Nicaragua – Labour Market Profile 2014

Nicaragua
Labour Market Profile
2014
This Labour Market Profile is a yearly updated report that provides a broad overview of the labour
market's situation and development. The report is based on the latest data available and following
trends. Each section has also accesses to the sources' links that can be used to go more in-depth on
selected themes.
1
Nicaragua – Labour Market Profile 2014
Executive Summary
Nicaragua is attempting to find a balance between
global competitiveness and equity for workers. Sound
macroeconomic and open trade policies are
implemented, but the economy and the labor market
show little structural change. The productivity has
stagnated, leading to underperforming GDP and
employment growth relative low in comparison with
the Latin American average. On the other hand, the
Nicaraguan transoceanic canal is a mega-project that
is projected to start in 2015. If it succeeds to raise the
necessary funds to implement this huge program
through a Chinese billionaire entrepreneur, the
government has estimated it will raise the GDP growth
up to 12%-15% annually in coming years and create
jobs for 50,000 workers in construction and indirectly
200,000 for the operation of the Nicaraguan Canal.
Many questions are floating about an impact of the
canal, such as U.S.-China as well as Latin America
geopolitics, a possible high influx of Chinese workers,
and environment consequences.
A new Code on Processes of Labour and Social Security
came into force in May 2013. It establishes specialize
labour courts, and judicial mediators are appointed
whose role it is to mediate labour disputes orally in
the first instance, thereby reducing the amount of
labour disputes, which can take years to solve.
Many trade union organizations experience a
fragmentation, which mainly are motivated by internal
ruptures of central trade unions, affected by the
current government's policies, and flexibility of the
labour market. It has also been reported that the
government interfered in union activities, and some
employers engaged in antiunion discrimination with
impunity.
The tripartite dialogue has improved labor stability in a
normally volatile sector. It has suppoted Nicaragua to
reduce the labour market impact of the global
financial crisis and recover quicker than other
countries. The collective bargaining coverage is
estimated to cover 2.4% of the labour force. A large
share of waged workers is covered by collective
bargaining agreements. In December 2012 a tripartite
agreement was reached, increasing the salary of
workers in Export Processing Zones with 8%, for the
four consecutive years 2014-17.
Poverty is declining in Nicaragua, but remains high.
The labour market was affected by the global financial
recession in 2008-09 and unemployment rose from 5%
in 2007 to 8% in 2010, and has been unchanging on
this level since then. Youth unemployment also
increased to 11%, while the time related
underemployment stands at 22%.
This report shows that the employment in the
informal economy is on a rise. The lack of decent work
opportunities drive Nicaraguans seeking jobs in other
countries and it is estimated that 20% of the
population live abroad, which is one of the highest
migration rates in the world. Remittances are also very
high at 9.7% of GDP. Many of the migrating
Nicaraguans are agricultural workers in Costa Rica and
two trade union centres in Nicaragua and Costa Rica
have initiated cooperation to improve migrants
working conditions.
Reforms to Nicaragua's Social Security system were
agreed by the National Assembly in January 2014. The
reforms initiate that the retirement age will remain at
age 60 and workers' contributons will remain the
same, with a requirement to pay into the system for
14 years in order to qualify for entitlement to a
pension. However, the amount that employers
contribute will gradually increase from the current
16% to 19% in 2017.
Nicaragua was one of the first countries to ratify the
ILO Convention 189 on Domestic Workers. Labor
inspectors have authority to inspect working
conditions of domestic workers. It has been observed
that the Government’s enforcement of labor laws in
agriculture is still inadequate due in part to resource
constraints.
The minimum wages were set in 2014 and reached an
average of C$4,260 per month (US$178). Minimum
wages have steadily been increased every year,
doubling-up the real minimum wage during the last
decade. However, the average wage has only
increased slightly over the last decade, and has been
falling since 2006 due to high inflation.
2
Contents
Trade Unions ......................................................................................................................................... 4
Trade Unions in Nicaragua ............................................................................................................................ 5
Employers’ Organisations ....................................................................................................................... 5
Central Tripartite Structures ................................................................................................................... 6
National Labour Legislation .................................................................................................................... 6
ILO Conventions ..................................................................................................................................... 7
Trade Union Rights Violations ................................................................................................................ 8
Working Conditions................................................................................................................................ 9
Workforce ........................................................................................................................................... 10
Unemployment and underemployment ..................................................................................................... 11
Migration ..................................................................................................................................................... 12
Informal Economy ....................................................................................................................................... 13
Child Labour ................................................................................................................................................. 13
Gender ......................................................................................................................................................... 14
Youth ........................................................................................................................................................... 14
Characteristics of the Working Age Population ..................................................................................... 15
Vocational training ...................................................................................................................................... 16
Social Protection .................................................................................................................................. 17
General Economic Performance ............................................................................................................ 18
Trade ................................................................................................................................................... 19
Trade agreements ....................................................................................................................................... 19
Export Processing Zones (EPZs) ................................................................................................................... 20
References ........................................................................................................................................... 21
3
Trade Unions
automatically can renew if neither party requests
revisions. The collective bargaining coverage is
estimated at 2.4% of the labour force.
Trade unions in Nicaragua
Number of trade unions
Dues (standard)
Members of trade unions
1,312
N/A
342,410
Trade union members share of labour force
14 %
Trade union members to waged workers
32 %
Female member share of trade unions
(FNT & CST)
Members of affiliated trade unions from the
informal economy (CSTCP)
Number of CBAs
5
National Workers Front (FNT)
FNT is the largest trade union centre. It has nine
affiliated trade union federations. The organization
has approximately 267,000 members. Several trade
union leaders from FNT were elected to the
Parliament in 2011 under the Sandinista party.
51 %
50,000
13
Workers covered by CBAs
60,000
Share of workers covered by CBA
2.4 %
Labour force (2013)
Nicaragua has several trade union centres:
Public Sector Union (UNE)
2,588,000
6
UNE has represented public sector workers in
Nicaragua since its formation in 1978. Its membership
has drastically decreased since 1990 in part because of
the privatization of previously publicly owned services
and in part because of attacks on unions carried out by
successive right wing governments since 1990.
Organized labour in Nicaragua was developed during
struggles in the nineteenth century between
Conservatives and Liberals, Somoza dynasty dictator
regime (1936-1979), and interference from outside
1
interests. The trade union movement boomed in
1979 after the fall of the Somoza regime.
Industrial and Manufacturing Union & the Free Trade
7
Zones (CST-JBE)
The trade union movement is in a transition phase:
Many trade union organizations experience a
fragmentation, which mainly are motivated by internal
ruptures of central trade unions, affected by the
current government's policies, and flexibility of the
2
labour market.
