Business in Nicaragua could receive an unexpected and unwelcome Valentine’s Day present, an adjustment to the minimum salary that could reach 18% if they meet the expectations of the strong Nicaraguan trade unions. In addition to the substantial salary increases, the unions are also demanding the business do not increase the prices of their products and services, delivering a double whammy to the already challenged business economic environment.
These demands could be very difficult to meet for the already Nicaraguan coffee industry, already plagued by the ongoing “Roya” infection, decreasing worldwide prices, and the potential 18% salary increases. The industry challenges may be compounded by the increasing production in Brazil and other countries, and the worldwide recession that is still holding back demand and prices. The requested salary increases could also tax the developing Nicaraguan tourism industry if hotels and service business need to increase their employees salaries, and drive those tourists back to better known regional destinations such as Costa Rica and Panama.
One of the primary long term consequences of these salary increases could be a continued inflation, and a reduction in the competitiveness of Nicaragua as a location for relocating international business. With over 500,000 unemployed the country needs to attract more foreign investment, and balance the immediate economic needs of its citizens with their long term needs to attract more and better industries to the country. Daniel Ortega the current president of Nicaragua should look more to their little neighbors in the south (Costa Rica, and Panama) than to his Venezuelan and Cuban heroes, if he wants to actually move the economy of the country forward.