Economists warn that new minimum wage maintains labor poverty
The minimum wage increase in Nicaragua barely covers part of the cost of the basic food basket. Economists warn that the 4% adjustment approved by the regime does not improve workers' purchasing power and that more than half of the labor population lives in poverty.
TL;DR
- Nicaragua approved a 4% minimum wage increase, set to take effect from March 1, 2024, until February 28, 2027.
- The new average minimum wage is approximately 9,237.86 córdobas (about $252 USD) per month.
- Economists criticize the increase as insufficient, stating it covers only 43.6% of the basic food basket's cost ($568 USD).
- This gap results in widespread 'labor poverty,' where income is less than the cost of basic necessities.
- Estimates suggest over 50% of the economically active population suffers from labor poverty.
- Specific sectors have different minimum wages, with construction, finance, and insurance earning the highest at 13,848 córdobas, and the agricultural sector the lowest at 6,188 córdobas.
- Experts argue the legal framework suggests adjustments should at least match inflation and economic growth, which would have resulted in a higher increase than 4%.
- Rising food prices, with a 417 córdoba increase in January alone, further erode purchasing power.
- Data from the Social Security Institute indicates 80% of contributing workers earn below the cost of the basic food basket.
- Economists contend that the policy favors large businesses over workers' well-being.
- Teachers' average salaries are around 10,000 córdobas, covering less than 50% of the basic food basket.