Monthly Salary Hikes? The Messy Business of Paying VenezuelansBy and
Bonuses of food crates, vouchers, dollars have become the norm
Companies trying to prevent top employees from fleeing country
Venezuela’s economy is in such a state of disrepair that it’s easy to forget that there are still companies operating in the country.
There are lots, in fact. Big, small, local, foreign.
And for all of them, one of the single biggest challenges is devising compensation systems that protect -- at least partially -- their employees’ pay from the ravaging effects of hyperinflation. Their main focus has been the pay packages of higher-ranking employees, who are more mobile than rank-and-file workers and, as a result, more able to leave the company (and the country entirely) if unsatisfied with their pay.
All sorts of systems have been created. They broadly break down into three categories: Those who pay salaries exclusively in bolivars and grant frequent increases; those who supplement salaries with bonuses in dollars, food vouchers and an assortment of perks; those who have indexed pay to the value of the dollar in the black market. (A fourth category could be assigned to those who use some combination of all of these tricks.) Here’s a look at how each works, as explained by eight company officials in a series of conversations over the course of several weeks. Most asked they not be identified because they’re not authorized to discuss pay policies publicly.
The Wage-Hike Approach
This tack seems to be the least common of the different strategies. Only two of the people interviewed get paid this way, and both said their firms are in the process of implementing changes. One of them, a legal consultant and administrator at a Caracas real-estate firm, said she receives pay increases every month, typically in the 60 percent range. Even that has proven insufficient to keep pace with an inflation rate that Bloomberg’s Cafe Con Leche Index estimates to be running at more than 1,700 percent a year. She and the rest of the firm’s staff requested back in August to have all their 2017 wages brought forward to help meet expenses.
These bonuses comes in all shapes and sizes -- even in crates stuffed with hard-to-find food items like corn flour, cooking oil and soap. A manager at an e-retailer said that along with his salary, he gets a bonus check in dollars deposited to an U.S. account every month. A junior engineer at a food conglomerate said she gets three or four bonuses in bolivars per year. That’s on top of a monthly box of food and two cases of drinks as well as daily lunch in the office and Cestatickets, as food stamps are known.
“The salary of any top executive right now will be a combination of bolivars and dollars,” said Ivan Acosta, 44, general manager of research consultancy company PGA Group in Caracas. “Companies know that there isn’t a salary in bolivars that’s competitive enough to keep talent from migrating."
This is one sure-fire way to keep employees happy because of the near constant pay increases it fuels. But it’s expensive for the employer. A dollar is worth 128,000 bolivars today in the black market, the place where most Venezuelans acquire dollars. Back in June, it fetched less than 8,000 bolivars. So if someone is paid the equivalent of, say, $1,000 a month, that would come to 128 million bolivars now, up from 8 million bolivars in June.
“It’s no longer a question of retaining people in your company but to keep them from leaving the country because of this great economic crisis," said Luis Garmendia, a partner at Alcance Consultores, a Caracas-based consulting firm.