Nicaraguan Unions Win Increase in Minimum Wage

NSCAG News | on: Thursday, 20 March 2014

Following months of fierce negotiations with private sector employers COSEP, the Nicaraguan trade unions are celebrating increases in the minimum wage. Although the National Workers' Federation, FNT, had originally called for a 14% increase, the increase announced by the Nicaraguan government goes a long way towards meeting their demands, as COSEP had previously stated that they would only agree to a 'one-digit' increase. The increases amount to 9.80% for small and medium-sized enterprises, 10.77% for the agricultural sector, and 10.27% for the other economic sectors. The adjustment will begin retroactively as of March 1, 2014. The increase was mandated by the government after the breakdown of negotiations between the unions and COSEP.

The head of the FNT, Gustavo Porras, said that it was important to see that the government has followed the law in setting the increase, which has been based on the accumulated inflation rate of 5.7% and the country's economic growth of 4.6% in 2013. However, there are likely to be problems ahead for the unions, as the President of COSEP,José Adán Aguerri, has asserted that the realignment will increase unemployment, and said that businesses will not pay retroactively. And while the business sector has agreed to the raise, they said that in the future they would pay only a “one-digit” raise.

An estimated 160,000 Nicaraguan workers earn the minimum wage. The new minimum salaries still do not allow workers to cover the cost-of-living, calculated in Nicaragua by the cost of a “basic basket” of food and products. A farm worker at the lower end of the range will only be able to cover 24.5% of the cost of an average week’s shopping with their minimum pay; a construction worker will achieve buying power of some 55%.

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