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Nicaragua - Compensation & Benefit Legislation

CAPITAL

Managua

 

CLIMATE

Tropical climate in the lowlands, cooler climate in the highlands.

 

LANGUAGES

Spanish (official).

 

LEGAL SYSTEM

Nicaragua’s legal system is a civil law system. The Supreme Court may review administrative acts.

 

CURRENCY

Nicaraguan Cordoba Oro (1 USD = 14.1700 NIO as of May 15, 2002).

 

NICARAGUA - COST-OF-LIVING

ERI's Relocation Assessor is a recommended source for cost-of-living data.

 

NICARAGUA - EMBASSY/CONSULATES

U.S. Embassy at Managua

Apartado Postal 327

Kilometro 4 ½ Carretera Sur

Managua, Nicaragua

APO AA 34021

Telephone: [505] (2) 662298

Fax: [505] (2) 669074

http://usembassy.state.gov/managua/

 

Embassy of Nicaragua at Washington D.C.

1627 New Hampshire Avenue N.W.

Washington D.C. 20009

Telephone: (202) 939-6570

Fax: (202) 939-6542

 

NICARAGUA - HOLIDAYS

 

NICARAGUA – LEAVE

Maternity Leave: 12 weeks – 60% of pay (paid by social security).

 

NICARAGUA - MINIMUM AGE

Comprehensive labor legislation protects children up to the age of 18. The Constitution also provides protection from any type of economic or social exploitation. The law prohibits child labor in areas such as mines and garbage dumps and imposes heavy fines for illegal employment. The 1996 Labor Code raised the age at which children may begin working with parental permission from 12 to 14 years. Parental permission to work also is required for 15- and 16-year-olds. The law limits the workday for such children to 6 hours and prohibits night work.

 

(Section 6.d. Acceptable Conditions of Work, Nicaragua – Report of Human Rights Practices, 2001, U.S. Department of State.)

 

NICARAGUA - MINIMUM REMUNERATION

The minimum wage is set through tripartite (business, government, and labor) negotiations and must be approved by the Legislative Assembly. A different minimum wage applies to each sector of the economy. A new minimum wage scale took effect in February 2001, over 1 1/2 years after the last increase, although by law minimum wages must be revisited every 6 months.

 

With some exceptions, such as the fishing and government sectors which remain unchanged, the new monthly minimum wage schedule increased wages for all sectors by approximately 12 percent: agriculture, 642 cordobas (approximately $47) plus food; fisheries, 700 cordobas ($51); mining, 1,970 cordobas ($145); industrial manufacture, 1,016 cordobas ($75); electric, gas, and water utilities, 1,320 cordobas ($97); construction, 1,608 cordobas ($118); restaurants and hotels, 1,290 cordobas ($95); transportation, 1,322 cordobas ($97); banking, 1,172 cordobas ($86); community and social services, 947 cordobas ($70); central and municipal government (includes health and education employees), 550 cordobas ($40); and FTZ 960 cordobas ($71).

 

(Section 6.e. Acceptable Conditions of Work, Nicaragua – Report of Human Rights Practices, 2001, U.S. Department of State.)

 

NICARAGUA - REMUNERATION

ERI's Geographic and Salary Assessors are recommended sources for international remuneration covering 189 countries.

 

NICARAGUA - REPORT OF HUMAN RIGHTS PRACTICES (2001, U.S. DEPARTMENT OF STATE)

Section 6 Worker Rights

 

a. The Right of Association

 

The Constitution provides for the right of workers to organize voluntarily in unions, and the new Labor Code that entered into effect in 1996 reaffirmed this right. The ILO has criticized various provisions in the Labor Code that remain below international standards. All public and private sector workers, except those in the military and the police, may form and join unions of their own choosing, and they exercise this right extensively. The Labor Code permits the existence of more than one union, representing the same group of workers, at any place of employment. To become a union, a group of at least 20 persons must petition the Ministry of Labor for legal status and the right to engage in collective bargaining (see Section 6.b.). The Labor Code legally recognizes cooperatives, into which many transportation and agricultural workers are organized. Representatives of most organized labor groups criticize these cooperatives, and assert that they do not permit strikes; have inadequate grievance procedures; are meant to displace genuine, independent trade unions; and are dominated by employers. According to the Ministry of Labor, approximately 15-16 percent of the work force is unionized. Union membership continued to decrease during the year. Unions are independent of the Government, although many are affiliated with political parties.

 

The Constitution recognizes the right to strike; however, legal strikes are rare. The Labor Code requires a majority vote of all the workers in an enterprise to call a strike. The Labor Code requires that before a union may strike, it must first receive approval from the Labor Ministry. To obtain approval, the union must go through a process that requires good faith negotiation with management. The Labor Ministry asserts that it would take approximately 6 months for a union to go through the entire process to be permitted to have a legal strike. Observers contend that the process is inappropriately lengthy and so complex that there have been only three legal strikes since the 1996 Labor Code came into effect; however, there have been several illegal strikes (see Section 6.b.).

