Envío Digital
Central American University - UCA  
  Number 310 | Mayo 2007



We Can’t Go on Paying Our Teachers Miserable Salaries

The new government’s announcement that public school education would again be free of charge received a strong round of applause, but such a brusque and improvised change immediately created conflicts.

Adolfo Acevedo

The day after the new government took office, Education Minister Miguel de Castilla declared that he had abolished the school autonomy system set up by his predecessor Humberto Belli in the early nineties; primary and secondary public school education would again be free. The announcement was made just before the start of the new school year and went into effect immediately. Seemingly improvised with no thought for the consequences of such a brusque implementation, the announcement that had brought applause from economically beleaguered parents promptly triggered a rash of conflicts.

The government didn’t have the resources to cover all the autonomous schools’ needs that had been palliated by the fees they charged parents. Nor did it have any way to deal with the increased enrollment now that it was free. The change also brought layoffs for secretaries, tellers and bookkeepers. Some school directors were accused of misusing funds and fired—one of them, Juan Narváez, from the Miguel de Cervantes Institute, was pulled out of his school by armed, hooded men backing the minister. The minister’s non-dialoguing attitude aggravated the conflicts even further. In the National Assembly, opposition representatives talked about calling him in for questioning and even removing him from his post.

This is the new government’s first important social conflict—certainly the loudest one—and its most sensitive and ongoing aspect is the public teachers’ just demand to increase their miserable salaries. Starting in early April, one sector of teachers began work stoppages and strikes and barricaded highways and city streets around the country to demand a $30 increase—barely a dollar a day more. What they were offered through budget adjustments in March was roughly $12, not even half of what they’re asking.

The treasury minister and the education minister—who during last year’s election campaign signed a National Educational Agenda pledging to negotiate salaries with the teachers’ unions in the first 100 days of government if the FSLN won—responded to the demands with the same cold arguments proffered by the previous neoliberal government: there’s no money. But in fact there is, as I demonstrated in the proposal publicized through the Civil Coordinator on April 13, and repeat in the following reflections.

What is involved in
de-privatizing education?

A salary freeze affecting teachers and health workers began in 1992, at the same time as the launching of the “school autonomy” process—a form of privatizing public education. The downside of this privatization policy, dictated by conditions imposed by the IMF and World Bank, consisted of progressively transferring the responsibility for financing public health and education expenses to the family pocketbook, despite the fact that both services were still constitutionally defined as free.

In health, families suddenly had to pay for medications and all other expenses involved in treatment received in the public hospitals and health centers. In a country in which 80% of the population is struggling to survive on less than $2 a day, and 45% of those on under $1 a day, shifting these expenses to the household budget was tantamount to a violation of the human right to health and life.

In education, transferring the responsibility for maintaining and repairing public schools and complementing teachers’ salaries was established in the policy of “voluntary charges” implemented in schools that went autonomous. For the most impoverished families these charges effectively negated their children’s right to education.

So what does “de-privatizing” education now involve? In the first place, it means reversing the autonomy process by transferring those responsibilities back to the public sector. But many details still need to be clarified to fully understand what this implies. For example, the fact that the bulk of the schools’ operating, repair and maintenance expenses depended on the squalid contributions from poor households meant that this spending was also necessarily squalid. The result is a seriously deteriorated school infrastructure.

It’s thus not enough to cover the pittance provided by parents; the state needs to reassume its responsibility, assigning enough resources so the schools can deal with those costs better than they’ve been able to do in the past 15 years. It also implies reversing the teachers’ enormous salary gap, fulfilling the National Education Plan’s mandate to match the average Central American teacher’s salary by 2010.
It further involves correcting the enormous aberration—not even found in African countries—in which per-capita public spending for secondary schools is under half that for primary schools. This is particularly indefensible given that preparing a high school student is more costly due to the number of teachers, texts and laboratories required.

Obviously, the mere absence of public school charges doesn’t assure all children access to the educational system. The expenses families must assume to send their children to school aren’t limited to enrollment and monthly fees, but include what are called “private costs” such as transportation, clothing and shoes, school supplies, etc. This is easily prohibitive for the poorest families. And the issue becomes even more problematic because their school-age children need to contribute to the family’s precarious income, particularly in rural areas, so the families must also absorb the “opportunity cost” of lost income if they send their children to school.

Both private and opportunity costs shoot up as children move up from one educational level to another. This explains why the poorest children tend to leave school after primary, if not earlier.
The material given out in the Initiative for Nicaragua’s March 2003 Forum on Education and Human Development states that “The concept of free education cannot continue to be considered just the entry of the school-age population into the state school system. The concept of gratuity is much broader. It means not charging any kind of fee, however low it may be, for pre-enrollment, enrollment, bulletins, exams, etc. It means making it possible for children and adolescents to get to school and back and making educational materials accessible. It means providing them all the necessary elements to enter and stay in the educational system.”

7% of the GDP is not yet
being provided for education

The teachers’ salary increase approved in the 2007 budget is not only very poor, but fails even to compensate for a new problem that has made the situation even worse for teachers. The bulk of the public schools that became “autonomous” used an important part of their charges to complement the teachers’ salaries, so elimination of the school autonomy model suddenly shrank their salaries even more.

To assume more fully its responsibility for assuring the right to quality education for all, the state must bring the overall educational budget, universities included, up to the level of countries that are just as poor, such as Honduras and Bolivia, or even much poorer, such as Malawi, Kenya and Lesotho. All these countries have attained UNESCO’s recommendation to invest 7% of the gross domestic product (GDP) in education. Bringing Nicaragua’s education budget up that level by 2010 is the very least we must require.

It’s not a whimsical goal. This year is critical to achieving the Millennium Development Goals for education, but it’s not clear what course the new government has decided to set to do so. The pitiful salary increase for teachers in the 2007 budget bill drafted by the Bolaños government in October 2006 was negotiated in very different political conditions and with very different projected resources than existed when the budget was reformulated this March.

Nonetheless, the government’s point-blank refusal to provide an immediate response to the salary hike the teachers are now demanding—which is possible and would earn the government enormous support well beyond the country’s roughly 40,000 teachers—is neither justifiable nor explainable. The only possibility is that the government has already decided to accept the IMF’s parameters for the next three-year agreement, which is why we are presenting the following proposal for a national solution to our teacher’s salary lag.

Proposal for an immediate solution

Our proposal is based on the Inter-American Development Bank’s pardoning of a debt of over 800 million córdobas that Nicaragua had accumulated and budgeted for payment, although only a little over half that amount is recorded as relief in the budget. We propose that 206 million of the remaining unrecorded 400 million be used to increase teachers’ salaries immediately.

This would double both the budgeted increase in the basic monthly salary (currently equivalent to US$16), and the amount added for each diploma a teacher has acquired (from $7 to $14), thus encouraging them to upgrade their professionalism. Doing so only requires a budget modification, which the National Assembly should approve as soon as possible.

Proposal for a medium-term solution

But the above isn’t enough. The government and teachers’ unions would then need to move immediately to a discussion of the prospects for recovering and ordering teachers’ salaries for the next three to five years. This policy must seek to bring their salaries as close as possible to those of their colleagues in the rest of Central America, especially Honduras, which will evidently require fully restructuring the burdensome domestic debt and instituting a more progressive tax system that starts but does not end with eliminating exemptions and exonerations.

This involves putting into practice the following proposals made by President Ortega in a speech in Masaya a year before taking office: “We have a very clear position and not some crazy idea that it doesn’t matter how much is spent. No, we’re saying where the money must come from to pay for the salary increase for teachers and the health sector. We’ve said that this increase would be footed by the creditors of the domestic debt—the banks, among others, which have huge profits. We’re not going to stop paying them, but in lieu of handing over around 4 billion córdobas to all creditors of the domestic debt next year, we’d give them, for example, 3 billion and use the remaining billion to increase health and education sector salaries. We have to talk to the bank owners, people who have money and owe the state, so they understand they have to do their part! In other words, they wouldn’t earn as much as they normally would next year, and the difference would be restructured into longer repayment periods. This would allow the same budget ceiling to be maintained while freeing up resources to increase the salaries of teachers, health workers and other public sector workers. I believe this effort should be made; otherwise we won’t be contributing to the country’s stability, because the country can’t have stability under the kind of conditions the Monetary Fund is trying to impose.”

This process can’t wait until October, as the education minister has insinuated. By October, everything will already be “cooked” with the IMF and there will be very little left to negotiate with the teachers’ unions.

The salary reduction has been dramatic

In 1992, when Nicaragua was first subjected to the conditionality crusade of the International Monetary Fund and the World Bank, a policy was established to drastically restrict public investment in health and education. In addition to slashing allocations for purchasing medicines and repairing schools and health centers, one of the critical variables of this draconian policy was the freezing of teachers’ and health workers’ salaries.

