Bus Strike, Minimum Wage and the IMF

Weekly News Update on the Americas, issue #395, 24 August 1997

Inter-city passenger transport operators in Nicaragua began an open-ended strike on Aug. 21 to protest what union leaders are calling an "invasion of new routes" authorized by the government. Some 400 buses covering departments in the north and center of the country have parked their buses on the edge of the Panamerican Highway around kilometer 30 between Managua and Matagalpa. Transport union leader Luis Jimenez charged that the government's move has provoked an excess of service which is "strangling [the operators] economically." According to Jimenez, beginning on Aug. 22 transport cooperatives in the departments of Leon and Chinandega were to join the strike. The transport union leader said that unionists would not block the circulation of private vehicles. Deputy transport minister Pablo Hurtado has warned that if operators do not put their buses back in service their operation licenses will be revoked. [La Prensa (Honduras) 8/23/97 from AFP]

Meanwhile, representatives of the government, private enterprise and unions began talks on Aug. 21 to review Nicaragua's minimum wage, which is currently $15 a month for agricultural workers and $31 a month for other workers. Public employee unions are not represented at the talks. A source close to the negotiations told the press that the government plans to raise the monthly minimum wage to $31 for the agricultural sector and $62.50 for other workers. The unions are demanding a base salary of $118.70 a month, which would still only cover 70% of a family's basic necessities, estimated to cost $169.70. The government claims that a raise of that magnitude would have a negative impact on currency stability. Business representatives are rejecting both proposals but have not yet made their counter-proposal; they plan to present it at the next meeting scheduled for Aug. 26. Salaries in Nicaragua have been frozen since 1991, when the government of Violeta Barrios de Chamorro introduced a structural adjustment plan. [La Prensa (Honduras) 8/22/97 from AFP]

Central Bank president Noel Ramirez has announced that in December the government will sign a new accord with the International Monetary Fund (IMF), which Nicaragua hopes will reduce its foreign debt by 80%. Ramirez said an IMF mission will arrive in Nicaragua during the second half of September to continue the final negotiations, which are expected to end on Oct. 10. The agreement consists of an austerity program which will freeze state spending over the next two years and increase international reserves, said Ramirez. The government has already begun a tax and trade reform program which in 30 months will result in Nicaragua having the lowest tariffs in Central America. If the government manages to get $6 billion of its $12 billion debt forgiven, the government will then have $80 million annually which has been paid to service the debt available to support economic development, according to Ramirez. [Diario Las Americas 8/23/97 from EFE]