Venezuela's minimum wage has risen 18 times, tied to the Petro cryptocurrency

Venezuelan President Nicolas Maduro raised the country's minimum wage in a speech in front of 10.000 government workers.

This decision came after the country somehow found stability last year after years of hyperinflation.

Venezuelans get slightly richer

Maduro said people who work in the private sector earn much higher salaries than government workers. So, to sustainably increase salaries, he proposed feasibility discussions.

At the same time, it raised the minimum wage of workers by 18 times. This puts the monthly income of these workers at 126 bolivars, equivalent to $ 28.

This would also affect minimum wage workers in the private sector. To perform the same, Vice President Delcy Rodriguez was instructed to dialogue with business.

In addition, the increase would also apply to retirees from social security. Interpreting the same, Maduro said in his speech:

“You proposed to set the minimum basic wage for workers by half petro, approved! And this pushes all wage scales upwards ”.

In this way, the government will now tie the minimum wage of 126 bolivars to half the value of 1 Petro. Petro is the cryptocurrency launched by the Venezuelan government four years ago.

It was established to complement the falling value of the country's currency, the hard bolivar. 

The value of the bolivar has started to decline since the Trump administration imposed sanctions on Venezuela. Technically, Petro would be classified as a stablecoin since it is centrally issued.

However, due to its price and volatility, the world has classified it as a cryptocurrency.

The criticisms of the Petro

Unlike other centrally issued digital currencies such as thee-CNY, the Petro is pegged at 1 barrel of oil instead of 1 bolivar. This has led the country to receive criticism from other countries and also from its people.

Built on the DASH-based chain, the Petro is of no substantial value due to its volatile peg and undocumented origins i.e. the absence of a whitepaper.

What's more, the Venezuelan government is forcing people to use cryptocurrency. It made it mandatory to pay for government document services and fuel for planes flying internationally with the Petro.

The Brookings Institution commented on Petro, saying:

"It is relatively unsurprising that a dictatorship with little reserve currency ... has resorted to a deceptive means like the introduction of the Petro ... the Petro ... exists to create foreign exchange reserves out of thin air."

So whether or not this turns out to be a good decision is yet to be discovered, but the people will benefit from the salary increase.