The CST-JBE is affiliated with FNT and represents
workers in the industrial and manufacturing sectors.
CST-JBE has around 70,000 members organised in 23
federations and 150 trade unions. Around 15,000
members are women, who mostly work in the
maquilas. CST has close ties to the Sandinista FSLN
party.
It is estimated that around 1,312 active trade unions
are operating in the country. There are registered
eight unions in the Export Processing Zones (EPZ), but
only two are active. Members of labour unions are
becoming more vulnerable in organizing collective
bargaining with employers, e.g. workers have
3
concerns to be fired due to negotiations.
Health Workers Union (FETSALUD)
8
FETSALUD is affiliated with FTF and organizes doctors,
nurses, administrative staff, auxiliary workers and
others in the health sector. FETSALUD represents
26,000 health workers, including both medical and
non-medical staff; and 80% members are women.
Most labor unions are allied with political parties. It is
estimated that close to 350,000 workers are members
of trade unions in Nicaragua. It equals a trade union
density of 14% of the labour force, which is slightly
4
lower than the Latin America's average at 21%. This
density is much higher among waged workers were it
is measured at 32%. Based on an estimation, it is
noteworthy that half (51%) of trade union members
are women.
Teachers Union (ANDEN)
9
ANDEN is one of the biggest teaching unions in
Nicaragua, representing over 50% of primary and
secondary school teachers.
University Lecturers Union (FEPDES)
10
FEPDES is affiluated with FTF and was created in April
1990 and recognised as a Federation in 2001. The
FEPDES has an estimated 5,109 members.
The Constitution guarantees the right to collective
bargaining and with a length of two years, which
4
11
Trade Unions in Nicaragua
Members, Dues, Collective Bargaining Agreements (CBA) and Occupational Safety and Health committees
Trade Union /
Trade Union Centre
FNT Frente Nacional de los Trabajadores
CPT Consejo Permanente de Trabajadores
CTN-A Central de Trabajadores de
Nicaragua Autónoma
CUS Confederación de Unificación Sindical
CPT-I Confederación General del Trabajo
(independiente)
CAUS Central de Acción y Unificación
Sindical
CST Central Sandinista de Trabajadores
CTN Central de Trabajadores de Nicaragua
CUSa Confederación de Unidad Sindical
Autónoma
CST-JBE José Benito Escobar
CUT Confederación Unidad de
Trabajadores
CSTCP-FNT Confederation of SelfEmployed Workers
CSNTMLAC Fishermen
CSNTAI Confederation of Agroindustry
Workers
National
affiliation
CPT
CPT
Number of
OSH committees at
workplaces
55%
-
-
13
-
-
-
267,000
-
-
-
-
-
-
30,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
25,410
30%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
-
-
-
-
-
22,000
-
-
-
-
-
12,000
-
-
-
-
-
CPT
FNT
FNT
Workers
covered
by CBAs
Female
Members
CPT
FNT
FNT
Dues
Number
of CBAs
Total
Members
(2012)
Employers’ Organisations
High Council of Private Enterprise (COSEP)
12
COSEP (Consejo Superior de la Empresa Privada) is the
main employers’ organisation. Its mission is to foster
economic and social policies and to ensure free
enterprise, respect for private property and
strengthening business in order to contribute to
progress in Nicaragua through its leadership, the
active participation of its members and its interaction
with the various stakeholders. COSEP is governed by a
Board of Directors, and is run by an Executive
Committee and has a workforce commission.
COSEP has 18 affiliated organisations – mainly
chambers of commerce. COSEP conducts CSR
activities, publishes a “Legislative and Economic
Reports” newsletter every second month has received
development aid from DANIDA, among others.
Notable other employer organisations are the
Nicaraguan Association for Textiles and Apparel
Industry (ANITEC), and the Federation of Nicaraguan
Chamber of Commerce in Free Private Zones (FCNZFP).
5
Central Tripartite Structures
Mediation and Arbitration
Bi/tripartite organs
13
Labour disputes are governed by the labour code:
First a dispute is submitted to the Ministry of Labour
(MITRAB), and is attempted to be solved under direct
settlement between employers and workers. Then a
conciliator appointed by MITRAB will attempt to settle
the dispute. If conciliation fails, a strike may be
initiated or the dispute may if the parties agree, be
referred to arbitration, by a Arbitration Tribunal
presided by a representative from MITRAB, and one
representative each from workers and employers.
-
-
A new Code on Processes of Labour and Social Security
14
came into force in May 2013.
It establishes
specialised labour courts, and judicial mediators are
appointed whose role it is to mediate labour disputes
orally in the first instance, thereby reducing the
amount of labour disputes which can take years to
15
solve.
16
National Council for Social Economic Planning
Local Power Cabinets
National Commission on the Occupational Health
and Safety of the Workers and Workplace
Hygiene (MITRAB)
National Minimum Wage Commission (MITRAB)
Higher Work Council
Social Security Council
National Health Council
National Education Council
National Fishing Council
National INATEC Council
National Airport Council
National Lottery Council
Tripartite National Commission for Export
Processing Zones
National Labour Legislation
Constitution
17
Código del Reglamento de Asociaciones Sindicales
The Constitution from 1987 was last amended in 2014
paving the way for third consecutive terms of
Presidency as well as scraped the minimum required
votes for election and allows the president to issue
decrees with force of law. Previous amendments from
1995 created a unicameral legislative National
Assembly. The constitution recognises the right to
work, worker participation at workplaces, equal pay
for equal work, minimum social benefits and wage,
occupational safety and health, eight hour workday,
rest, holidays, job stability, job security and paid
maternity leave. It also prohibits child labour and
recognises the right to strike, freedom of association
and collective bargaining. Workers have the right to
participate in development and implementation of
economic plans.
Labour Law
19
The trade union law from 1997 outlines the forms of
membership and geographical levels. Basic trade
union rights are guaranteed and workers have the
right to form and join the trade union of their choice
as well as to bargain collectively. The International
Trade Union Confederation (ITUC) has argued that
some problematic areas exist in the law, e.g. while
union leaders have protected status, this is limited to
nine executive members per union and three branch
members. The fines for interfering in trade union
20
affairs are not sufficiently dissuasive.
Código Procesal del Trabajo y de la Seguridad Social
21
The law on processes of labour and social security
came into force in May 2013 and aims to ease the
process of settling labour disputes.
18
The Labour Code is the most important labour
legislation. Several other legislations exist, which
regulates and sets standards and restrictions for the
22
labour market.