 

The Labor Code prohibits retribution against strikers and union leaders for legal strikes. However, this protection may be withdrawn in the case of an illegal strike. Workers involved in illegal strikes often lose their jobs.

 

The Labor Code provides protected status to union leaders, requiring that companies receive permission from the Ministry of Labor after having shown just cause to fire union executive board members. Such protection is limited to nine individuals per union. However, the Labor Code allows businesses to fire any employee, including union organizers, provided the business pays the employee double the normal severance pay. Business leaders sometimes use this practice to stymie unionization attempts.

 

Unions freely form or join federations or confederations and affiliate with and participate in international bodies.

 

b. The Right to Organize and Bargain Collectively

 

The Constitution provides for the right to bargain collectively, and the 1996 Labor Code reaffirmed this right. The Government generally sought to foster resolution of pressing labor conflicts (usually in the public sector) through informal negotiations rather than through formal administrative or judicial processes. According to the 1996 code, companies engaged in disputes with employees must negotiate with the employees' union if the employees are thus organized. However, the possible existence of more than one union at any place of employment means that several unions, each with different demands, can coexist at any one enterprise. Similarly, management may sign collective bargaining agreements with each union.

 

There are 34 enterprises operating in the government-run free trade zones (FTZ), employing approximately 30,000 workers; labor laws apply equally in the FTZ's, except for the minimum wage which varies by industry. In addition, there are 4 authorized private FTZ's; the 10 enterprises in these zones employ some 11,000 workers. Approximately half the workers in the government-run FTZ are represented by a union organization; however, only about 10 percent of them are actual union members. While some of these unions have real collective bargaining power, others are primarily symbolic. The Ministry of Labor reports that there were eight collective bargaining agreements in effect in the FTZ's and five in the negotiation process. Union organizing efforts have encountered strong employer opposition in the FTZ's.

 

There have been several allegations of violations of the right to organize, primarily at the Las Mercedes FTZ, the largest in Managua, with 15 enterprises and approximately 26,000 workers. The Ministry of Labor has investigated these allegations and has concluded that employers have acted within the law, taking advantage of the extensive administrative requirements necessary to declare a strike legal (see Section 6.a.). Notwithstanding the legality of employer actions, the result has been to weaken significantly an important union in the FTZ, the Sandinista Workers Central (CST). The CST has declared several strikes without first exhausting the very lengthy and complex administrative process of getting the required majority of the workers (see Section 6.a.). Consequently, the Ministry of Labor consistently has ruled the strikes illegal. Employers then fire the striking workers based on the Ministry's ruling.

 

In essence, employers have taken advantage of the extensive administrative requirements required to declare a strike legal and the CST's failure to follow the prescribed rules.

 

In April 2000, the representatives of the CST tried to obtain authorization from the Ministry of Labor to go on strike at Chentex, a Taiwanese-owned textile factory, for its failure to honor the terms of its collective bargaining agreement. Negotiations broke down because the CST sought to increase the factory's minimum salary from $62 to $115 (800 to 1,500 cordobas) per month, an increase which fell below the Government's estimate of 1,600 cordobas per month for a basic basket of goods (see Section 6.e.). After 50 CST workers participated in a work stoppage, management requested and received permission to fire 11 of the 13 CST board members based on participation in an illegal strike. All of the dismissed members filed an appeal before the labor court, which subsequently found that the workers had been fired properly. The CST then appealed that finding to an appellate court. In addition, scores of workers were fired while many others resigned to show their support for the fired board members.

 

The CST organized a series of work stoppages leading to the occupation of the factory in May 2000. Chentex then filed criminal charges against the nine board members for damaging property, kidnaping management personnel, and injuring security persons during the takeover. Chentex later filed a petition to have the CST's legal status dropped because after the firings and resignations, they failed to meet the legal minimum of members.

 

In April an appellate court ruled that the CST board members had been fired improperly. Soon thereafter, Chentex and the CST signed an agreement that provided that Chentex would rehire 4 of the 11 fired board members. The remaining seven received backpay, double severance, vacation pay, and a bonus of approximately $1,130 (15,000 cordobas). In addition, Chentex agreed to rehire 17 other fired CST workers and to drop all ongoing litigation. As agreed, Chentex rehired the four board members. However, within 1 month, all four CST board members had left the factory. In exchange, Chentex gave each the same severance package as the other seven, who were not rehired. Although the agreement called for the rehiring of 17 non-board members, Chentex and the CST could find only 4 of these who were willing to return to work. These four also have left, allegedly because the CTN workers did not welcome them. The CST's membership at Chentex now falls below the 20 required to be certified, and the CST is no longer a workable union at the factory.

