Venezuela: Salary Increase Leaves Businesses With Little Options

The salary increases in Venezuela have left a number of businesses with little options. The South American nation was once considered one of the richest countries in Latin America but that has changed since 2013.

Estimates say the latest salary increase has forced around 40 percent of the businesses to close. The businesses have not decided to completely shut down but experts say many of them will likely choose this route.

The most recent salary increase of 3,500 percent could be the end for many businesses in the country. A lot of them were already struggling to keep up with the salary increases introduced by the government earlier this year.

In the last two years alone, the government has announced over five salary increases. The increases fall very short of what Venezuelans need to buy basic products such as food and medicines. The constant increases have forced businesses to partially shut down or let go of a high percentage of its staff members.

The Venezuelan government brought its new economic plan just a few weeks ago. The changes include the removal of five zeros off the currency and another salary increase. The changes have also brought new bills and coins.

The new changes haven’t stopped the currency from losing value against the dollar and other foreign currencies. Experts say the changes don’t actually solve the main problem that Venezuela has.

The president of CONSECOMERCIO said the decisions are forcing businesses to say that they can’t keep up. Around 40 percent of businesses are said to be closed at the moment. Just a few days ago, news began surfacing that McDonald’s had decided to close at least seven locations in the country.

The news were not surprising since several companies have decided to exit the country or partially suspend operations following new measures or changes by the government. The salary increase is a big problem but there is one more thing that the government does that is also affecting businesses around the country.

The government has forced businesses to sell at lower prices and set limits on what they can actually earn from a sale. In recent weeks, several managers of supermarkets and other businesses have been arrested over prices. The National Assembly says the inflation for the month of August was 200 percent. The IMF estimates that inflation could reach a whopping one million in the next few months.