An article in the Economist about Venezuela stated: "The economy is in such an appalling state, and inflation is so high, that Venezuelans greeted a rise of 60% in the minimum wage on May 1st with shrugs of 'so what?'." Source: "It's Up to the Army," Economist , May 6, 2017. What would be a reason why the people of Venezuela would shrug off a rise in the minimum wage of 60 percent?

Question

Natalya Hines

Business

16 April, 19:24

An article in the Economist about Venezuela stated: "The economy is in such an appalling state, and inflation is so high, that Venezuelans greeted a rise of 60% in the minimum wage on May 1st with shrugs of 'so what?'." Source: "It's Up to the Army," Economist , May 6, 2017. What would be a reason why the people of Venezuela would shrug off a rise in the minimum wage of 60 percent?

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Answers (1)

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Zaire Ayers · Answer 1

The very rise in inflation.

Explanation:

Inflation in Venezuela is very high. In this sense, the population would avoid the 60% increase in the minimum wage because this value would not replace inflation. In other words, inflation is rapidly eroding the Venezuelan's salary and the replacement is well below the inflation value. Rising wages, on the other hand, further contribute to rising inflation, as rising wages raise demand and raise prices, worsening the situation, leading the population to avoid rising.