The Labour Law (Código del Trabajo) from 1996
regulates individual and collective labour relations,
working hours, breaks, leave, wages occupational
safety and health and special working conditions.
6
ILO Conventions
Ratified ILO Conventions23
Subject and/or right
Ratification
date
Convention
Fundamental Conventions
Freedom of association and
collective bargaining
Elimination of all forms of
forced labour
Effective abolition of child
labour
Elimination of discrimination
in employment
C087 - Freedom of Association and Protection of the Right to Organise, 1948
C098 - Right to Organise and Collective Bargaining Convention, 1949
C029 - Forced Labour Convention, 1930
C105 - Abolition of Forced Labour Convention, 1957
C138 - Minimum Age Convention, 1973
C182 - Worst Forms of Child Labour Convention, 1999
C100 - Equal Remuneration Convention, 1951
C111 - Discrimination (Employment and Occupation) Convention, 1958
1967
1967
1934
1967
1981
2000
1967
1967
Governance Conventions
Labour inspection
Employment policy
Tripartism
C081 - Labour Inspection Convention, 1947
C129 - Labour Inspection (Agriculture) Convention, 1969
C122 - Employment Policy Convention, 1964
C144 - Tripartite Consultation (International Labour Standards) Convention, 1976
Not ratified
Not ratified
1981
1981
Up-to-date Conventions
Working time
C014 - Weekly Rest (Industry) Convention, 1921
1934
Elimination of child labour and
protection of children and
young persons
C077 - Medical Examination of Young Persons (Industry) Convention, 1946
1976
C078 - Medical Examination of Young Persons (Non-Industrial Occupations)
Convention, 1946
C095 - Protection of Wages Convention, 1949
1976
Wages
1976
C131 - Minimum Wage Fixing Convention, 1970
1976
Occupational Safety and
Health
C115 - Radiation Protection Convention, 1960
1981
C139 - Occupational Cancer Convention, 1974
1981
Industrial relations
C135 - Workers' Representatives Convention, 1971
1981
Vocational guidance and
training
C140 - Paid Educational Leave Convention, 1974
1981
C142 - Human Resources Development Convention, 1975
1977
Freedom of association
(agriculture)
Seafarers
C141 - Rural Workers' Organisations Convention, 1975
1981
C146 - Seafarers' Annual Leave with Pay Convention, 1976
1981
Indigenous and tribal peoples
C169 - Indigenous and Tribal Peoples Convention, 1989
2010
Specific categories of workers
C110 - Plantations Convention, 1958
1981
C189 - Domestic Workers Convention, 2011
2013
Fundamental Conventions are the eight most important ILO conventions that cover four fundamental principles and rights at work. Equivalent to
basic human rights at work.
Governance Conventions are four conventions that the ILO has designated as important to building national institutions and capacities that serve to
promote employment. In other words, conventions that promotes a well-regulated and well-functioning labour market.
In addition, there are 71 conventions, which ILO considers “up-to-date" and actively promotes.
7
Trade Union Rights Violations
The International Trade Union Confederation (ITUC)
noted restrictions on the principle of free and
voluntary bargaining in March 2013 when the
Universidad Politécnica de Nicaragua (UPOLI) was
unwilling to negotiate. Teachers and administrative
personnel from UPOLI staged a protest calling for a
10% salary increase. According to the Secretary
General of the trade union, the employers and
24
authorities at UPOLI were unwilling to negotiate.
discrimination were not severe enough to prevent
abuses. Also several cases with state workers were
processed by the Central American Court of Justice,
ruling in favor for the employees. None had been
reinstated or received severance payment, despite the
favorable ruling.
The U.S. Annual Human Rights Report moreover
observed that many employers in the formal sector
continued to blacklist or fire union members with
impunity and delay severance payments to fired
workers - especially public sector employees – or omit
the payments altogether. Employers avoided legal
penalties by organizing employer-led unions that
lacked independence and frequently using contract
workers to replace striking employees. There were
reports party dues were automatically withdrawn
26
from paychecks.
25
According to the U.S. Annual Human Rights Report ,
there continued to be reports that the government
interfered in union activities, and some employers
engaged in antiunion discrimination with impunity.
There continued also to be reports of government
interference in union activities in the public sector,
including illegal dissolution of unions and firing of
workers not associated with the ruling FSLN party. The
Democratic Federation of Public Service Workers
(FEDETRASEP) reported that since 2007 government
ministries illegally disbanded 175 unions, including 19
during the year 2013. Former ministry employees and
human rights and labor organizations alleged that proFSLN public sector unions used intimidation and
coercion to recruit new members, often pressuring
workers to leave non-FSLN unions.
ILO's Committee of Freedom of Association is
processing one active confidential case, which was
raised by the Federation of Workers and Textile
Maquila (FESTMIT) in September 2013. The follow-up
case was filed by the Administrative Workers’ and
Teachers’ Union of the Ministry of Education
(SINTRADOC) in Decmber 2011. It has reference to
transfer and subsequent dismissal of three trade union
officials by the Ministry of Education on the pretext of
restructuring. The Government was requested to keep
the Committee informed of any rulings handed down
with respect to the transfer and subsequent dismissal
of the trade union officials.
There are abundant cases of workers being fired due
to political motives. For example, the organization
FEDETRASEP has registered that since 2007 close to
27,000 public sector employees were fired without
just cause or due process of law, including 2,361
workers during 2013. In addition, employers often do
not reinstate workers fired for union activity or pay
the required severance.
27
ILO Complaints Procedure
Freedom of Association cases (2014)
According to labour leaders, collective bargaining
agreements and labor laws have routinely been
violated by employers with impunity. Labor
organizations have argued that the fines for antiunion
8
Active
Follow-up
1
1
Closed
64
Working Conditions
The most common areas of non-compliance in the
areas of national labour law are in the categories of
Occupational Safety and Health, and Contracts and
Human Resources. Regarding Freedom of Association,
the implementation of clauses in collective bargaining
agreements was the area in which there are the
34
highest levels of non-compliance.
Wages and earnings
Monthly average, median and legal minimum wages
Current
Cordoba
US$
6,615
295
3,189
132
MITRAB30
2,851
110
Doing
Business31
3,448
135
Source
Average wage
(2011)
Median wage
(2012)
Minimum wage
(average, 2014-15)
Minimum wage for a
19-year old worker or
an apprentice (2014)
Growth of real
average wage
(2000-2011)
Growth of real
minimum wage
(2000-2011)
Global Wage
Database28
Wage
Indicator29
During the first six months of 2012, the Ministry of
Labour (MITRAB) reported conducting 1,276 health
and safety inspections and registered 6,820 workplace
accidents, including 13 registered deaths.
