Costa Rica’s private sector will earn more from January 1

Costa Rica’s National Wage Council (CNS) agreed that the minimum wages of private sector workers must increase by at least 6.62% in 2023.

However, domestic service will receive an additional 2.33% to that amount, informed the Ministry of Labor and Social Security (MTSS).

The measure will be in force from next year and apply to all salary categories.

Weeks ago, workers’ representatives had proposed that the adjustment for all private sector minimum salaries be 8.95%, while the employers’ sector, represented by the Costa Rican Union of Chambers and Associations of the Private Business Sector (Uccaep), had suggested a general adjustment for minimum salaries of 6.12%.

The final amount was due by the interim Minister of Labor and Social Security, Luis Paulino Mora Lizano.

With this adjustment, for every CRC 100,000 (US$160), the income from labor remuneration will increase by CRC 6,620. CNS authorities estimated it is the most important increase recorded in the last four decades.

However, the increase will be below the inflationary percentage, which would close at 9.7% in 2022, according to economic science researchers consulted by the University of Costa Rica.

The adjustment agreement will be effective as of January 1, 2023, and is of mandatory application only to those positions that receive the minimum wage.

However, this salary adjustment applies only to the private sector since public sector salaries remain frozen due to the application of the fiscal rule.

PURCHASING POWER OF COSTA RICAN FAMILIES

The results of the National Household Survey (Enaho) 2022, which was conducted in July, reveal that the average income per Costa Rican household is CRC 1,023,641 per month, with an increase of 3.2% over 2021, but this was not enough to offset the 10.06% year-on-year price increase.

The amount of goods or services that households can purchase with their current income is less than what they could buy last year, i.e., there was a loss of purchasing power or a drop in real income in 2022 compared to 2021 of -6.2%.

Regarding the behavior of poverty, the Enaho 2022 reveals that the percentage of Costa Rican households in poverty is 23%, which meant no variation compared to the previous year, becoming the second-highest figure historically in the country the report reveals.

This percentage is equivalent to 399,439 households in poverty, 15,934 more than in 2021.

Regarding households in extreme poverty, the percentage is 6.4%, similar to the previous year’s value (6.3%).

In absolute terms, this is equivalent to 6,078 more households in extreme poverty, going from 104,553 households in this condition in 2021 to 110,631 in 2022.

With information from Bloomberg