Nicaragua's labor situation is in terrible condition with over half of the nation under-employed, wages at incredibly low levels (the lowest in the Americas), and abuses of labor rights. An estimated 1.7 million Nicaraguans are part of the labor force with that figure divided between the service, agricultural, and manufacturing sector at 45%, 40%, and 15%, respectively. A new labor code was created in 1996 which seems to foreshadow an improvement in labor conditions and rights of the workers.
One major problem with labor in Nicaragua is that unskilled laborers are a dime a dozen. There is a severe lack of trained technicians, managers, and even basic personal such as clerks and cashiers. On the other hand, this does create abundant low-cost labor. Nicaraguan workers are required, by law, to make up at least 90% of any labor force. Even after workers are hired, they usually receive minimal training in doing their job and are rarely taught about sales service and costumer support. A few international companies have attempted to train their employees to meet higher standards and the results have been prosperous and welcomed.
The minimum wages for each class of worker was raised in 1997, but this has had little or no affect because the minimum wage is so low that most workers make well above the set amount.
The idea of severance pay, which was instituted in the new labor code, has caused quite a few problems between employers and employees.
The Ministry of Labor has set up the Labor Code so that grievances are brought by an individual or groups to the employer first and then to the Ministry. If the Ministry decides that the firm is infringing on the rights of laborers, then it has the right to suspend its activities.
According to the new code, strikes, which have been all too common in Nicaragua, are too be used only as a last result--all other resources must have been exhausted. If the strike is considered illegal by the Ministry, than the employer may legally fire all striking employees. Employers are required to get permission from the Ministry before firing a large group of employees for any reason. Employers are also required to give the employee a month's notice before termination and two paid hours of leave daily so that they can search for a new job.
Unions, which obviously play a large role in strikes, are useful because only unions are allowed to bargain collectively with employers. Unions have been decreasing in potency since the end of the Sandinista regime as members deserted in opposition to their typically radical actions. The fact that so many people are out of work has also made the workers with jobs unwilling to do the union's bidding.