C.R. Facing the Bitter Tune of Hard Times

February 6, 2009

Costa Ricans can no longer pretend that the global financial downturn has not hit the country. National and international companies are announcing job cuts daily, and in some cases, shutting down operations completely.

The current economic crisis is putting all of Latin America in a tight spot. The International Labor Organization (ILO) said last week that about 2.4 million Latin Americans could lose their jobs this year in the wake of the worldwide financial downturn, ending a five-year rally of declining unemployment.

In Costa Rica, the construction sector has been one of the most heavily affected and reported a loss of approximately 15,000 jobs during the last quarter of 2008.

Randall Murillo, president of the Costa Rican Construction Chamber (CCC), said that many more construction jobs could be lost if measures are not taken to cushion the impact of the current slump.

The CCC is predicting a 15 to 20 percent decrease in new construction, which could translate into a loss of about 30,000 jobs, or about 20 percent of the currently 153,000-strong workforce.

Murillo cited a lack of foreign investment for new projects as one of the main factors, and said more than 100 projects that have been put on hold throughout the Central Pacific and Guanacaste regions during the last few months.

Luis Chavarría, president of the Social Security Worker’s Union (UNDECA), said approximately 20,000 to 25,000 people have lost their jobs in Costa Rica from November 2008 to January 2009.

He also said the majority of these losses were in the industrial, export and construction sectors, and the losses will continue through 2009.

The CCC is currently studying actions taken by governments in Colombia, Chile and Panama to reactivate their construction sectors, including, for example, promoting homes that cost less than $80,000.

President Oscar Arias presented his economic plan aimed at boosting to certain sectors (see story, Page 1). “The market needs to hear good news. Plans like Arias’ could encourage foreign investors to come back and reactivate their projects,” Murillo said.

Moreover, Murillo said Arias’ petition to the three state banks to reduce the interest rate by 2 percent on loans for small and medium-size companies and individuals with loans on homes worth $90,000 or less could help the construction sector.

Per Arias’ plan, the government will implement a ¢100 billion-project ($182 million) to improve public schools, plus funds to improve over 500 kilometers of the nation’s roads.

“We will continue the construction of public works that will bring development to communities, competitiveness to companies and jobs for workers in the construction sector,” Arias said.

Arias added that, regardless of the measures mentioned in his new plan, jobs in the next few months are inevitable.

But some companies are already shutting down completely in Costa Rica.

Domino’s Pizza abruptly announced the closure of its nine San Jose-area stores, leaving 130 employees out of work. (See story, Page 15) The pharmaceutical company Merck Sharp & Dohme, with a plant in Pavas, in western San José, also said it will close its doors at the end of this year, leaving more than 100 employees out of work.

The English-language weekly The Beach Times, based in Guanacaste, quietly shut down in January, after a five-year run.

Grupo Nación, which publishes the daily La Nación among other projects, announced last week it was letting go 25 employees. The group will also eliminate the print edition of their publication Vuelta en U, putting all that content online.

The Costa Rican tourism sector has also felt the heat from the downturn. A recent National Tourism Chamber (CANATUR) study, which surveyed 66 different tour operators, hotels and travel agencies, found 30 percent of those companies had to lay off employees during the last quarter of 2008.

Popular employer Intel has announced that the 3,200 jobs at their Heredia plant, northwest of San José, are safe for now, although the company is laying off 6,000 employees at plants in the U.S., the Philippines and Malaysia after registering a 23 percent decrease in global sales in the last quarter of 2008.

However, the local branch is employing some cost-cutting measures, including a freeze on salary increases and long-distance travel, in face of the hard times, said Karla Blanco, Intel’s corporate affairs manager.

In his plan, Arias also said heath insurance provided by the Social Security System (Caja) to laid-off employees will be extended from three to six months.

Costa Rica is not a stranger to hard times. During the 1980s, the country lived through a economic crisis during which thousands of jobs were lost. Between 1982 and 1984, the country’s gross domestic product grew less than 1 percent.

vgarnica@ticotimes.net

 

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