Costa Rica Roundup: Cost of living crisis, IMF funds, minimum wage, job creation
Cost of living increases for expats
Semanario Universidad reports that San José is the city that experienced the highest cost of living increase for international employees in the past year, according to the 2023 Cost of Living ranking made by Mercer, an international consulting firm. While Costa Rica’s capital is not the most expensive city overall, it rose 76 places in the ranking, and now sits in the 63rd position out of 277 cities. In Latin America, only Nassau, San Juan, Buenos Aires and Montevideo are more expensive, according to Mercer, while in Central America, San José is the most expensive city for expats.
IMF disburses $523 million to Costa Rica
The International Monetary Fund (IMF) has approved two disbursements for Costa Rica totalling $523 million, according to Semanario Universidad. A review under the Extended Fund Facility (EFF) led to a disbursement of $276 million. Simultaneously, the Executive Board completed a review of the agreement under the Stand-By Arrangement for Resilience and Sustainability (SRS), designed to advance a climate change agenda, which enabled a disbursement of $247 million. The IMF advised the country to maintain the current fiscal restraint in 2024. They also recommended approving reforms in income and value-added tax laws that would enhance the efficiency and equity of the tax system.
Minimum wage will increase in 2024
Starting January 1st, a 1.83% increase in the minimum wages for the private sector will come into effect in Costa Rica, Delfino.cr reports. This increment, approved on October 30th by the National Salary Council, is mandatory for all private sector minimum wages. The Ministry of Labor and Social Security stated that employers paying the minimum wage must apply this adjustment, but those who pay above the minimum are not obligated to do so. By mid-2023, Costa Rica’s US$650 minimum wage was the highest in Latin America, followed by Chile’s and Uruguay’s US$550.
Health Ministry fails to pay salaries in December
Costa Rica’s Health Ministry failed to pay salaries to more than 800 of its employees due to an administrative mistake, says La Nación. The Vice President and Minister of Health, Mary Munive Angermüller, acknowledged this issue and expressed her solidarity with the affected individuals. She emphasized the importance of timely income for their families' well-being and criticized the negligent action that led to the delayed salary payment. Munive Angermüller said she was committed to ensuring that the missing payments are made in the first half of January 2024. The minister also announced the initiation of an administrative investigation into the matter. The country’s National Medical Union has filed a complaint with the Ministry of Labor.
Government fell short on its job creation promise
Semanario Universidad reports that in 2023, the government experienced a setback in its job creation promise. Instead of advancing towards its initial annual target of around 50,000 jobs, it regressed. To fulfil President Rodrigo Chaves’ commitment of creating 205,000 jobs by 2026, as outlined in the National Development Plan presented in December 2022, the government must now double its initial annual objectives, aiming for over 100,000 jobs per year for the next three years. According to the National Institute of Statistics and Census (INEC), from the government's announcement in December 2022 to the latest October 2023 data, there was a reduction of 110,000 jobs, resulting in 2,062,436 employed individuals.