6.9 %
Global Wage
Database
This insufficient enforcement of labour law is widely
prominent in the informal economy. This 'sector'
makes up 65% of the total employment and absorbs
workers in street sales, agriculture and ranching,
transportation, domestic labour, fishing, and minor
construction. It has been registered that legal
limitations on hours worked often are ignored by
employers who claim that workers readily volunteer
for extra hours for additional pay. Violations of wage
and hour regulations are common and generally not
investigated in the large informal sector, particularly in
street sales, domestic work, and agriculture.
Compulsory overtime is reported in the private
security sector where guards often are required to
35
work excessive shifts without relief.
94 %
The minimum wage is set for 10 different economic
formal sectors, with the lowest being C$2,851
(US$110) for agriculture and the highest being
C$6,410 (US$251) of construction, finance and
insurance sectors. The minimum wage has steadily
increased every year, doubling the real minimum wage
during the last decade. The average wage has only
increased slightly over the last decade, and has been
32
falling since 2006 due to high inflation.
The minimum cost of living is C$1,666 per week
(US$256), whereas a textile worker in the EPZs receive
33
C$1,455 per week (US$223 per month). Both the
minimum and median wage are well below the cost of
living. Also in terms of minimum wages' averages in
Central America, Nicaragua's remain much lower than
the others.
Working hours per week (2010)
>=50 hours
26%
The National Assembly voted in 2012 to broaden
rights ensuring decent work for domestic workers,
including expanding union rights, reducing the length
of the workday, and assuring social security benefits.
However, the legislation has so far not entered into
force.
40-48
hours
31%
A recent assessment of 20 factories, showed no
evidence of child labour and forced labour. However,
the section of child labour on page 12-13
demonstrates that child employment still is prevalent.
36
<25 hours
20%
25-34
hours
10%
35-39
hours
13%
As can be seen from the graph above, most employed
Nicaraguans work more than 40 hours per week, and
over a third work more than 50 hours per week.
9
Workforce
37
Employment rates
(2013), Age and Sex distribution
Sex
Age
Male &
female
Total
Youth
Adult
Total
Youth
Adult
Total
Youth
Adult
Male
Female
Employment
rate
15+
15-24
25+
15+
15-24
25+
15+
15-24
25+
59 %
43 %
66 %
75 %
58 %
83 %
44 %
28 %
51 %
51%
25+
83%
66%
28%
15-24
58%
43%
44%
15+
75%
59%
0%
20%
Female
Nicaragua has a population of 5.9 million people and a
labour force of 2.6 million workers. Population
projections can be interpreted as favorable, as no
major changes are expected in terms of a 'youth bulge'
massively entering the labor force, or rapid aging
process in which a shrinking labor force has to cope
with the costs of supporting an increasing share of
elderly people.
Ease of Doing Business
Topics
38
Share of workers
in total employment
Nicaragua (2005)
Latin America and the
Caribbean (2005)
Latin America and the
Caribbean (2012)
2 US$
a day
28 %
5.7 %
12 %
3.5 %
7.4 %
100%
Measuring how easy or difficult it is for a local
entrepreneur to open and run a small to medium-size
business when complying with relevant regulations,
Nicaragua has made some improvements, especially in
terms of starting a business and getting credit. On the
other hand, registering property and resolving
39
insolvency have experiences a decline. Enforcing
Contracts has the highest ranking at 70 out of 189
countries. (See also the section of Economic
Performance).
The latest data on working poverty from 2005 indicate
that there are double as much working Nicaraguans
living for US$1.25 or US$2 a day than the average for
the Latin America and the Caribbean region.
1.25 US$
a day
10 %
60%
80%
Male & female
Caribbean where 19% lived for US$2-4 a day and 57%
for US$4-20 a day.
Women have considerably lower employment rates
than men, but the overall employment rate is average
for the region.
Working Poor
Age 15+
40%
Male
40
2015 2014 Change
Starting a Business
120
140
20
Dealing with Construction Permits
134
133
-1
Getting Electricity
Registering Property
Getting Credit
Protecting Investors
Paying Taxes
Trading Across Borders
Enforcing Contracts
Resolving Insolvency
96
134
89
172
164
74
70
110
91
128
99
171
163
77
71
102
-4
-6
10
-1
-1
3
1
-8
Doing Business 2014 indicators are ranking from 1(top) to 189
(bottom) among other countries. The rankings tell much about the
business environment, but do not measure all aspects of the business
surroundings that matter to firms and investors or that affect the
competitiveness of the economy. Still, a high ranking does mean that
the government has created a regulatory environment conducive to
operating a business.
Working poor measures employed people living for less than
US$1.25 and US$2 a day, as proportion of total employment in that
group.
Nicaragua has a larger lower middle class, but a
smaller upper middle class than the regional average,
as 38% lived for US$2-4 a day and 29% for US$4-20 a
day, compared the average for Latin America and the
10
Unemployment and underemployment
labour market is problematic in developing countries.
When unemployment is not an option where a person
can survive, work of some sort has to be found, often
casual and informal work. Unemployment should
therefore be understood in relation to the strength of
social safety nets, the prevalence of informal
employment and how much of informal employment
is underemployment due to few formal employment
45
possibilities.
Unemployment and Underemployment
(2010)
41
Unemployment rate
Urban youth
Unemployment rate 42
43
Underemployment
share of employment
Part-time workers share
44
of employment
Total
Male
Female
8%
7.4 %
8.8 %
16 %
15 %
16 %
22 %
17 %
29 %
21 %
14 %
31 %
Unemployment trend in Nicaragua, 2000-2012 (%)
46
50
Unemployment in Nicaragua stands at 8%, and urban
youth unemployment at 16%. The both rates a similar
as the Latin America and the Caribbean's average at
7.8% and 16.3%, respectively.
44
44
40
43
43
36
35
35
34
34 33
7
5
9
6
9
7
11
8
11 11
8
8
30
Indicators of hidden unemployment, which indicate
who involuntary work less than they desire out of total
employment, are high: 22% are in underemployment
and is much higher among women. Around 30% are
part-time workers, voluntary or not.