 

In January 2000, Mil Colores, a textile factory, asked the Ministry of Labor for permission to fire 50 workers as a money-saving measure. Included in the request were 26 of 34 workers who had petitioned in that same month to certify the CST union. The Ministry granted the factory's request to fire the workers and at the same time denied the CST's request because, once the 26 workers were fired, the CST would count only 8 workers as members and therefore would fail to meet the 20-member minimum requirement for certification. The CST alleged collusion between the Ministry and Mil Colores, specifically, that the factory's request to fire the workers was backdated to precede the attempt to form a union. This led to further dismissals and a violent confrontation between workers and security guards and police; 30 persons were injured and 5 were arrested. Shortly thereafter, the company filed criminal charges against 68 workers for involvement in the incident. The president of Mil Colores subsequently dropped all charges and came to an agreement with the CST to rehire dismissed workers on a case-by-case basis. By the beginning of the year, Mil Colores had rehired several CST workers and the CST union had been certified. However, the leader of the CST union resigned from his position abruptly and left the factory. Several others also resigned. By December the CST union at Mil Colores fell below the number required for certification and was decertified by the Ministry of Labor.

 

Other than the labor dispute at Chentex, which was not resolved until May, there were no other significant labor disputes this year.

 

In response to longstanding complaints by union representatives that the Ministry of Labor poorly enforced the Labor Code in the FTZ's, in 1997 the Ministry opened an office in the Managua FTZ to ensure that the code was being enforced. FTZ officials claim that, due to memories of the corrupt and ineffective unions of the 1980's, many workers in the FTZ enterprises simply have no interest in unionizing. They also claim that wages and working conditions in FTZ enterprises are better than the national average. For example, some FTZ enterprises assert that they pay wages that average over $192 (2,400 cordobas) per month, three times the minimum wage.

 

c. Prohibition of Forced or Compulsory Labor

 

The Constitution prohibits forced or compulsory labor but does not specifically address forced or bonded labor by children, and such practices occur. The Ministry of Labor continues to report that some children were forced to beg by their parents, and that some were rented by their parents to organizers of child beggars (see Sections 6.d. and 6.f.). There were reports during the year of trafficking in women and girls for the purpose of sexual exploitation (see Section 6.f.).

 

In July 2000, the Labor Ministry investigated charges of forced labor at a textile factory located outside the FTZ, but operating under the same rules and enjoying the same tax incentive as FTZ companies. The inspector verified that some 34 workers had begun work at 7:00 a.m. the previous day and still were working at 10:00 a.m. the next day when the inspector arrived--a total of 27 hours. The company produced signed documents from the workers stating that they had agreed voluntarily to work extra hours. Privately, the workers stated that they had signed the document for fear that they would be fired if they refused. Moreover, they understood that they would work only 2 extra hours. Although there is no evidence that the company made any threats, the fact that all 34 workers who were requested to work overtime agreed to do so indicates that the workers believed they would be fired if they refused. The workers were only provided with a piece of bread and a bottle of soda during the night that they spent at the factory. The human resources manager who allowed the inspector into the factory subsequently was fired. The Ministry of Labor issued the company a warning and threatened heavy fines and possible closure if the problem recurred. There were no other similar incidents during the year.

 

d. Status of Child Labor Practices and Minimum Age for Employment

 

The Constitution provides for the protection of children's rights and prohibits child labor that can affect normal childhood development or interfere with the obligatory school year; however, child labor is a problem. Comprehensive labor legislation protects children up to the age of 18. The Constitution also provides protection from any type of economic or social exploitation. The law prohibits child labor in areas such as mines and garbage dumps and imposes heavy fines for illegal employment. The 1996 Labor Code raised the age at which children may begin working with parental permission from 12 to 14 years. Parental permission to work also is required for 15- and 16-year-olds. The law limits the workday for such children to 6 hours and prohibits night work. However, because of the economic needs of many families, a cultural legacy of child work among peasants, and lack of effective government enforcement mechanisms, child labor rules rarely are enforced except in the small formal sector of the economy.

 

There are no reliable figures regarding the number of working children, but the Government reports that child labor occurs in both urban and rural areas. The latest official figures estimate that approximately 292,488 children are employed; CENIDH estimates that there are approximately 322,000 working children. Over 140,000 children are employed in rural areas at coffee, tobacco, rice, and banana plantations. In Managua over 6,000 children work on city streets, selling merchandise, cleaning automobile windows, or begging. According to a 1998 UNICEF report, approximately 42 percent of children between the ages of 6 and 9 work. A 1996 study by the National Commission against Child Labor concluded that over 161,000 children between 10 and 19 years of age worked, including approximately 109,000 employed in rural areas such as coffee, tobacco, rice, and banana plantations. The study found that 6,219 children worked in urban areas as beggars, or self-employed car washers or parking attendants. The Ministry of Labor continues to report that some children were forced to beg by their parents, and that some were rented by their parents to organizers of child beggars. Child prostitution is a serious problem (see Section 5).

