The decline in the purchasing power of formal workers’ salaries is the primary characteristic of the Venezuelan labor market, with income levels significantly affected by rapid inflation since 2024. Consequently, earnings are insufficient to cover the basic food basket.
This is confirmed by the “Venezuela Economic Overview. April 2025,” prepared by the Economic and Social Research Institute (IIES) of the Andrés Bello Catholic University (UCAB), which also warns that the minimum wage has lost its significance.
The loss of importance is greatly contributed to by the replacement of the minimum wage with discretionary bonus policies—especially the economic war bonus—which provide greater control and lower labor costs.
More Bonuses, Less Salary
UCAB analysts argue that due to Chavismo’s policies, the minimum wage has become less relevant as an indicator, particularly for public sector employees and pensioners, whose income is mostly composed of bonuses, while the actual salary constitutes only a small percentage of that total.
The report presents average salary data for the manufacturing, commercial, and service sectors, indicating that only managers earn enough to exceed the cost of the basic family basket.
This precarious income is a fundamental cause of informality, poverty, and mass emigration. While discussions about adjusting the minimum wage continue, the prospects for significant change in 2025 are limited due to financial restrictions.
Deterioration of Salary Purchasing Power
The acceleration of inflation since the third quarter of 2024 has worsened the inadequacy of income to cover the basic food basket since 2015. The decline in real wages affects both the formal sector—equivalent to 53% of workers—and the public sector, where fiscal adjustments have led to reductions in real remuneration.
The legal minimum wage has lost all meaning as an indicator for calculating labor benefits due to state policies that substitute salaries for discretionary bonuses. This grants Maduro’s regime greater social control while reducing labor and social security costs.
As of March 2025, minimum salary constituted only 1.6% of an average public employee’s monthly income—Bs. 8,070 equivalent to USD 115—while the remaining 98.4% came from bonuses (24.8% Cestaticket, 73.6% economic war bonus).
The Economic War Bonus
The so-called economic war bonus has gained relevance over salaries, especially for public sector workers and pensioners.
This assignment, unlike the minimum wage, has remained constant in nominal terms and is indexed to changes in the official exchange rate.
The UCAB report highlights that the private sector employs 28% of the workforce, while the public sector represents 25%, according to preliminary ENCOVI 2024 figures.
Remunerations in the private sector are higher than those in the public sector but vary significantly by sector, activity, and function. Even with higher salaries, the average remuneration in the private sector is still insufficient to purchase the basic food basket.
Figures from Conindustria indicate that by the end of 2024, the manufacturing sector faced the following situation:
- Worker: USD 230 per month (18% increase vs 2023).
- Professionals and technicians: USD 460.
- Managerial staff: USD 1,048.
Meanwhile, the commercial and service sectors, according to estimates from the Venezuelan Finance Observatory (OVF, 2024), in the metropolitan area of Caracas were as follows:
- Average remuneration: USD 241 per month (19% increase vs the same quarter last year).
- Managers: USD 512.
- Professionals and technicians: USD 338.
- Workers: USD 222.
Spatial Disparity in Income
The UCAB report warns of great regional disparities in income and notes that the average remuneration in Caracas (USD 110) is more than double the national average, while other regions like Zulia (USD 114), Nueva Esparta (USD 202), and Anzoátegui (USD 93) show significant variations.
It’s worth noting the discrepancy in average figures for Caracas (USD 110) versus the average for the commercial and service sector in Caracas (USD 241) reported by the OVF.
The report indicates that the commercial and service sector experienced increases greater than 200% in national currency over the last four years, while the industrial sector saw increases ranging from 65% to 95%.
Additionally, it states that remuneration levels in the industrial sector are higher than those reported by the OFV for commerce and services in Caracas.
Insufficiency of Income Vs. Basic Basket
UCAB analysts mention that general remuneration levels for professionals, technicians, and workers are below the cost of the basic family food basket according to CEDICE and CENDAS-FVM indicators.
CEDICE: USD 663
CENDAS-FVM: USD 498
Only managers in the industrial, commercial, and service sectors earn enough to acquire the basic family basket and maintain a decent standard of living (according to the ILO).
Non-Monetary Compensation Mechanisms
The report indicates that private sector companies have other non-monetary compensation mechanisms that complement salaries, aimed at retaining scarce, qualified human capital.
They emphasize that the general precariousness of labor income explains informality, high poverty levels, and massive emigration.
Tripartite Discussions on Minimum Wage
The UCAB report also points out that tripartite meetings to discuss minimum wage adjustments have resumed.
The Venezuelan Trade Union Network proposes raising the minimum wage to USD 200.
The methodology for annual calculation and adjustment should be agreed upon according to conventions and ILO recommendations.
The ILO has urged the government to adhere to agreements for social dialogue.
Outlook for 2025
The report is skeptical about significant salary changes in 2025.
This is due to greater financial restrictions for both the government and the private sector caused by oil sanctions and the expected decline in domestic economic activity.
The report cites the government’s recent measure to reduce daily work hours to half a regular shift and the work week to three days for six weeks (starting March 27).
This measure is justified by the regime as a necessity for energy savings due to climate changes, but it likely stems from the need to cut public spending because of financial constraints.
This reduction does not imply adjustments in nominal remuneration but leaves public employees with more time available for informal sector activities.
The situation of the Venezuelan labor market and remuneration is critical, marked by insufficient real incomes that do not cover basic needs for the majority of workers.
The regime’s policy has prioritized bonuses over salaries, particularly in the public sector, impacting social security and social control.
Despite generally higher salaries in the private sector, precariousness remains widespread outside managerial levels. Short-term prospects for a significant improvement in labor income are bleak due to economic restrictions.