2 Min Read
CARACAS, April 30 (Reuters) - Venezuela will raise the minimum wage to mark May Day, a tradition in the OPEC nation, despite failing to tame Latin America's highest inflation in an economy driven by strong oil prices and government spending.
Economy Minister Rodrigo Cabezas said on Monday the president would formalize the decision as a way of celebrating May 1, a national holiday in Venezuela and the date leftists around the world rally for labor rights.
"We will be able to say we are No. 1, we will have the highest minimum salary in South America in dollar terms," Cabezas said in a statement.
The majority poor see Chavez as their champion and such increases have helped reinforce his popularity in the past.
At the official fixed exchange rate of 2,150 bolivars to the dollar, Venezuela ranks high in the region for its minimum salary of $238 per month.
But with much of the real economy based on a parallel market, where the currency is worth almost half as much, the country could also be considered behind many others.
Cabezas did not specify how large the wage increase would be. It was also not clear if his comparisons with other nations included a system involving coupons that are also received by some workers and can be used to buy food and other products.
Economists worry over wage hikes because they believe labor costs have dragged on the productive sector and that Venezuelans typically consume rather than save increases, driving inflation.
Cabezas's biggest challenge is to control runaway consumer price rises.
In March, prices fell but economists estimate they have risen again this month, and most believe the government will fail to meet its target of 12 percent inflation for the year.