Industrial sector foresees low job growth this year, citing high costs for electricity, raw materials

Increasing costs of electricity and raw materials lowered hiring expectations for this year in Costa Rica’s industrial sector as employers expect a slowdown in new job creation, a study released Tuesday by the Chamber of Industries of Costa Rica (CICR) showed.

Some 70 percent of surveyed companies do not expect to create new jobs this year, 10 percent are considering layoffs and only 20 percent of business owners plan to hire more staff.

CICR President Juan Ramón Rivera said associates see 2014 as a year of “little dynamism in industrial production and a year with a good chance for stagnation in hiring, mostly because of ongoing competitiveness problems the sector faces.”

Employers cited high energy costs as the major factor affecting business, followed by increasing exchange rates and the high cost of raw materials.

“This is the fourth consecutive year that the cost of electricity is the major concern for the industrial sector,” Rivera said.

Among its main conclusions the CICR’s study proposed a “re-engineering of the Costa Rica Electricity Institute in order to lower financial burdens and to facilitate lower electricity rates.”

The chamber also requested the elimination of taxes on fuels used for electricity generation, and called for greater private sector participation in energy generation.

The survey interviewed 200 CICR associates between March 3-31 and has a margin of error of 5 percent, the chamber reported.

Earlier this month, tech giant Intel and Bank of America announced 3,000 layoffs from their operations in the country, which will become effective by the end of this year.