The cost of the basic food basket (a set of products considered essential for the subsistence of a family of five) for the month of April is more than 6600 córdobas higher than the highest minimum wage in Nicaragua. The highest minimum wage is paid to construction workers, financial establishments, and insurance. The gap rises to almost 12,500 córdobas when compared to the lowest minimum wage set for the agricultural sector.
The gap between the two indicators is a constant topic of discussion between workers and employers, with an unstoppable rise in consumer prices, which reached 4.05% in April. The combination of a basic food basket that increases in price at a faster rate than minimum wages are corrected translates into constant anguish for the heads of families who must solve their day-to-day problems, day in and day out.
This feeling of economic asphyxiation hits hardest for those who have the least. CONFIDENCIAL spoke with two housewives and an underemployed worker, who narrated the difficulties they must overcome to try to stop the deterioration of their standard of living, while they observe how it is increasingly difficult to bring money home.
Although the three main components of the basic food basket (‘food’, ‘household products’, and ‘clothing) reported increases in price during the first four months of the year, the one that includes the ingredients necessary to serve three meals a day to the family is the one that worries housewives the most, especially when comparing how this item has risen so far in 2022.
At the end of December 2021, a family needed 11 096.45 córdobas to acquire a basket of 23 products (four basic foods, four types of meat, cereals, dairy products, eggs, and eight different perishables), but at the end of April, 11 976.6 córdobas were required to buy the same amount of the same products, which implies an increase of 880.15 córdobas, or 7.9% more.
Economist Marco Aurelio Peña, a specialist in Economic Development, does not consider that the 4.05% of accumulated inflation as of April reported by the Central Bank of Nicaragua (BCN), is “soaring”, but he does recognize that “it punishes the purchasing power of Nicaraguans because nominal salaries do not register increases that are proportional to the increase in prices”.
Geovannia’s story coincides with Peña’s statement. This housewife and mother of two adult daughters has a degree in engineering, but since she could not find work in her profession she started creating handicrafts, and since she was doing acceptably well to supplement her husband’s income, she did not go back to look for work in her own field.
On her last visit to the corner grocery store last week, she found that a pound of beans, which cost 20 córdobas, had gone up to 24; that the best rice had already reached 20 córdobas, while the lowest quality was at 15; that for a liter of oil on tap they were asking 80 córdobas, and that cheese was now offering a breather: 75 córdobas a pound, instead of the 80 to 90 at which it had been priced.
Although this is not her case, she says that she sees how some of her neighbors purchase ten córdobas of cooked beans and two eggs to survive another day.
“My youngest daughter, who works at a private company, receives a stipend at her job, and we share it with another daughter, my mother-in-law, and a neighbor who is in need,” she says.
Things are not at all different if she decides to shop in a supermarket, thinking that she will be able to save a bit of money, because “before, a trip to the supermarket cost us 2,500 córdobas. Now, just by buying a few basic items, you can easily reach 1200 or 1500 córdobas, so what we do is buy less than we need,” she explains.
Her skill for handicrafts, which allowed her to generate additional income, is an activity that is in decline, because “I receive fewer requests for my products since last year” because people sometimes prefer to buy Chinese products, which are cheaper; and also because they don’t have much to spend on decorations. “They prefer to have a simple party because there is not so much money to spend on celebrations,” she explained.
Economist Peña points out that the increase in inflation is considered “a tax for the ordinary citizen,” who has to allocate an increasing percentage of his income to buy the consumption basket. “If a liter of milk goes up from 30 to 40 córdobas, the VAT to be paid to the government will have to be calculated against a much higher market price, and this increase in revenue is detrimental to the standard of living of the citizens”, he explains.
Elena is another mother, like Geovannia, only she has three young children (the two older ones, 9 and 5 years old, are already in school), and she does not have a partner with whom to share the burden of maintaining the household.
Like Geovannia, Elena is also a mother struggling to make ends meet. She has three young children (the two older ones, 9 and 5 years old, are already in school), and she does not have a partner with whom to share the burden on maintaining the household.
Shopping in her neighborhood grocery stores is a constant source of anguish, especially when she notices that the only thing that has gone down in price is cheese, which she can now buy for 70 córdobas a pound, although that is significantly more expensive than a pound of chicken breast, which costs 56 córdobas, while for a pound of beans she is charded 24 córdobas.
If the choice is to buy eggs, she must decide whether to go to the market and pay 135 córdobas at once to buy a box of thirty eggs, or pay six córdobas per egg in the shops near her house. Given that the liter of oil is almost 90 córdobas, she is opting to give her children cooked maduro instead of fried maduro, cooked beans instead of fried beans, or to look for other ways to prepare chicken, although she admits that there are foods -such as rice- that she cannot stop frying.
