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Pessimism growing among Costa Rica’s business sector, studies find

May 29, 2015

Costa Rican entrepreneurs expect hiring to stagnate while the number of private-sector companies considering staff cuts has increased in recent months.

Two separate studies presented Thursday by the Chamber of Industries of Costa Rica (CICR) and the Costa Rican Union of Private-Sector Chambers and Associations (UCCAEP) concluded that the business sector is not optimistic about performance for the remaining months of this year.

Both studies show a downward trend in hiring expectations that has been consistent for the past nine months, according to chamber experts.

The UCCAEP study shows that while 34 percent of private-sector employers in late 2014 planned to expand staff, the figure for the second quarter of this year dropped to 25 percent. The number is even lower in the CICR study as only 23 percent of industrial companies plan new hiring in coming months.

The percentage of companies that instead are considering layoffs in coming months actually rose two points in both studies.

UCCAEP’s study found that 16 percent of employers said they would cut staff this year, up from 14 percent in late 2014.

Results from the CICR study show that 11.5 percent of employers are planning staff cuts, while the figure was 9.4 percent in 2014.

“Our survey’s results indicate that we have a negative outlook for business development in the country. This will not be a year for job creation in the industrial sector, instead it will be a year of stagnation and reduction,” CICR President Enrique Egloff said Thursday.

“Industrial companies make up just 5 percent of the business sector, but they employ 55 percent of the sector’s total workers and they contribute more than 65 percent of the country’s industrial gross domestic product,” he said.

President’s performance

The CICR study also shows that industrial employers are pessimistic about President Luis Guillermo Solís’ efforts, giving him 4.9 out of 10 points for his performance during his first year.

Industrial employers said Solís “has poor control over public expenditures” and rated him 3.8 points on that subject, while they believe government efforts related to prices stabilization (6.3) and Central Bank measures to control the exchange rate of the dollar (6.5) were the president’s highlights in recent months.

UCCAEP members also were critical about President Solís’ performance, with 54 percent of them calling his administration “bad or very bad,” 24 percent saying  it is “the same” as the previous administration, and 21 percent saying it is “good or very good.”

The Chamber of Industries surveyed a total of 141 business owners between March 15 and May 22. The study has a confidence level of 95 percent with a margin of error of 3 percent.

UCCAEP conducted their study among 462 entrepreneurs during the last three weeks of April. It has a confidence level of 95 percent with a margin of error of 5.6 percent.

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