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Fighting for a living wage in Nicaragua

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30 October, 2012Garment workers in Nicaragua producing high-quality apparel are earning barely 40 per cent of the government’s ‘basket of goods and services’. Let’s take the case of Veronica.

Veronica, a single mother with a six year old daughter, Angie, and a fifteen year old son, Marvin, is a union leader at the factory where she works. Her story is factual; only her name has been changed to protect her identity.

Over the years she has worked in a number of different factories, but two years ago she landed a job in one of the better companies in the industry, so in that respect things are looking up. But her life is far from easy.

At school Veronica was never much good at numbers, but as a single mother of two working in the garment sector she’s had to come to terms with subsistence maths.


Let’s start with Veronica’s weekly pay. She earns a basic weekly wage of 771 córdobas (US$32) for a 48 hour week.

Let’s assume she reaches her production target, which will give her a bonus of 300 córdobas (US$12.50). You could call this ‘incentive’ pay though in reality it’s more of a stick than a carrot: if Veronica doesn’t break her back all week, she doesn’t reach her target.  Nor is it just a question of working hard: if the factory doesn’t have enough work, she won’t get the bonus.

With overtime, she can usually count can sometimes add another 700 córdobas. But let’s assume for a moment that Veronica sticks to the internationally recognised limit of 12 hours of overtime a week: that would give her an extra 384 córdobas (US$16).

So, that’s 1,455 córdobas (US$60.70) for a 60 hour week. And now we have to start subtracting.

Costs of living

First let’s take out the social security contribution, which at 6.25 per cent comes to 90 córdobas (US$3.75).

There’s no income tax to pay, since the government exempted the 110,000 maquila workers. Good news for Veronica, but bad news for the country’s tax base.  

Then she has to put money aside to pay her rent at the end of the month. Her modest two-room house costs 1,200 córdobas a month, so every week she needs to put aside 300 córdobas (US$12.50).

She needs to get to and from work every day.  A single fare costs 4 córdobas, so that’s 48 córdobas a week (US$2).

Working 60 hours a week, she needs to pay someone to look after six-year old Angie. That’s 1,000 córdobas a month - another 250 córdobas (US$10.40) she needs to put aside.

We should probably include electricity, but the truth is Veronica hasn’t been able to pay her bill for years. Tucked away in a hole in the wall is her last bill: she owes 30,875 córdobas, which is over 3 years pay on her basic wage.

Although she only has running water after 5pm, her water bill still comes to 80 córdobas a month. And let’s hope her tank of butane gas doesn’t run out this week – that would cost her another 200 córdobas.

Keeping her cell phone going will cost her another 20 córdobas (US$0.83). She would let this go if it wasn’t the only way of making arrangements for childcare when she gets unexpected overtime.

So rent, transport, childcare and utilities have just eaten up more than Veronica’s basic wage.

But what about food ?

Twice a month, Veronica buys a subsidized food parcel at the factory: five pounds of beans, fifteen pounds of white rice, ten pounds of white sugar, a bottle of cooking oil and three bars of soap take 340 córdobas out of her paycheck every fortnight, or 170 córdobas a week.

At the local store, her weekly bill for food and a few extra items like dish soap and toilet paper is usually about 700 córdobas. This buys her some pork rinds, a pound of onions, a couple of pounds of tomatoes, some red peppers, a packet of stock cubes, eggs, a few bananas, cheese, tortillas, coffee and milk. Very occasionally some chicken or maybe some off-cuts of beef.

It’s not the most nourishing diet (is it any wonder that Veronica suffers from diabetes?) and it’s certainly not enough to feed an adult working 60 hours a week, a teenage boy and a growing girl, but it still takes up 870 córdobas (US$36.32). 

But wait, that already puts us at 1,666 córdobas (US$66.70), which 200 córdobas more than Veronica will be earning this week. As usual she will need to rely on credit from the local shop, because it’s only two days after payday and already she has only 20 córdobas in her pocket.

And what about her kids? At the start of the school year Veronica had to work 48 hours of overtime for two weeks to pay for school uniforms and books.

What about a party for Angie’s seventh birthday? Or a pair of cleats that would let Marvin join the local soccer league? No way.

Ask Veronica about entertainment or community involvement, and all you get is a blank stare. “All I do is work,” she says.

Value of what she produces

But here’s the thing: The factory where Veronica works is a supplier of high-quality clothing for major sportswear brand that prides itself on product innovation and efficient supply chain management.

The style Veronica is currently producing is a long-sleeved shirt that retails at $84.99 in the US. Her line turns out 600 of these shirts a day. At a rough estimate, her union reckons that the total labour costs represents a paltry US$1 of the retail price.

The brand in question has made a commitment to paying a living wage, yet Veronica earns barely half of the official ‘canasta basica’ (basket of needs).

The retailer concerned is approaching 2 billion dollars in revenue this year. The company’s CEO owns 12.5 million shares in the company. In contrast, a mere 60 shares a year would pull Veronica out of poverty and enable her to earn a living wage.

Veronica recently participated in an FES workshop on the living wage in Managua organized by IndustriALL Global Union. She shares the belief that unions need to make the living wage a priority and to take the initiative in calculating a credible and accurate living wage figure.

She strongly supports the demand that brands pay prices that allow suppliers to pay their workers a living wage, and that suppliers uphold the right to organize and bargain collectively to allow unions to negotiate a living wage.