Thursday, 3 December 2020

Minimum wages in the private sector will increase by ¢300 for every ¢100,000 as of January 1

This is the lowest adjustment since the calculation methodology was implemented, in 2016

QCOSTARICA – Private sector employees can see some relief come January 1, with an increase in minimum wage of 0.30%, that is, ¢300 for every ¢100,000 of salary. That adjustment was approved by a majority on Wednesday afternoon at the National Salary Council.

It was also agreed to do a review at the end of the first quarter, in April 2021, to determine “if the conditions exist to improve minimum wages.”

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The economic contraction and the high level of unemployment facing the country, had a downward impact on the wage adjustment. In fact, this is the lowest increase since 2016, when the current calculation methodology began to be implemented.

Two components are taken into account for setting the increase: One associated with the increase in the cost of living; and the other with economic growth.

However, the current conditions activate clauses provided in the model to omit that second component.

In other words, only the increase in the interannual cost of living will be recognized, which as of September was 0.30%.

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Opinions divided

Though government and private sector representatives voted in favor of the 0.30% adjustment, it was not my consensus as it was announced, a point made clear by the union sector opposed to the low increase.

“The agreements reached today were not approved by consensus, they are majority agreements. The union sector did not agree with this 0.30% increase,” said Dennis Cabezas, representative of the union sector.

The trade unions put forward a proposal of 1.67%. The Bloque Unitario Sindical y Social Costarricense (Bussco) wanted it to be 1.73%.

Meanwhile, employers are opposed to the April review.

“What was decided at the Council level was to vote for both points separately. In point 1 (the increase) there was consensus between the state sector and the employer, and point 2 (the revision) was by consensus of the labor and state sectors.

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For this part, the government representative, Luis Guillermo Fernández, affirmed that they expect an improvement in the national economy in the first months of 2021 to assess an additional adjustment.

“Our position is mainly derived from the Minister of Labor. I must say that it is expected that there will be an improvement in the economic indicators for next year and that a review can be carried out in order to improve this increase that is being granted,” said Fernández.

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Q Costa Rica
Reports by QCR staff

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