21
20
23
17
13
10
6
4
6
4
6
5
11
7
8
9
6
9
5
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Unemployment rate (%)
Youth unemployment rate (%)
Share of youth unemployed in total unemployed (%)
Interpretation of the open unemployment and
employment rates as indicators of a well-functioning
Sectoral employment
47
48
Employment (2010) & GDP share (2012)
Sector & Gender distribution
Male
employment
Female
employment
GDP share
per sector
9,775
1,089
2.5 %
Manufacturing
144,757
154,557
15 %
Electricity, gas and water
11,658
2,130
1.6 %
Construction
101,396
1,587
5.3 %
256,512
382,809
14 %
89,080
8,708
5.9 %
56,407
24,425
10 %
176,180
333,885
18 %
N/A
N/A
8.9 %
670,952
163,294
18 %
Sector
Mining and quarrying
Trade, hotels and
restaurants
Transport, storage and
communications
Financing, insurance, real
estate and business services
Community, social and
personal services
Others
Agriculture
0%
7%
21%
28%
2,5%
15%
1,6%
5,3%
14%
5,9%
10%
18%
8,9%
18%
0
Male
Around 46% of workers are in waged employment and
49
66% of non-agricultural employment is informal.
Agriculture produces 18% of GDP, which is largely
14%
180.000
Female
360.000
540.000
GDP share by Sector
720.000
because of the share of cash crops in exports. It is
estimated that 32% of workers are operating in this
sector. It is a male dominated sector. Male are also
11
Sector Share of GDP (%)
more present in the sector construction, mining and
transport, but these only employ a smaller group.
50
70
60
One out of two workers (51%) are employed in the
service sector. The service sector has been declining in
contribution to GDP, though, but not in share of
employed. It suggests a decline in productivity of this
sector.
58
58
59
60
59
59
59
59
59
59
57
50
54
53
26
27
20
20
40
30
20
22
19
23
18
23
18
23
17
23
17
23
18
23
17
23
17
23
18
23
18
24
19
10
Many employed women tend to work outside of
agriculture, especially in Trade, Hotels and Restaurants
as well as Community, Social and Personal Services.
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Industry
Migration
51
Migration
Net migration
(2008-2012)
Net migration to
average population
per year (2008-2012)
Personal transfers
i.e. remittances
received, % of GDP
(2012)
Nicaragua
- 120,000
Nicaragua
- 1 : 243
Inhabitants
Latin America &
the Caribbean
- 1 : 956
Inhabitants
Nicaragua
9.7 %
Latin America &
the Caribbean
1.1 %
Services
Agriculture
Nicaraguans migrate to very different countries, with
the top three destinations being Costa Rica, the United
53
States, and Spain.
Around 20% of the population has migrated abroad.
An estimated 400,000 Nicaraguans work in Costa Rica,
mainly in the agricultural sector. Many of them are
illegal migrants, and therefore prone to be paid wages
lower than the minimum wage and not receive
mandatory health insurance and pension. The two
trade union centres FNT and ANEP in respectively
Nicaragua and Costa Rica, have started cooperation to
54
improve migrant workers conditions.
Net migration is the net total of migrants during the period, i.e.
the total number of immigrants less the annual number of
emigrants, including both citizens and noncitizens.
Lack of decent work opportunities, unemployment
and underemployment are the main reason for
55
migrants leaving Nicaragua. Migrants tend to be
young and unskilled, and there are also many
temporary migrants, mainly to neighbouring Costa
Rica, but also increasingly to El Salvador, Panama, and
Guatemala. A tightened U.S. immigration policy has
increased emigration to neighbouring countries. The
large exodus of Nicaraguan labour migrants has also
had social impact, and most families now have one
56
parent away from the household.
With a remittance rate of 9.7% to GDP, Nicaragua
receives much more remittance than the Latin
American and Caribbean's average. It makes Nicaragua
one of the top remittance receiving countries in the
52
world.
More leave out of Nicaragua than enter. The net
migration rate from 2008-2012 is one out of every 243
inhabitant, and the Latin American and Caribbean
region already has a high migration rate, compared to
the rest of the world. The trend is on a decreasing
rate, i.e. the previous Labout Market Profile 2013
reported one out of 141 inhabitants.
A new migration law is being discussed in Parliament
to reflect the current migration management reality
and strengthen the protection of Nicaraguans
57
abroad.
12
Informal Economy
organises 50,000 self-employed workers in the
63
informal economy.
Employment in the informal economy
Total informal
employed in nonagricultural
employment
Nicaragua (2009)
58
59
64
Trend of employment in the informal economy (%)
50 %
LAC (2010)
Employment in the
informal sector in nonagricultural
employment
65 %
Nicaragua (2013)
60
90
80
55 %
81
70
61
66
66
60
32 %
LAC (2010)
57
50
1 = Very
informal
48
5 = Very
formal
Employment
status on
informality-index
2001
2002
58
54
44
40
2000
59
58
2003
2004
2005
2009
2010
Share of persons in informal employment in total nonagricultural employment (%)
Share of persons employed in the informal sector in total nonagricultural employment (%)
2
3
A survey by WageIndicator.org conducted in 201265
rated workers on an informality scale from 1-5, with 1
being workers not entitled to social benefits, who do
not contribute to social security and with no contract.
It shows 44% in the most informal category and 25% in
the most formal. This is more formal than a similar
survey of neighbouring Honduras.
4
Informal employment make up 65% of total
employment in the non-agricultural sector. The
informal economy is therefore somewhat larger than
the average for the Latin American and Caribbean
region. It is also noteworthy that the informal
economy is on rise.
The survey also showed that the informality index
correlates the wage level as well as how likely a
worker is to be paid above the minimum wage level.
With only 22% in the most informal category paid
above the minimum wage level. There is no clear
correlation between age and informality, and young
workers are only slightly more likely to work
informally.
Another indication is the type of employment: Two
types of employment, which are often informal, are
own-account workers, who make up 30% of the
employed; and contributing family workers who make
62
up 17%. There are 46% waged workers.
Trade unions are opening up access for affiliated
organizations, e.g. Confederation of Informal Sector
Workers (CSTCP) is an association affiliated to FNT. It
Child Labour
The most recent survey on child labour in Nicaragua is
from 2005, where 13% of children were engaged in
child labour, slightly higher than the average for the
66
Latin America and Caribbean region. The rate of
children in employment fell slightly from 12.1% 2000
to 10.1% in 2005, which coincided with an increase in
school attendance.
Most children aged 7-14 work as unpaid helpers (85%)
many are also waged workers (14%). The average
working week for children who only work is 38.5
hours, children who also go to school work an average
of 20.8 hours.
Children tend to work in forestry, fishing, coffee
plantations, and subsistence farms. Hazards in
agriculture included sun exposure, extreme
temperatures, pesticides and chemicals. Hazards in
fishing included polluted water and dangerous ocean
67
conditions.
