Costa Rica could reduce its poverty rate by 8.5 percent if all employers paid the legal minimum wage and poor families could find work, according to a new report from the United Nations Development Program released Monday.
Social programs, including non-contributory cash transfers, have shown success combating poverty, but jobs are needed for significant long-term reductions in Costa Rica’s 20 percent poverty rate, argued the UNPD report’s authors. Costa Rica’s poverty rate has stagnated at roughly 20 percent of the population for the last 20 years, despite regular economic growth and a growing population.
The report’s authors, investigators Pablo Sauma and Juan Digeo Trejos, said that non-contributory pensions, scholarships and assistance to poor families with children and cash transfers from the national welfare office, IMAS, reduced poverty by 2.9 percent for families living in extreme poverty, and 2.5 percent for poor families between 2000 and 2011. The researcher, however, stressed that these gains were based on receiving assistance from the government and did not represent long-term gains in the country’s fight to lower persistent levels of poverty.
The investigators recommended Costa Rica pursue an enforcement policy that guarantees workers get what they’re owed and improve the productivity of small businesses.
Unemployment was the most important factor for those living in extreme poverty. Costa Ricans living in extreme poverty have an unemployment rate of 36.7 percent, compared to 4.5 percent for those not living in poverty, according to the report.
Sauma told The Tico Times that businesses are not hiring enough to start to close the 20 percent poverty gap in Costa Rica.
“Costa Rica has grown at an average rate of 4.5 percent during the last 20 years. With average growth at just 4.5 percent, we can’t hope for more [reductions in poverty]. To lower the poverty rate we’d have to see growth over 6 percent,” Sauma told The Tico Times.
Many poor Ticos who do work, don’t make the minimum wage. Over 67 percent of the poor here make less than the minimum wage. The figure jumps to 87.3 percent for those in extreme poverty. Many poor Costa Ricans work in the informal sector (65.6 percent), where they do not receive health insurance or other benefits. Over 91 percent of these informal jobs involve unskilled labor.
UNDP Resident Representative Yoriko Yasukawa said the coffee-producing country should better focus its famous social assistance programs and work toward universal coverage for public services like education. The UNDP representative noted that some 24,000 children who should be in primary school are not. This number has slightly increase during the last decade, according to investigators.
“It’s important that Costa Rica continue strengthening the impact of its social programs, even more so for a country that has demonstrated a commitment to the rights of the less fortunate, principally in education, health and social assistance,” Yasukawa said.