How many jobs will the coronavirus eliminate in Costa Rica?

May 6, 2020

The numbers of new unemployed people in Costa Rica range from 129,000 to 500,000. Without income and with scant savings running out, these people await proposals for economic recovery that have not come.

The sanitary measures adopted by the government beginning March 16 to protect Costa Rica against the coronavirus have meant the collapse of family businesses, closings of bars, hotels and shops, and sodas and restaurants that barely survive. The ban on arriving tourists in a country highly dependent on this economic activity has resulted in thousands of layoffs, the suspension of contracts and reduction of working hours — and, especially for low-income families, anguish.

Tuesday, during the government’s daily coronavirus briefing, the Minister of Labor and Social Security (MTSS), Geannina Dinarte, indicated that so far the organization has registered 129,652 people whose work has been affected due to the COVID-19 crisis.

Summing those to the 309,000 people who were already unemployed at the end of 2019, according to figures from the National Institute of Statistics and Censuses (INEC), means Costa Rica has about 433,650 unemployed people. However, that may be an underestimate; the figures excludes undocumented foreigners and those still receiving benefits from previous employers.

The International Labor Organization (ILO) has already warned that 81% of the 3.3 billion people who make up the global workforce have been affected in some capacity by the coronavirus. The agency recently announced that working hours will be 10.5% lower this quarter than before the crisis began, meaning 305 million full-time jobs are in danger.

The Institute of Research in Economic Sciences (IICE) of the University of Costa Rica (UCR) released a survey that concluded that nearly 400,000 employed people would lose their jobs during these months. Their publication, “Estimation of the effects of COVID-19 on the Costa Rican economy” (PDF download) highlighted that those jobs in danger of disappearing correspond to 24% of employed workers.

The president of the Costa Rican Social Security Fund (CCSS), Román Macaya, based on the institution’s estimates, said that more than 500,000 people in the private sector, including salaried and independent workers, will stop contributing to the public pension and healthcare system.

The data provided by government institutions, research institutes, and international organizations only respond to jobs in the formal sector, and do not include the impact that the pandemic will have on informal workers.

REQUESTS TO REOPEN BORDERS

Luis Picado and his family have moved into a smaller house that they share in La Fortuna de Bagaces, since the 35-year-old’s contract at a hotel in the Gulf of Papagayo was suspended on March 16. While the former waiter watches his savings run out without any income to replace it, he says that he’s still receiving collection calls.

“People need to go out to eat, sell empanadas, sell bread. This brings a lot of stress, a lot of mental problems to all of us who are worried about how to support the family. This government believes that with ¢125,000 we will survive and that is the basic rent payment for a house,” Picado said.

On Friday, May 1, he was approved to receive Bono Proteger, more than a month after he applied for the emergency financial relief.

“One’s profession is hospitality and tourism, and until airports are opened, there will be no tourism,” he said.

Picado was one of 250 people whose contract was suspended at a single beach hotel. In the Chorotega region (Guanacaste and Upala) and the Central Pacific, the accommodation and restaurant sector represents 20% and 15%, respectively, of total economic activity, according to the State of the Nation program.

In the first quarter of 2019, the province of Guanacaste had an unemployment rate of 13.6%, higher than the figure at the national level (11.3%), according to data from the National Institute of Statistics and Censuses (INEC).

This Guanacastecan, like many, hoped that on May 4, President Carlos Alvarado would announce measures for economic reactivation or at least when the borders could be reopened — anything to give hope to him and his family.

However, he and thousands of others are currently waiting for answers that do not come, with government aid that is not enough.

In his speech to the Legislative Assembly on Monday, the president announced that he has asked his economic team to share the measures that will be taken — without saying when this will be.

‘IF YOU DON’T GO OUT, YOU WON’T EAT’

In Cinco Esquinas de Tibás, Ginger Picado resides with her two children in a house where 10 people live together. She works “on her own,” buying and reselling clothing and steel items. But since the crisis began, her income has decreased by at least 50%; she also applied for and received the Bono Proteger.

Her 65-year-old ex-mother-in-law, with whom she lives, wakes up before dawn every morning to prepare 40 empanadas that she sells with coffee in front of the Clorito Picado Clinic.

“She has 12 years of working in front of the clinic, and since this started, she could no longer sell. One of these days she tried to go again and sold nothing,” Ginger said.

Ginger, 43, sometimes travels into Alajuela by bus to make her sales.

“I have been doing it because I need each ¢3,000. There is no other way; if you don’t go out, you won’t eat,” she says.

Ginger has a 7-year-old girl with chronic asthma and a 20-year-old son with a disability. She also said that 22 days ago, she filed a request with the Municipality of Tibás to receive food packages being distributed by the National Emergency Commission (CNE), but she hasn’t heard back.

“We are all looking for a way. We have made bread and juices to go and sell from house to house, to turn things around, because you can’t stay still,” she said.

Unemployment and the precariousness of the informal labor sector have only worsened with the economic crisis generated by the COVID-19 pandemic.

At the end of 2019, the unemployment rate was already 12.4%, according to INEC data. The figure far exceeded the 8.7% unemployment reported in 2018. The female unemployment rate was 15% in the second quarter of 2019, while the percentage of informal employment among the population was 46.3% between April and June 2019.

SODAS AND SMALL BUSINESSES BARELY HANGING ON

Small shops, restaurants and sodas remain open, but uncertainty is rising.

In the La Sabrosa soda, in Heredia center, administrator Paula Díaz Rubios said that before the crisis they regularly served workers from four large institutions; today none of their typical clientele arrive. They now generate ¢10,000 to ¢15,000 (about $17.50 to $26.50) of profit per day.

The Costa Rican Chamber of Restaurants and Related (CACORE) last week requested that the Government allow restaurants to remain open all week with normal hours of operation. They indicated that of the 19,000 restaurants in Costa Rica, only 10,450 continue to operate.

According to their survey, some 23% of them (approximately 2,400 restaurants) have made the decision to close in the coming months due to the impacts of the coronavirus pandemic.

CACORE data also indicate that 53% of restaurant owners have fired employees, equivalent to 121,000 workers.

NO PLACE TO GO

One of the first people to be out of a job as a result of the current crisis was Ericka Espinoza Chavarría, who had worked at Marina Los Sueños as a waitress for three years.

The 37-year-old lives in El Roble de Puntarenas with her two children and her husband, who works independently as an automotive mechanic. Espinoza traveled an hour and 40 minutes daily to work, but at the beginning of the crisis, she was fired from the hotel (with ongoing benefits from the employer), as were around 90 others.

“We were told that we were being fired because of the illness; there was no talk of suspending contracts or reducing hours,” she said. “One is left without a hope or something to rely on. