Momotombo volcano between Managua and Leon
Courtesy Nicaraguan Tourism Institute

Describing the Nicaraguan class structure that existed in the early 1990s is a problematic task. Current data on the distributions of occupation and income are not available. In the wake of a decade of Sandinista rule, certain aspects of the class structure are still in flux. Nonetheless, the general profile of the class structure can be described with data from the recent past (see table 3, Appendix A).

An outline of the Nicaraguan class structure, based on labor force and rural property data from 1980 and reflecting the 1979 seizures of properties held by the Somoza family and other early expropriations under the Sandinistas, revealed a highly stratified society. Less than one-fifth of the population could be described as middle class or higher. Another study from the same period showed that 60 percent of income went to the top 20 percent of households. The data also indicated that although a high proportion of Nicaraguans were self-employed, relatively few held stable, salaried employment. Self-employed workers constituted almost half of the labor force in 1980, and salaried workers made up less than 30 percent.

Land is the traditional basis of wealth in Nicaragua, and in the twentieth century the greatest fortunes have come from land devoted to export production, including coffee, cotton, beef, and sugar. Almost all of the upper class and nearly a quarter of the middle class are substantial landowners. The rapid expansion of agro-export production in the decades after World War II encouraged growth of the urban economy. Planters diversified their investments. Together with an expanding class of urban entrepreneurs, they found opportunities in banking, industry, commerce, construction, and other nonagricultural sectors. Economic growth created jobs for salaried managers and technicians. The impact of this period is reflected in the varied occupations held by the middle class.

The rural lower class is characterized by its relationship to the agro-export sector. Rural workers are dependent on agricultural wage labor, especially in coffee and cotton. Only a minority hold permanent jobs. Most are migrants who follow crops during the harvest period and find whatever work they can during the off-season. The "lower" peasants are typically smallholders without sufficient land to sustain a family they also join the harvest labor force. The "upper" peasants have enough resources to be economically independent. They produce a substantial surplus, beyond what they can consume directly, for national and even international markets. Studies have shown that peasant farmers supply much of the country's domestic grains, beef, and coffee.

Many, if not most, of the workers in the urban lower class are dependent on the informal sector of the economy. The informal sector consists of small-scale enterprises that employ primitive technologies a 1000 and operate outside the legal regime of labor protections and taxation to which large modern firms are subject. Workers in the informal sector are self-employed, unsalaried family workers or employees of small-enterprises, and they are generally poor. In the past, many economists believed that the informal sector in Latin America was a remnant of past underdevelopment that would disappear with economic modernization. But in Nicaragua, as elsewhere in the region, the informal sector expanded at the same time that modern factories were being built and new technologies were transforming export agriculture.

Nicaragua's informal sector workers include tinsmiths, mattress makers, seamstresses, bakers, shoemakers, and carpenters people who take in laundry and ironing or prepare food for sale in the streets and thousands of peddlers, owners of tiny businesses (often operating out of their own homes), and market stall operators. Some work alone, but others labor in the small talleres (workshops sing., taller) that are responsible for a large share of the country's industrial production. Because informal sector earnings are generally very low, few families can subsist on one income. A man who works in a taller might have a wife at home making tortillas or a child on the street peddling cigarettes.

The Sandinistas attempted to transform the Nicaraguan class structure, most notably by expropriating wealth from the privileged classes. Upon assuming power in 1979, the Sandinista government expropriated the banks and seized the property of the Somoza family and its closest associates. These early measures targeted the interests of the country's most powerful capitalists: the Somoza group and two competing financial groups, each organized around a separate bank. In subsequent years, the government gradually took over other large urban and rural enterprises, until the private sector was reduced to about half of the gross national product (GNP--see Glossary).

In the countryside, where the Sandinista revolution probably has had its most enduring effects, the Agrarian Reform Law transferred nearly a third of the total land under cultivation. Land expropriations began in 1979 with Somoza's properties, constituting about a fifth of all farmland, and continued under agrarian reform laws passed in 1981 and 1986. Most of the affected land belonged to the richest 5 percent of landowners, who, at the end of the Somoza period, controlled more than half of the land under cultivation. By 1988 the reform had benefited 60 percent of Nicaraguan peasant families: 43 percent received land, typically as members of government cooperatives, and another 17 percent received the land (often located on the agricultural frontier) on which they had been squatters.

The restructuring of land tenure between 1978 and 1988 resulted in a sharp decline in the share of land held by the largest landowners. Expropriated farms generally became state farms or peasant cooperatives. By 1988 the land reform had passed through its most active phase. During the brief lame-duck period following the Sandinistas' electoral defeat in 1990, however, Sandinista authorities granted several thousand new agrarian reform titles, often to land transferred from the state farm sector. Some properties, which later became objects of controversy, went to influential Sandinistas, but the net effect of these actions was to further reduce the concentration of land in the hands of the few.

The government of President Violeta Barrios de Chamorro (president, 1990- ) assumed power committed to privatizing the state sector in both urban and rural areas. But the new government also agreed to reserve a 25 percent share of state sector enterprises for their workers and to uphold the rights of the peasant beneficiaries of the agrarian reform. The government faced militant demands for land from ex-fighters on both sides of the civil war. Of roughly 300,000 hectares of state cotton, coffee, and cattle lands priv 8f3atized b by late 1991, former combatants received 38 percent, and farm workers received 32 percent. Far from attempting to reverse the agrarian reform, the Chamorro administration was compelled to extend it.

The enduring effects of the Sandinista revolution on the Nicaraguan class structure may not be known for some time. In the early 1990s, the property situation remained unsettled. It was also uncertain how many of the businesspeople, professionals, and skilled workers who became expatriates in the 1980s would reestablish themselves in the country. The Sandinistas did reduce class inequalities, most notably by eliminating the three major financial groups that once dominated the economy and by redistributing land. They seem also to have altered the perceptions and expectations of the population. The gap between the privileged classes and the poor majority did not appear as proper or as inevitable as it did in the past. However, some key aspects of the class structure that existed before 1979 remained unchanged. During the 1980s, the urban informal sector actually grew in size, and a large part of the rural population continued to depend on seasonal employment. Even before the economic collapse of the late 1980s wiped out the gains of the early Sandinista years, the vast majority of Nicaraguans lacked the resources to satisfy basic needs, according to a government study.

Data as of December 1993