Minimum monthly income of workers in Venezuela is Bs. 250,531.56

In Official Gazette No. 6,313 Extraordinary of July 2, 2017, Decrees Nos. 2,966 and 2,967 were published, which establish a 50% increase in the monthly minimum national mandatory wage, as well as the adjustment of the calculation basis for the payment of the Cestaticket Socialista, respectively. The following are the most relevant aspects contained in both standards:

1.- Increase of national minimum wage and payment of an additional special bonus for retirees and pensioners

By means of Decree No. 2,966, the National Executive increased by 50% the mandatory monthly minimum wage, throughout the territory of the Bolivarian Republic of Venezuela, for workers who provide services in the public and private sectors, increasing the monthly amount from Bs. 65,021.04 to the amount of Bs. 97,531.56; as from 1 July 2017.

The Decree also established a 50% increase in the national minimum wage for apprentices, which was set at Bs. 72,532.44.

Additionally, the amount of Bs. 97,531.56 was set as the minimum amount of pensions for retirees and pensioners of the Public Administration and the amount of pensions paid by the Venezuelan Institute of Social Security (I.V.S.S.); same amount established for the monthly national minimum wage. However, in addition, the payment of a “special economic war bond” to the pensioners of the I.V.S.S. equivalent to 30% of the aforementioned amount, that is, Bs 29,259.47 totaling Bs. 126,791.03 of monthly income.

2.- Adjustment of the basis of calculation of the Cestaticket Socialist

Decree No. 2967 established the adjustment of the basis of calculation for the payment of the Socialist Cestaticket to workers who provide services in the public and private sectors, so that from 15 daily Tax Units (TU) the calculation basis was increased to 17 UT per day, at the rate of 30 days per month, being able to receive up to a maximum of the equivalent of 510 U.T. monthly. This adjustment implies an increase in the monthly benefit of Bs. 135,000.00 to Bs. 153,000.00. This benefit comes into effect on July 1, so the first payment must be made during the first five days of August.

Currently the U.T. has a value of Bs. 300.00; that is to say, that for day worked the food ticket has a value of Bs. 5,100.00. Thus, the formula to calculate the Cestaticket Socialist would be the following one:

U.T. Bs. 300,00 x 17 = Bs. 5,100.00 (daily) x 30 days = Bs. 153,000.00

All working entities in the public and private sectors must adjust this food benefit as established and is mandatory for employers.

In addition, the decree establishes that public and private sector labor entities must grant this benefit in cash or by credit to each employee’s payroll account, expressing on a separate payment receipt the amount resulting from the days worked, and indicating in the same as this payment has no salary incidence and, consequently, deductions can not be made on it, unless the worker authorizes it with the purpose of acquiring goods and services within the framework of social missions to satisfy their needs.

With this new increase in the minimum wage, as well as the adjustment in the basis of calculation of the Socialist Cestaticket, the minimum monthly income of the workers is established in Bs. 250,531.56, of which Bs. 97,531.56 correspond to the national minimum wage , effective from July 1, 2017, and Bs. 153,000.00 correspond to the Socialist Cestaticket benefit, that is, the total monthly income of the workers is equivalent to 2.57 minimum wages.

Likewise, as has occurred with each increase in the mandatory minimum wage that has been decreed in the country, as a result of this measure there will be an increase in the labor cost for employers with respect to those workers who are entitled to receive the social benefit relative to the Initial Education or Nursery, ie those with children under 6 years of age, and will also be affected the amounts of social contributions that base their calculation on minimum wages, such as the Employment and Social Security Scheme Required. All this added, of course, to the economic impact that this measure will imply in the calculation of labor concepts such as holidays, vacation vouchers, utilities and social benefits.