Children are more likely to be engaged in child labour
in rural areas (19%) than urban (7%). Boys (21%) are
also much more likely than girls (4%). Children are
more likely to work the older they are, as 10% of
children aged 7-14 and 36% of children aged 15-17 are
employed.
13
The government's plans to combat child labor and
protect children have not been fully implemented, and
programs are insufficient to reach the numbers of
children engaged in hazardous child labor in
agriculture and victims of commercial sexual
68
exploitation.
Working children
Proportion of all children in age group
In October 2012, the National Assembly approved a
law to simplify, modernize, and streamline the public
administration of labor justice, including child labor
cases. The trade union CTCP has identified elimination
of child workers from the informal sector as a priority
area.
Latin America and
the Caribbean70
(2008)
Region
Nicaragua
(2005)69
Age
7-14
5-17
14-17
5-17
Type
Children in
employment
Child Labour
Hazardous work
Children in
employment
Child labourers
Hazardous work
Proportion
10.1 %
12.9 %
26.9 %
13.3 %
10 %
6.7 %
Children in employment include all children who conduct some
kind of work, whereas child labourers are a narrower term
without mild forms of work. Hazardous work is the worst from
of child labour as defined in ILO C182.
Gender
On the Global Gender Gap Index, Nicaragua has
moving up from rank 62 in 2006 to 10 out of 136
countries in 2013, and is the highest ranking in Latin
71
America. This index is constructed to rank countries
on their gender gaps not on their development level.
On the Gender Inequality Index it is ranking 129 out of
72
187 countries.
than five times more likely as girls to be engaged in
child labour. Women have lower levels of education,
however, more girls enrol into schools than boys.
The large trade union centre FNT has a policy of
promoting 50% female participation in trade union
leadership. It is also promoting the implementation of
73
the 2008 Equal Opportunity Law 648.
As noted elsewhere in this report: Women have
considerably lower employment rates than men.
Women are only slightly more likely than men to be
affected by unemployment, though almost twice as
likely to be affected by underemployment. Few
women work in agriculture and more commonly find
employment in manufacturing, commerce, education
health, and domestic work. In addition, boys are more
An Enterprise Survey reported that as many as 62% of
firms had female participation in ownership compared
to 40% for the average in Latin America and the
Caribbean, whereas 10% of full time employees were
women, lower than the Latin America and the
74
Caribbean where it was 14%.
Youth
The Government established a National Plan of Youth
Employment (2012-2016) and expanded its Youth
Employment and Migration program to protect
working adolescents and increase their employment
75
opportunities.
as most jobs continue to involve low-skill tasks, and
this is reflected in the meager growth of real incomes.
Notwithstanding, a recent survey from 2011 estimated
that more than 62% of young Nicaraguans are
optimistic about their future despite high levels of
77
unemployment, poverty, and violence.
The youth labour force participation rate (15-24 years
old) is 48% of the total participation, which equals
605,000 workers. As previously showed, the share of
youth unemployed in total unemployed exploded in
the beginning of the 2000s, and is only gradually
decreasing again since 2003. Unemployment for
educated youth is around 30%, three times higher
than average youth unemployment and four times
76
higher than general unemployment. It explains why
more workers are turning to self-employment in the
growing informal economy. Moreover, there is
evidence that the productivity of labor has stagnated
There has been raised concerns of the high youth
density in the Caribbean Coast, which is characterized
by multiple risk factors that contribute to an acute
level of vulnerability. Among others, there is a higher
prevalence of drugs and alcohol, disintegration of
family and community ties, school abandonment,
unemployment and bleak prospects for a job, and the
78
weak presence of state institutions.
14
Characteristics of the Working Age Population
Highest level attained and years of schooling in the population
(2010), Population 25+, Total and Female
Highest Level Attained
Total
Female
No Schooling
Primary
32.1 %
22.2 %
8.1 %
10.1 %
11.6 %
5.8 %
10.1 %
42.4 %
16.7 %
10.1 %
9%
10 %
4.3 %
7.5 %
5.8 years
4.8 years
0.52
0.59
Secondary
Tertiary
Begun
Completed
Begun
Completed
Begun
Completed
Average year of total schooling
Educational Gini Coefficient
79
Total
Female
0%
20%
No Schooling
Secondary - Begun
Tertiary - Completed
40%
60%
Primary - Begun
Secondary - Completed
80%
100%
Primary - Completed
Tertiary - Begun
Primary, secondary and tertiary is the internationally defined distinction of education. In Denmark these corresponds to grundskole, gymnasium &
university.
The educational Gini Coefficient is similar to the Gini Coefficient, but instead of measuring the distribution of income in a population, it measures
the distribution of education measured as years of schooling among the population. 80
The graph above shows the educational attainment of
all Nicaraguans above 25 years, therefore gives a
glance of the human capital of the labour force.
and the rest, where most have progressed to
secondary schools and above.
Women have lower levels of educations in most types
of education, with especially more having no
schooling.
Nicaragua’s education is unequally spread between
the over 50% of the population who have either had
no schooling or have not completed primary school,
81
Enrolment in Primary and Secondary schools (2000-2010)
Total and Female, Nicaragua and Latin America & Caribbean
Net primary school enrolment
100%
Net secondary school enrolment
80%
Nicaragua ,
Total
enrolment
70%
95%
60%
90%
Nicaragua ,
Female
enrolment
50%
40%
85%
30%
80%
LAC , Total
enrolment
20%
75%
10%
0%
70%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
LAC , Female
enrolment
Net enrolment is the ratio of children of official school age, who are enrolled in school to the population of the corresponding official school age.
Gross enrolment is the ratio of total enrolment, regardless of age, to the population of the corresponding official school age. Gross primary
enrolment is therefore sometimes higher than 100%.
The enrolment into Nicaragua’s primary schools has
increased during the last decade and is now similar to
the regional average, while enrolment into secondary
schools are still considerably below the regional
average.
There have hardly been any gender differences in
enrolment rates in the last decade, even though
women in general have lower average years of
schooling. The enrolment rate for tertiary education
was 18% in 2003, somewhat below the regional
average at 28%.
15
Vocational training
Vocational Training
young people, as vocational training often gives easily
employable skills. The vocational training trend has
been on a decreasing rate which is in contrast with the
Latin America and Caribbean's average.