 

The Ministry of Labor established an inspection unit to monitor occupational safety and health in the agricultural sector, signed agreements with nightclubs and restaurant owners who pledged to comply with labor laws and issued a resolution in 1999 prohibiting employment of minors specifically in the FTZ's. However, child labor occurs due to most families' need of extra income.

 

The Ministry of Family sponsors several programs that target working minors. These programs, which cover up to 10,000 children nationwide, include childcare services, return-to-school programs, and technical and vocational training. The programs also include training for parents and teachers. The Ministry of the Family, in conjunction with the Ministry of Education, established a program--known as the Traffic Light Plan--to keep 647 children off city intersections where they wash windshields, sell fruit, or beg for money from motorists stopped at red lights. The program provides housing for the 75 percent of these children who are homeless and schooling for the 60 percent who are school dropouts. The Ministry of Family reports that out of 600 children in the Traffic Light Plan, 498 (or 83 percent) returned to school. The remainder returned to the intersections to work.

 

In September the Government ratified ILO Convention 182 on the elimination of the worst forms of child labor; most of its provisions already were incorporated into the Labor Code. The Convention took effect in June.

 

e. Acceptable Conditions of Work

 

The minimum wage is set through tripartite (business, government, and labor) negotiations and must be approved by the Legislative Assembly. A different minimum wage applies to each sector of the economy. A new minimum wage scale took effect in February, over 11/2 years after the last increase, although by law it must be revisited every 6 months. With some exceptions, such as the fishing and government sectors which remain unchanged, the new monthly minimum wage schedule increased wages for all sectors by approximately 12 percent: agriculture, $47 (642 cordobas plus food); fisheries, $51 (700 cordobas); mining, $145 (1,970 cordobas); industrial manufacture, $75 (1,016 cordobas); electric, gas, and water utilities, $97 (1,320 cordobas); construction, $118 (1,608 cordobas); restaurants and hotels, $95 (1,290 cordobas); transportation, $97 (1,322 cordobas); banking, $86 (1,172 cordobas); community and social services, $70 (947 cordobas); central and municipal government (includes health and education employees), $40 (550 cordobas); and FTZ $71 (960 cordobas). The minimum wage does not provide a decent standard of living for a worker and family. With the exception of the mining sector, the minimum wage falls below the government estimate of what an urban family must spend each month for a basic basket of goods ($135, or 1,832 cordobas). The majority of urban workers earn well above the minimum rates.

 

The Labor Code incorporates the constitutionally mandated 8-hour workday; the standard legal workweek is a maximum of 48 hours, with 1 day of rest weekly. The 1996 code established severance pay at from 1 to 5 months, depending on the duration of employment and the circumstances of firing. However, persons fired for cause may be denied severance pay through a process that requires employers to demonstrate proof of worker misconduct. The code also established an employer's obligation to provide housing to employees who are assigned temporarily to areas beyond commuting distance.

 

The Labor Code seeks to bring the country into compliance with international standards and norms of workplace hygiene and safety, but the Ministry of Labor's Office of Hygiene and Occupational Security lacks adequate staff and resources to enforce these provisions. The code gives workers the right to remove themselves from dangerous workplace situations without jeopardy to continued employment.

 

In May a court ordered several foreign companies to pay more that $1 billion (13.5 billion cordobas) to banana workers who had been exposed to insecticides from 1968 to 1983.

 

f. Trafficking in Persons

 

The law prohibits trafficking in persons; however, the country is a source for trafficking in women and children for purposes of sexual exploitation. There are reports that procurers from Mexico induce young persons to travel there on the promise of legitimate employment; however, upon their arrival, they are sold to the owners of brothels and then forced to work as prostitutes to repay their debts upon arrival. There were reports in the past that children were trafficked to Guatemala by organized crime rings for the purposes of prostitution. In July 1999, the media reported that Nicaraguan girls had been lured to Guatemalan clubs to work as dancers and waitresses but upon arrival were forced into prostitution.

 

NICARAGUA - SOCIAL SECURITY

Social Security Office of International Programs:

 

http://www.ssa.gov/SSA_Home.html

 

NICARAGUA - STANDARD WORKWEEK

The Labor Code incorporates the constitutionally mandated 8-hour workday. The standard legal workweek is a maximum of 48 hours, with 1 day of rest weekly.

 

(Section 6.e. Acceptable Conditions of Work, Nicaragua – Report of Human Rights Practices, 2001, U.S. Department of State.)