Lydia is a free zone worker in Managua. She works on a shirt assembly line in the Las Mercedes Industrial Park and in January 2024 she received some news that, despite sounding good, did not excite her all that much: the Government of Daniel Ortega, employers and unions decided to increase the salary for maquila workers. The so-called “tripartite commission” established a new monthly minimum wage of 8,746.46 córdobas, or 239 dollars at the official exchange rate. In practical terms, an increase of 18 US dollars.
“Something is something, but it is always insufficient. Life is more expensive every day,” Lydia tells EL PAÍS by phone and with fear, which is why she asks to remain anonymous. “I have two small children, I am a single mother and we have no other choice: we have to bite the bullet, especially when it comes to food.” With the increase, Lydia now earns 8,098.46 córdobas, about 221 dollars a month. But that amount is insufficient to buy the 22 basic products in the Nicaraguan basic basket. “What one does is find a compromise: one eats rice, beans, instant soups, cheese when one can afford it, or instead of cheese, cream, because it goes further,” says the woman.
Despite the propaganda of prosperity promoted by the Ortega regime and his wife, the “co-president” Rosario Murillo, 86.8% of Nicaraguans say they cannot cover the cost of the basic basket. This data is revealed in a report entitled Perception of the Political, Social and Economic Reality of Nicaragua, conducted by the organization Let’s Make Democracy. The independent report, based on 200 sample surveys, adds that 87.3% of the people surveyed said that their income does not allow them to cover all their monthly and daily expenses for their families. Only 12.7% of those surveyed said yes.
Lydia is in that group, among the most affected. According to the National Information Institute (Inide), the cost of the basic basket of goods in Nicaragua in May 2024 was 20,560 córdobas, about 555 dollars. That is, if Lydia invested her entire salary in buying the basic basket, it would barely be enough to buy a third of it.
In Nicaragua, a family of four needs to buy 14,414 cordobas (394 dollars) a month for groceries alone. This means that even two equal minimum wages for state workers cannot buy basic food for a family. All this does not include household expenses: rent, gas, transportation, water, electricity, soap, detergent, toothpaste, clothing, among others.
Disparity between wages and purchasing power
“These data show that, in today’s Nicaragua, the way wages are made up in contrast to what they are supposed to cover, employment is already ineffective in generating stability and solvency for families, whose quality of life is deteriorating,” indicates the Hagamos Democracia study. While food prices have increased between 26% and 146% in the last six years, real wages — which measure purchasing power according to the Central Bank of Nicaragua (BCN) — have decreased by more than 20%. A disparity that Nicaraguan citizens feel in their pockets when they pay for their food.
According to data from Inide, in the last six years, basic food baskets — indicated for a family of two adults and three children — have increased in price by 60%. The latest price approved by the Government, of 20,560 córdobas, is the highest in the last 40 years in Nicaragua. The cost of basic food basket products has skyrocketed due to the imbalance left by the coronavirus pandemic. The imbalance between global demand and supply has driven up prices around the world and, therefore, inflation that is not giving up. This economic phenomenon is hitting Nicaraguans hard, who live in the second poorest country in Latin America after Haiti.
Precarious employment and remittances
The Hagamos Democracia report, which was carried out due to the lack of reliable data from the Ortega-Murillo government, also warns of the precariousness of the jobs that Nicaraguans have. The surveys of the citizens showed that the great majority of people are self-employed, with 55.3%. This represents a significant increase of almost 10% compared to previous surveys carried out by the organization. 28.3% of those surveyed have formal employment, a percentage that decreased compared to previous reports. 16.2% are unemployed, which has not had much variability.
Let’s Make Democracy concludes that the large increase in people in informal work has a direct impact on their ability to earn a salary to cover monthly expenses, and also has negative effects on the lack of contributions to the social security system, and on the need and desire to migrate. “This increase in informal work reveals the Government’s inability to generate jobs, and the absence of private employability,” states the report prepared by researcher Manuel Orozco of the Inter-American Dialogue and economist Enrique Sáenz.
Greater dependence on remittances
Another aspect that experts highlight is family remittances. This injection of money forms an important part of the income of 6 out of 10 Nicaraguans surveyed: the impact of remittances on the Nicaraguan economy is so strong that without them economic growth would be negative. However, unlike in previous years, remittances are necessary for people’s monthly subsistence.
“This means that remittances are no longer for shoes or clothes that were previously bought, now they are for buying food for the fortnight and basic expenses,” said Jesús Tefel, director of Hagamos Democracia during the presentation of the report. Although remittances, which amounted to 1,140.9 million dollars in the first quarter of 2024 according to the BCN, are important for the country’s economy, families are becoming dependent on this income.
After six years of socio-political crisis, the Nicaraguan population still maintains an “absolutely majority desire to migrate if they could do so.” 61.4% of those surveyed said they would migrate if they could, compared to 38.6% who said they would not. Since 2018, more than one million Nicaraguans have fled the country due to political persecution and economic hardship.
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