82
Pupils in vocational training
(2010)
Ratio of pupils in vocational
student to all pupils in
secondary education
Ratio of pupils in
vocational training out of
15-24 year olds
Nicaragua
6,880
Nicaragua
Latin America &
Caribbean
3.5 %
Nicaragua
1.3 %
9.3 %
Among firms that have unfilled vacancies, more than
61% of them find that social skills such as
communication skills are the most difficult to find in a
candidate, in contrast to 52% in the rest of Central
America. It is noted that Nicaragua has less difficulties
with technical skills in comparison with the region.
Latin America &
5.2 %
Caribbean
Nicaragua’s ratio of pupils in vocational training to all pupils in
secondary education was calculated on average for the period
2006-2010, while the Latin America & the Caribbean region is an
average of the period 2007-2011.
The ratio of pupils in vocational training out of 15-24 year olds is
calculated as an average in the period 2005-2010.83
85
Most difficult skill to find when filling vacancies
(% firms)
Rest of Central
Nicaragua
America
Ratio of pupils in vocational student to all pupils in
84
secondary education, 2000-2011
12%
10%
8%
Social skills
52
61
52
Technical skills
48
39
48
An impact evaluation of interventions aimed at
increasing the income capacity of the poor through
vocational training, micro-finance or business grants in
Nicaragua, showed that poorest households were
more likely to enter programs and received higher
profits in non-agricultural self-employment, while less
poor households assigned to the training had higher
non-agricultural wages. The vocational training didn't
lead to wage increases of the poorest. It questions
86
benefits and impact of courses.
6%
4%
2%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Nicragua
Total
Latin America & Caribbean
Nicaragua has a lower share of students in vocational
training out of students in secondary education, and
also compared to the population of 15-24 year olds.
This can be a problem for youth unemployment of
16
Social Protection
Public spending on social protection schemes
(2009)
Public social
protection
expenditure, excl.
health
Córdoba
4.8 billion
US$
236 million
% of GDP
2.9 %
per capita
41 US$
% of government
expenditure88
36 %
% of GDP
4.1 %
% of population
12 %
% changes per year
(2007-2011)
3.5 %
Public health care
Health social
protection coverage
Trends in government
expenditure in health
87
Employers pay 16% of the salary to the Integral and
10% to IVM and RP. Workers pay 6.25% of the salary
to Integral and 4.25% to IVM and RP. Integral and IVM
are open for voluntary coverage for self-employed for
92
respectively 18% and 10% of declared earnings. Still
only about 15% of the working age population is
covered by the INSS.
Reforms to Nicaragua's Social Security system were
approved by the National Assembly in January 2014.
The retirement age will remain at 60 years old and
workers' contributons will remain the same, with a
requirement to pay into the system for 14 years in
order to qualify for entitlement to a pension. The
reforms initiate that employers contribute will
gradually increase from the current 16% to 19% in
93
2017.
Benefits, coverage and contributions to pension
89
schemes
(2011)
Social benefits for the active age
Pensionable age receiving an old age
pension (men 62+; women 57+)
Old age effective coverage as
proportion of programs
Active contributors to an old pension
scheme
% of GDP
Proportion of
total
Proportion of
contributory
15-64 years
0.5 %
The non-contributory Social Protection Network (RPS)
provides conditional cash transfers. RPS transfers
US$9.2 per household per month, US$21 per year for
school materials, US$18.7 per month to support
health and US$4.6 per year subsidy to school per child
covered. The conditions are that children must enrol
and attend school, as well as attend health check94
ups.
24 %
24 %
14 %
Nicaragua's old pension schemes have a low coverage
on an estimated 14%, between 15-64 years,
contributors, while the rate is 28% in Latina America.
The country has a relatively high government
expenditure on social protection at 36% and with
US$41 per capita. It is also notable that there is an
annual growth of 3.5% of government expenditure on
health.
There are some legal and political constraints of
extending social insurance to informal sector workers,
but there are possibilities for private sector actors to
take on the role of agent and/or provider of social and
health insurance.
Many workers from the informal economy do often
not have knowledge about the pension systems
and/or the costs were crucial determinants of signing
up for health insurance. When they are offered
voluntary insurance schemes, they enroll fast, mostly
in public institutions. An evaluation showed that
insurance did not result in increased overall service
utilization, but in a switching to health clinics for the
insured from other facilities not covered by the
insurance program. It was concluded that the
subsidized insurance significantly reduced enrollees’
out-of-pocket health expenditures. On the other
hand, once subsidies for the premium expired, the
insurance program experienced a low retention
95
rate.
The National Institute of Social Security (INSS) is the
main provider of social security. Data from INSS shows
that between 1998 and 2011 the population that
contributes to social security increased from 16% to
20% of the economically active population. This
coverage corresponds to less than 50% of wageearners in Nicaragua, 25% of the employed population
90
and 8% of the total population.
INSS has three schemes: i) Riesgos Profesionales (RP)
covers professional risks and work injury; ii) Invalidez,
Vejez y Muerte (IVM) provides invalidity, old-age and
survivor pensions, and iii) Enfermedad y Maternidad
(Integral) provides medical, sickness and maternity
91
benefits.
17
General Economic Performance
96
will raise the GDP growth up to 12%-15% annually in
coming years and create jobs for 50,000 workers in
construction and indirectly 200,000 for the operation
of the Canal. However, critical questions remain on
the perspectives of the canal, e.g. if the main investor,
which is a Chinese billionaire, can raise at least US$4050 billion; when China is more present in the U.S.
“backyard”; influx of thousands of Chinese workers;
104
and environmental consequenses.
Key Facts
(2013 est.)
GDP
GDP
per capita
(PPP)
GDP real
growth
HDI
(2012)97
Gini Index
(2010)
4,500 US$
0.599
40.5
4.2 %
166 of 229
129 of 187
56 of 141
countries
countries
countries
The Human Development Index (HDI) measures the average of a
long and healthy life, access to knowledge, and a decent standard of
living.
This Gini Index is measured if income were distributed with perfect
'equality', the index would be zero; if income were distributed with
perfect 'inequality', the index would be 100. In terms of the ranking,
the first country has the highest inequality, while the number 136
has the highest equality.
11.3
billion
US$
Doing
business98
Control of
corruption
Government
effectiveness
Rule of Law
119 of 189
countries
-0.76 (2007)
-0.91 (2007)
-0.80 (2007)
The doing business indicator ranks Nicaragua as
medium to low at 119 out of 189 countries, stepping
up on 7 steps on the index during the period 2013/14
and 2014/15. Nicaragua has low scores on all three
governance indicators, especially on Government
Effectiveness.
