from ZeroHedge:

The “dream” of socialism has once again collided with the realities of economics, after nearly 40% of stores in Venezuela have been forced to close following a mandated 3,000% increase in minimum wages by the Maduro government, according to the Miami Herald, citing the National Council of Commerce and Services of Venezuela.

Beginning this week, 7 million Venezuelan employees were to be guaranteed 1,800 bolivars a month – around $20 USD on the black market.

Many of the companies, which had been barely surviving the gradual collapse of the economy, saw the salary increase and other changes announced last month as the fatal blow in a string of policies that have been gradually strangling their operations.

“It is a perfect storm,” said María Carolina Uzcátegui, president of the council. “These decisions are leading many business people to say, ‘No, I can’t do it any more.’” –Miami Herald

Further complicating the situation are price caps on goods sold in stores – which are now selling below cost, and cannot raise prices to cover the mandatory increases in salaries.

If store owners are caught raising prices, they face fines and prison.

“We have inspections, and they force us to sell at last month’s prices,” said Uzcátegui. “That takes money away from the business because of the hyperinflation, when you can’t even sell at yesterday’s prices because you lose money.”

“And anyone who protests against these measures runs the risk of going to jail, without the right to appeal, without the right to anything, simply because the official whose turn it was to inspect the store just felt like arresting you. He did it, and that’s all,” she said.

“Some employers are restructuring costs, rejiggering pay scales and negotiating settlements with workers. Others are simply dismissing people,” notes Reuters.

Inflation in Venezuela hit 200% in August alone, according to estimates by the legislative National Assembly, while the Bolivar has lost 2/3 of its value in 31 days.

Many of the doomed stores, meanwhile, are liquidating merchandise as fast as possible before closing indefinitely.

Economist Orlando Ochoa said the stores cannot survive the salary increase, especially because the owners already had problems obtaining foreign currency to buy imports, and buying national products, in short supply, to fill their shelves.

…

The decision to close is much easier for small and medium-size companies. Bigger companies risk losing equipment and other investments that could be seized by the government, Ochoa said. –Miami Herald

“The government sector has the monopoly on imports, the currency market is dysfunctional and there’s hyperinflation,” said Ochoa. “So, if salaries are increased by decree, and the commercial and industrial sectors cannot sell their products because of these problems, and on top of that because of electricity blackouts, infrastructure problems and the loss of qualified personnel, which is leaving the country, then it’s easy to understand that many may prefer to close.”

Fueling the collapse is the backdrop of a country-wide economic collapse playing out, according to Francisco Ibarra, director of the Econometrica company.

“If you already have a demand that has been falling across all Venezuelan sectors, and you have this kind of increase in salary, and then you don’t have any way of adding these costs to the prices, and you also don’t have access to bank financing, and the company already was not generating significant profits, it’s obvious then that what’s happening is that the company is dying,” said Ibarra.

Paging Jim Carrey

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