This policy palpably reduced their real salaries between 1992 and 1997, after which they began a tortuous recovery thanks to union struggles. Even with that modest recovery, however, salaries in the two sectors still lag way behind the region and the national salary. This means that anyone can earn double a teacher’s income in any other salaried work, even jobs demanding similar training levels. This is obviously a massive and perverse bias against education.

Nicaragua has reached agreement on four programs with the IMF since 1992. What stands out in the conditionality framework associated with these programs is the emphasis on strangling any growth in the government’s payroll. A review of the Letters of Intent or Policy Memorandums sent to the IMF executive between 1992 and 2006 by the three previous governments shows a reiterated commitment to freezing government salaries.

As a result of this policy and the reduction of state employment, the government “wage and salary spending” budget line dropped from 30% of total government spending in 1992 to only 17% in 1997, i.e. from US$157 million to US$105 million. According to data from the Treasury and Public Credit Ministry’s Civil Service Department, the average monthly public sector salary fell from US$140 in 1992, which was equivalent to 74% of the national average salary, to US$98 in 1997, equivalent to only 54% of the average salary. Within this overall salary repression policy, the restriction on the growth of salaries in health, education and the police force—over 80% of all state workers—acquired special importance.

The average monthly salary in the Education Ministry shrank in that five-year period from US$111 to US$77, equivalent to a mere 45% of the national average. It was a hard blow, particularly considering that teachers’ salaries are by definition lower than the ministry’s overall average. The average monthly salary fell from US$128 to US$85 in the Health Ministry and from US$139 to US$90 in the Ministry of Government, which includes the police force.

Such repressed salaries are unsustainable

Such severe salary repression is very hard to maintain. It markedly deteriorates the quality of services provided to the population by demoralizing those who provide it. In addition, it builds up tremendous social pressure that becomes increasingly difficult to contain.

As a result of this pressure and other factors, public salaries started to make a moderate recovery in 1997. The Ministry of Education’s average monthly salary of $77 that year climbed to $100 by 2001 and to $135 the following year. While that’s nearly double the salary earlier in the nineties and represents the highest relative level achieved by the average education ministry salary, it still only represented 61% of the national average salary.

And to reiterate, the ministry’s average salary is not the same as the teacher’s average salary. In 2002, when Enrique Bolaños took office, the teachers’ gross monthly salary—which includes a series of extras such as seniority in addition to the basic salary—was only 39% of the national average for Nicaraguan workers.

During Bolaños’ term, the accumulated salary pressures triggered massive demands by the largest health and education unions. Together with other factors such as the “exoneration” of top public officials’ salaries and the increasing professionalization of government workers, this pushed the average government worker’s salary up from 83% of the national average in 2001 to 101% in 2006. But the teachers’ gross salary only rose from 39% of the national average in 2002 to 53% in 2006.

A new IMF condition

Concerned about even this modest recovery of real salaries in education, health and public safety in 2002-2006, the IMF introduced a new conditionality on public salary policy in December 2005: the overall public payroll or “total wage bill” would have to be frozen again, this time in real rather than nominal terms. This condition would become a new “performance criterion” in successive agreements with the IMF.

This means that the government payroll can only grow nominally, i.e. in accord with the projected inflation rate. In other words, price increases eat up the salary increase, keeping the latter static in real terms—assuming, of course, that the projected inflation was correct. And given that the government’s real payroll is the product of multiplying the total number of employees by their average real salary, this “freeze” would restrict any growth of average real salaries and any growth in the number of workers to be hired, since both variables contribute to the expansion of the real total wage bill.

The IMF wants us to be “competitive”

As a recent IMF document reveals, the fundamental reason for establishing as a condition the virtual freeze on the government wage bill in real terms is the IMF’s concern about the “demonstration effect” that new increases in the real public sector salary, mainly in education and health, could have on private sector workers. That in turn would affect the country’s “wage competitiveness,” particularly in the maquila plants that employ low-wage, unskilled labor to assemble imported materials for re-export.

The IMF is not pleased that the education and health unions are strong enough to have successfully lobbied the National Assembly to approve the modest salary increases of recent years. Greater increases would be a “bad example” for other poorly paid workers, causing Nicaragua to lose its main “appeal” to investors: miserable salary levels, below those of neighboring countries and only slightly higher than those of China, a strong contender for maquila investors.

The IMF’s argument is leading our countries into destructive competition with each other to attract investments and base our insertion into the global economy on subhuman salaries and unprotected workers.