GDP per Capita (PPP), trend and forecast105
20000
Current USD
-0.78 (2012)
-0.89 (2012)
-0.74 (2012)
A high ranking on the Ease of Doing Business Index means the
regulatory environment is more conducive to the start-up and
operation of a local firm.99
The selected Governance Indicators100 cover the years 2007 and
2012, and ranking from ‐2.5 to 2.5; i.e. negative tendencies below
the zero mean and unit standard deviation, score negative
measurements.101
15000
10000
5000
0
2017
2016
2015
2014
2013
2012
Nicaragua
2011
2010
2009
2008
2007
2006
2005
Nicaragua is one of the least developed countries in
Latin America with mediocre income equality. Poverty
has decreased steadily in recent years, but remains
high. There have been no advances on the Human
Development Index in the period 2007-2012.
Latin America and the Caribbean
Inflation, trend and forecast106
25%
20%
15%
After a quick rebound in 2010 after the global financial
crisis in 2008, economic activity grew at 5.4% in 2011,
the highest rate in a decade. Inflation was also tamed
to single digits, down from a high of 25% in mid-2008.
The macroeconomy remains stable, with a GDP
forecast growth at 4.2% in 2014. The fixed capital
formation is still increasing and stays above the
102
average in the Latin America and Caribbean. The
country is highly dependent on remittances and on
103
development aid.
10%
5%
0%
2017
Latin America and the Caribbean
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
Nicaragua
Gross fixed capital formation (% of GDP)107
40
30
Agriculture, construction, forestry, fishing and mining
are driving growth. On the demand side, are private
consumption, exports and government spending.
Private investment registered a slight growth, well
below the levels of the past two years, though. The
Nicaraguan Canal has been interpreted by the
government as a symbol of progress in the country.
The government has estimated that this mega-project
20
26
19
24
18
22
17
22
18
24
18
26
26
19
20
30
30
20
21
23
20
22
20
23
21
10
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Nicaragua
18
Latin America & Caribbean
25
21
Trade
Trade and Foreign Direct Investment
2013 (est.)
108
Exports
Imports
4.3
billion US$
6.6
billion US$
FDI flow
(average 2008-12)
668
million US$
38 % of GDP
59 % of GDP
5.9 % of GDP
The country is also part of the Central American
Integration System, which includes the Central
American Common Market (CACM), and has a
Consultative Committee involving labour and works to
112
harmonise education systems.
FDI Stock
N/A
Nicaragua is member of the Dominican RepublicCentral America-United States Free Trade Agreement
(CAFTA-DR), which was initiated in 2002. It is an
agreement between the United States and Central
American states, with the goal of setting up a free
trade area. It requires the two countries to uphold the
four core ILO labour standards, as well as acceptable
conditions of work, in a manner that does not affect
113
trade. It sets up a monitoring mechanism. CAFTA
has been controversial in the United States, for not
making
enough
labour
and
environmental
114
requirements,
while in the Central American
countries liberalize state owned enterprises and
opening markets to subsidized U.S. agricultural
115
products.
Nicaragua’s exports to the U.S. have
grown 75% over the past six years and fostered a US$1
billion-plus trade surplus with the U.S., which in large
part to CAFTA.
Trade is a prominent part of Nicaragua’s economy,
with export at 38% and imports at 59% of GDP.
Foreign Direct Investment (FDI) flows are also at a very
high rate at 5.9% of GDP.
The export sector is relatively well diversified, making
it less vulnerable to changes in global demand. The
export productions have a composition of skill
requirements that make it difficult for skilled labour to
109
be used in other sectors.
110
Main products share of exports (2012)
Coffee;
14%
Others; 44%
Knit
Sweaters;
4,0%
Crustaceans;
4,0%
Gold; 10%
Insulated
Wire; 4,9%
Main export markets (2013)
Mexico;
12%
El
Salvador;
4%
Venezuela;
7%
EU; 6%
Frozen
Bovine Meat;
8,2%
Passenger
and Cargo
Ships;
Raw Sugar;
5,9%
Nicaragua benefits from European Union’s (EU)
unilateral Generalised Scheme of Preferences (GSP+)
special incentive arrangement, which allows duty and
quota free access for most products. To be granted
and continue to be granted GSP+, a country must
ratify and effectively implement conventions within
human rights, environmental and the eight ILO Core
Conventions. The EU will examine each beneficiary
116
every second year. As of 1 August 2013, the EU and
Honduras, Nicaragua and Panamainitiated started
applying the trade part of an Association Agreement
signed in 2012. The agreement will open up markets
and create a stable business and investment
117
relation.
5,0%
111
Others;
13%
US; 50%
Along with five other Central American countries,
Nicaragua has entered an association agreement with
EU, which has not yet entered into force. The
Association Agreement is to strengthen regional
integration between the Central American countries
including
cooperation,
harmonisation
and
improvement of labour market. In turn, the EU will
118
provide trade benefits.
Canada;
8%
Trade agreements
Nicaragua has bilateral trade agreements with Costa
Rica, Mexico, Panama and Taiwan, and is also
negotiating trade agreements with Canada and Chile.
19
Export Processing Zones (EPZs)
Nicaragua’s EPZs where first established in 1991,
though there had been minor free zones since the
119
1970s.
specific minimum wages, and they are the same in
121
EPZs.
A tripartite agreement on the EPZ was reached in
December 2012 between the Government, the trade
unions CST, CST-JBE, CUS, CUT and the employer
organisations ANITEC and FCNZFP. The point of the
agreement is wage increases of 8%, for four
122
consecutive years 2014-2017.
As of 2010 there were 49 EPZs in Nicaragua with 147
enterprises, which according to the National Free
Trade Zone Commission (CNZF) have created 84,900
directs jobs and 254,700 indirect jobs, and exports for
US$1.57 billion. The largest sector is textiles
120
comprising 60 enterprises and 69% of direct jobs.
Anecdotal evidence suggests that EPZ workers in
Nicaragua are denied the legally mandated minimum
wage under the current government. In fact, low pay
and violations of labour law have characterized
Nicaraguan EPZs. Wages in comparable industries
outside the zones are higher on average, though.
There has also been a hostile social dialogue at times
within the EPZs. It is noteworthy that women have
played an important role in Nicaraguan labour
123
struggles.
Export constitutes close to 40% of Nicaragua’s GDP,
much of this from the Export Processing Zones. A 60hour workweek, including overtime, pays below
estimated costs of living.
In 2008, 20 collective bargaining agreements were
signed in the EPZs covering 54,054 workers out of
73,200 workers in 2008. It is illegal for employers to
restrict unions, but dismissals due to union activities
are still common. Nicaragua has several industry
20
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22

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