February brought its own share of worries. When it was time for the family to visit the stores of the Iván Montenegro market to buy uniforms and school supplies for her children, as well as shoes for each one, they found that the pants that used to cost 250 córdobas, now cost 280 córdobas. The same thing happened with shirts, T-shirts, backpacks, and notebooks, which a year ago cost 19 córdobas if bought by the dozen, but now cost 32 córdobas if bought in the same quantity.
After she stopped selling perfumes and cosmetics – because “people don’t have money for that, because they have to prioritize food”, Elena started dedicating her time entirely to selling fruits and vegetables from her home, where seh sometimes makes 80 córdobas a day, although there are other days when she closes with sales of 500 to 600 córdobas, although “the normal amount is 300 córdobas”.
Whatever the amount sold in a day, she has to pay for the fares to take her children to and from school, for the day’s meals, and to pay off the loan she received from a microfinance company.
The problem is when one of her children gets sick, like a month ago when her little girl had pneumonia, because “medicine is expensive”, and although the hospital gave her some of the medicines prescribed by the doctor, “I had to buy some on my own to nebulize her and maintain her treatment, and now I give her vitamins to make her stronger. What I do is take better care of the children, so that none of them get sick,” she says.
What Elena is now experiencing is a warning of the possibility of worse times to come, because the increase in prices “is one of the main elements that could generate recession… both in Nicaragua and in the world”, explains Julio Sevilla, a Nicaraguan professor of Business at the University of Georgia.
When the pandemic began to ease, inflation was expected to slow down, but Russia’s aggression against Ukraine raised prices in the global economy, starting with oil, the price of which could rise again. Paying more for a barrel of oil slows down economic dynamism, because “the money that could be left in the country to move the economy, will go out to pay exporters”, he recalled.
According to the report ‘State of the Economy and Perspectives’ as of May 2022, published by the BCN, as of February, the Monthly Index of Economic Activity (IMAE) registered an inter-annual growth of 4.7%; at the end of the first quarter, the unemployment rate was 4.2%, while the number of social security affiliations grew by 20,601.
Once again, the statistics published by the BCN -or any other agency of the Nicaraguan Government- do not seem to be related to the reality experienced by the majority of Nicaraguans.
In the case of Léster, a man who has not yet reached the age of 30 and did not complete high school, has to work “in whatever is available” if he wants to provide for his four children, even if it is only the basics.
“I applied to several places, I looked for a position in the maintenance area of a free trade zone in Las Brisas, and also in construction projects, but none of them accepted me. The answer is that there is no budget, or that they are making personnel cuts,” he says.
A few months ago he managed to get hired for several weeks in a project of the Managua Mayor’s Office – carried out by a private contractor – to lay drinking water pipes in neighborhoods of the capital, earning 300 córdobas per day, without a contract or social security. With an entry time, but no exit time.
“If they have you work at night, they hardly give you dinner, and when payday comes, they pay those who are closest to them first because they have worked together for a while. But for those of us who are hired on a temporary basis, they don’t pay us overtime, and we are always the last ones to get paid. If they make you work on Sundays, they don’t pay overtime either, or at most, an extra 100 cordobas. If you complain, they tell you ‘if you like it, fine, and if you don’t, you can leave,’” he complained.
These contractors do not comply with labor safety measures, because they do not provide reflective vests for working at night, “even with working with heavy machinery”. Nor do they provide helmets, gloves, goggles, or masks. “In most cases, you have to carry you rown personal protective equipment, and an extra shirt to protect you from the dust or the sun,” he stresses.
In his case, the alternative is to go out with a cart to buy recyclable material to sell to scrap dealers. “Before, I used to go out to sell ice cream, but now they ask for more requirements, in addition to the fact that less and less is being sold. Sometimes, if you are lucky, you can earn 500 a day, but if you do badly, only 100 to 200, after spending all day in the sun, walking kilometers and kilometers, and running the risk of being robbed, or the product thawing,” he said.
Economist Peña recalls that surveys conducted in the country reveal that the citizens identify unemployment as the main problem, even above politics. In contrast, “the Government says that there is no reason to worry about unemployment, because not even in times of crisis, nor during the recession from 2018 to 2020, did it reach 10%,” he notes with irony.
“That is not congruent with the perception that Nicas have about their own economic reality, although if they did this survey now, people would complain more about the prices. The Government says that the GDP will grow between 4% and 5%, as if everything is fine, but what we see is that people keep leaving the country by the thousands”, added the expert.
Although he prefers to continue looking for work in his own country, Léster does not rule out emigrating to see if in another country he can find what his own country no longer offers: opportunities.
This article was originally published in Spanish in Confidencial and translated by our staff
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