The teachers are on the lowest rung,
but have the greatest responsibility

Above we measured the salary lag of Nicaraguan teachers by comparing their earnings to the national average; another eye-opener is to compare them with an international standard. The Education for All-Fast Track Initiative (EFA-FTI) promoted by the World Bank sets the benchmark for the average annual teachers’ salary at 3.5 times their country’s per-capita GDP. Based on Nicaragua’s 2005 population census, its per-capita GDP was US$1,000 in 2005, and teachers’ salaries are only 53% of that.

Yet another way of grasping their enormous salary lag is to compare their salaries with those of their Central American colleagues, which average over US$350 a month, an amount even paid by neighboring Honduras, which is as poor as Nicaragua and also a member of the Highly Indebted Poor Countries (HIPC) initiative. It is scandalous that a Nicaraguan teacher can earn more as a domestic worker in Costa Rica than working in her profession in Nicaragua.

The prevailing national salary structure, which leaves educators on the lowest rung of the ladder, creates a dramatically perverse bias against education. In the first place, it reflects an enormous lack of social recognition of the teaching profession and is an affront to teachers’ dignity. It also generates what economists refer to as a perverse “incentive structure,” thoroughly devaluing public education and undermining the only possibility of improving its poor quality.

The quality of public education depends largely on the skill level and motivation of the system’s teachers. They play a central role in developing the capacities of the children and young people who will make up the country’s future labor force, which is in turn essential to its economic and social performance.

How can we expect to have qualified teachers if they are paid barely half of the average salary of the country’s other workers? With such a perverse salary structure, only people with comparatively low skills will be attracted to the profession.

The treasury minister delivers an
outrageous and dangerous message

On April 20, with dozens of teachers on strike, Treasury Minister Alberto Guevara presented some extraordinarily serious statements as the new government’s official policy. “We already pay the teachers what corresponds to them,” he began. “And the budget lines are already allocated; that’s all there is. There can be no reforms to pay salaries. If some day reforms were possible, it would be to cover the country’s priority needs. There can be no reform for salaries. We have to be responsible; first we have to increase income. If we can do that in the fourth quarter, there might be some talk of reform. But I’m absolutely certain that salaries aren’t strictly a priority. If at some point we’re able to do it, it will be to cover the country’s anti-poverty priorities.” Guevara claimed that even the IDB’s debt pardoning and the higher than forecasted tax collection—the two sources of funds the teachers proposed to increase their salaries—were already earmarked in the budget.

The treasury minister’s statements strike us as simply outrageous. The teachers’ miserable salaries are the product of an economic policy that did not view them as a priority for 16 years. By logical extension, that view posits that education itself isn’t a priority either.

Don’t the anti-povery priorities
include education for the poor?

When it suspended its program with Nicaragua in 2005, the IMF alleged that salary hikes for health and education workers were not a poverty reduction priority because they weren’t poor. We assumed the new government would have very different economic policy criteria. Were we mistaken? Perhaps the new government is using the conventional conservative fiscal policy criterion that classifies salaries as an expense rather than a fundamental investment in human capital, a basic prerequisite both for economic and human development and for reducing Nicaragua’s poverty and enormous inequalities.

To top it off, the minister made very serious accusations against those of us who have proposed using the resources freed up by the IDB’s debt write-off and the extra taxes collected when he charged that “speaking of resources that aren’t available is irresponsible. It amounts to political maneuvering by people interested in creating anxiety, in trying to demonstrate there are problems here. They want to reverse the gratuity of teaching; they want to go back to charging fees in the schools to raise salaries.”

It is extremely dangerous and inadmissible to accuse anyone who doesn’t share the official line or viewpoints of trying to destabilize the government or create anxiety. It reminds me of the accusations from President Bolaños’ treasury minister each time I talked about tax collection that exceeded budget projections or resources freed up by the HIPC initiative [the pardoning of 80% of the debt with the Paris Club creditors].

Trying to rebut the claim that there has been an economic deceleration, the new tax director said that 600 million córdobas more in taxes have been collected than were projected for the entire year—an increase of 7% over what was projected and of 21% over last year. If the new treasury minister can demonstrate that this unanticipated income is already included in the budget, let him do it, but I don’t see how he can. He must also tell us where the apparently unrecorded resources freed up by the IDB are going. And, finally, if he has any serious arguments to demonstrate why resolving the teachers’ salary lag doesn’t constitute a fundamental priority, he should enlighten us with them.

We can’t continue down this same road, trying to put band aids on the teachers’ enormous salary gashes. It’s time to start looking for a definitive way out of this situation, for the teachers’ sake and also for the sake of the nation. Only by starting this process of ordering and restoring salaries right now will we have any chance of designing a policy that can be presented to the IMF as a genuine national position.


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