What's Ahead In 2020 For Employers In Venezuela?

This article sets out some pointers for employers in Venezuela for the year ahead.

Lawmakers and courts

In the midst of the political dispute for control of the National Assembly, the prospect of enacting game-changing labour laws for the year 2020 seems remote. In matters of labour law, there were no significant regulations on employment matters during 2019, other than Executive orders raising the statutory minimum wage by amounts that failed to keep up with the rapidly growing inflation rates (just during the years 2018 and 2019 alone, the statutory minimum wage was raised nine times). The statutory minimum monthly wage was recently increased for January 2020 to VEB 250,000, that is approximately USD 4.00 at the current exchange rate.

The same can be said for labour court matters. Characterised by understaffing, lack of resources and operating at a reduced schedule, the courts' case law production has decreased alarmingly in the last three years (the Supreme Court Social Chamber decreased its production rate from 1457 decisions in 2016 to 496 decisions in 2019). This means labour disputes are mostly resolved through out-of-court settlements. We anticipate this will continue to be a tendency in 2020.

Economic context

As hyperinflation rates continue to rise (albeit with a slower pace than 2018 due to the relaxation of exchange control regulations that allow the exchange of goods and services in foreign currency), employers have found offering compensation schemes in foreign currency, the best way to incentivise and keep personnel. However in structuring their compensation scheme, employers are advised to keep a mixed scheme and single out certain benefits to be paid in bolivars in order to avoid major impacts in their...