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Salary increase for private sector set at 1.14 percent

November 2, 2016

Private sector workers earning minimum wage will get a 1.14 percent increase in their monthly salary starting in January.

The wage increase followed the approval of a new calculation methodology that National Wage Council members say will benefit workers. The council includes representatives from the government, business chambers and labor unions.

The approved increase, however, was lower than figures requested by labor unions, which ranged from 1.74 to 3.5 percent.

Council Director Dennis Cabezas said at a press conference on Tuesday that he knows many workers might be wondering how the new formula benefits them if such a low figure was approved. He explained if the old formula had been used, the wage increase for next semester would have been even lower.

“Using the previous formula, the wage increase would have resulted in a salary hike of just 0.49 percent,” Cabezas said.

The new formula takes into account the expected inflation for the upcoming period, instead of the inflation recorded in the previous period, which is the figure that has been used for the past five years. Cabezas said that they will use and evaluate the new salary calculation formula for the next three years.

Less frequent changes

The Wages Council also agreed to calculate wage-settings only once a year, in October.

Previously, the council calculated salary settings for private-sector workers every six months, “usually resulting in increases that didn’t match workers’ expectations,” Cabezas said.

Council members analyzed the formula for three months following recommendations from the International Labor Organisation.

Representatives of the Labor Ministry, the Union of Private-Sector Chambers and Associations (UCCAEP) and the National Wages Council unanimously approved the new formula on Oct. 31. The decision earned praise from Labor Minister Carlos Alvarado and UCCAEP President Franco Pacheco. Union leader Édgar Morales said workers had expected a higher increase, but in the end they are satisfied with the new formula.

Cabezas said their main goal is for the new formula to give workers a fairer distribution of the country’s wealth.

“The wealthier the country, the greater the salary hike for workers,” he said.

According to the National Statistics and Census Institute, private-sector workers represent 85 percent of the country’s total workforce, estimated at 2.06 million people.

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