical treatment.

"The social security pension is not enough for me, which by the way is not being given to me; I contributed to social security for 35 years."