The New Salary Policy

Gary Ruchwarger

WAGES IN Nicaragua offer a case study in the contradictions of the revolution and the dynamics of its policies.

Under Somoza Nicaragua suffered from an anarchic salary system that was part of the dictator’s deliberate tactics to divide workers.

As early as 1980 the Ministry of Labor considered a national reorganization of salaries but decided against making the necessary commitment of resources.

After an outbreak of (illegal) strike activity in 1982 following a wage freeze, and a substantial drop in purchasing power of wages in 1983, the Ministry again began the task of reordering salaries. The goal was to create a fair salary scale based on the specific tasks that workers perform.

The promoters of the new system believed that workers engaged in the same task-independently of where they work, the location of their enterprise, the ownership of their enterprise, or their union affiliation-should receive the same salary. Special commissions organized according to the country’s different economic sectors developed the Sistema Nacional de Organizacion del Trabajo y las Salarios (National System of Ordering Work and Salaries-SNOTS). Each commission included representatives from the administration, the unions, the Labor Ministry, as well as experienced workers and technicians.

Commission members first organized workshops to train each other in how to devise the new system in their sector. Next, they determined a work plan that included the number of businesses in each sector, the total number of occupations, and the sector’s occupational breakdown. The Commissions then formed subcommissions to establish job descriptions and salary scales. Defining each occupation according to its work functions, the sub­ commissions analyzed its degree of complexity in order to place it within a salary scale.

After setting the value of each occupation, they submitted the new salary scale to the workers for their review and approval. Finally, the sector’s administrative representatives, Ministry of Labor officials, and union leaders signed the salary accords.(1)

Disappointments

Applying the new wage and salary policy has required extraordinary efforts, and errors were committed in its application.

Before the government published the new wage and salary scales, workers were led to believe that the scales would mean across-the-board pay increases. In fact, only about 80 percent of the workers included in the SNOTS program actually received higher wages.(2) Thousands of workers who failed to receive pay hikes were disappointed.

The SNOTS program was poorly received by most workers in the private sector because this sector had the financial resources to pay higher wages and salaries than stipulated in the new salary scales. Consequently, private sector employers often resist implementation of the SNOTS program, thereby enabling them to lure both workers and professionals away from the state sector.

At the same time, however, many workers are satisfied with the new wage scales. The standardization of job categories and pay has eliminated much of the chaos that previously reigned in the wage labor sector, and the SNOTS program guarantees equity in pay increases whenever they occur.

In 1985 the government granted three wage increases totaling 107 percent, and in the first three months of 1986 alone workers received two wage increases totaling almost 140 percent. Although such increases lag considerably behind inflation, workers at least know that they are applied fairly since the wage scales are widely disseminated.

In addition to defining job categories in terms of difficulty, level of training, and required experience, the SNOTS program is implementing a “norm system” which attempts to establish a daily or weekly goal that a worker should be able to achieve if he/she works diligently and with little resource waste.

Once a norm is established a worker can receive a wage bonus as an incentive for surpassing the norm. But setting norms has proven to be an immensely difficult task, especially in the industrial sec­ tor where spare parts are lacking and power shortages frequent.

Moreover, establishing norms require meticulous analysis by technicians already overburdened with tasks. As a result, norms have yet to be established in many job categories, and the norms that do exist are often unrealistic. In 1985 and 1986 the unions and the Ministry of Labor met frequently to improve and expand the norm system.

Footnotes

1. Trabajadores, Numero 30, 5.
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2. Trabajadores, Numero 33, 2.
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January-February 1987, ATC 7