The most competitive platform for labor intensive operations

Every employee must be registered in the Nicaraguan Social Security Institute (INSS, for its acronym in Spanish) within three days of beginning employment.

The employer must withhold the social security contribution (7.0%) from the employee’s salary, and monthly pay the employer’s contribution (22.5% for companies with more than 50 workers) along with the employee’s contribution to the INSS.

 

Working hours

 

  • Day shift: Work undertaken between six in the morning and eight at night is considered a day shift. Regular day shift hours are 8 working hours daily for a 48-hour work week. Additional work must be compensated as overtime.
  • Night shifts: Work undertaken between eight at night and six in the morning of the following day is considered a night shift. Regular night shift hours are 7 working hours daily for a 42-hour work week. Additional work must be compensated as overtime.
  • Combination day-night shifts: A combined work shift is 7.5 hours per day for a 45-hour workweek. Additional work must be compensated as overtime.
  • Overtime: Work outside regular working hours is always considered overtime. According to the National Labor Code, overtime is paid double the amount stipulated for regular working hours. A maximum of 3 hours beyond regular hours may be worked, not exceeding a total of 9 hours per week.

 

Wages

Nicaragua has the most competitive minimum wage in the region. Wages in different economic sectors range from US$0.92 to US$2.06 per hour. Fringe benefits represent 52 percent additional to the minimum wage; these include social security, contribution paid by the employer to the National Institute of Technology (INATEC for its acronym in Spanish), vacation payment and Christmas bonus, among others.

Source: PRONicaragua (2020). Note: Wages include fringe benefits

The following table included the minium wage according to the law in 2020 for each relevant sector:

 

Minimum salary (2020)

Sector Monthly in US$ Hourly in US$
Construction, Financial Establishments and Insurance 424.60 1.77
Electricity, Gas and Water, Commerce, Restaurant and Hotels, Transport, Warehouse, and Communications 348.01 1.45
Mines and Quarry 340.75 1.42
Fishing 288.49 1.20
Community, Social, Domestic and Personal Services 268.61 1.29
Manufacturing Industry 255.12 1.06
Free Zones Regime Industry 283.25 1.18
Central and Municipal Goverment 236.60 0.99
Micro and Small Craft Industry and National Tourism 179.95 0.85
Agricultural* 189.73 0.79
Source: Ministry of Labor (MITRAB for its acronym in Spanish). 2020 average exchange rate: 34.33. *Minimum wage plus food. Fringe benefits are included.

 

With respect to companies that are under the free zone system, the minimum wage is the most competitive at a regional level, which makes Nicaragua an ideal country to set up labor-intensive operations.

Source: Ministry of Labor of each country, 2020. Note: Include fringe benefits.