Minimum Wage Negotiated During Crisis

Beginning August 29, Nicaragua will begin to negotiate changes in the minimum wage, but the businessmen ask that the decision-making process consider the levels of inflation and fall in production.

Tuesday, August 27, 2019

According to the most updated figures of the Central Bank of Nicaragua, in July the Consumer Price Index reported a 6.1% year-on-year variation, inflationary rhythm that is higher to the 5.6% registered in June.

Regarding the level of economic activity in the country, official information is still not updated and the latest available report states that in February 2019 the IMAE registered a 7% decrease with respect to February 2018, mainly because of the behavior of the Hotels and Restaurants, and Fisheries and Aquaculture sectors.

In this context, the Nicaraguan Foundation for Economic and Social Development (Funides), believes that a wage increase will put more pressure on the economy and could generate more unemployment.

You may be interested in "Tax and Minimum Wage Tension

The economist Sergio Santamaría, thinks that "... It should be considered that given this situation of economic contraction in progress, not modifying the minimum wage is the most suitable decision according to the crisis in which companies find themselves in Nicaragua. This is not only because of the economic deterioration, but also because of the tax and social security reforms of 2019 that generate a direct increase in the costs of each sector." que "... If an adjustment is applied, Funides believes that 'it would further weaken the financial situation of companies, especially small and medium enterprises, which would translate into greater layoffs and closures of companies. Furthermore, this situation of continuous revision of the minimum wage creates uncertainty for private sector decision-making, which deepens the current crisis."

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More on this topic

No Information to Make Decisions

November 2019

In Nicaragua, the authorities have not published information on the Monthly Index of Economic Activity since February 2019, when the year-on-year fall was 7.5%, a situation that prevents businessmen from making decisions based on the real situation of the economy.

The latest report published by the Central Bank of Nicaragua states that in the second month of 2019 the IMAE in the country registered a 7.5% decrease compared to February 2018, mainly because of the behavior of the Hotels and Restaurants, and Fisheries and Aquaculture sectors.

Nicaragua: Minimum Wage Unchanged

August 2019

Nicaraguan authorities and workers' unions decided not to make changes to the minimum wage, so it will be until 2020 when the issue is discussed again.

Days ago there was tension over the possible increase to the minimum wage in a context of economic recession, but finally the negotiating table decided not to make any change.

Nicaragua: Economy Could Fall by up to 11%

February 2019

If the country does not provide an early solution to the socio-political crisis it has been going through since April 2018, it is projected that the economy could decline between 7% and 11% during 2019.

The Nicaraguan Foundation for Economic and Social Development (Funides), presented the "Informe de Coyuntura" (Situation Report), which explains that if the socio-political crisis continues this year there will be a greater fall in the economy compared to the 4% reported in 2018.

Never-ending Struggle for Minimum Wage

January 2019

The determination of how much and how the minimum wage should be regulated, something that occasionally seems to be done in an arbitrary manner and for political purposes, continues to be one of the factors that most confront Central American businessmen and governments.

In Costa Rica, a 3% increase in the minimum wage was approved for 2019; in El Salvador, an increase is expected to be discussed, and in Guatemala, the commission in charge of the issue reported that no increases will be made this year.

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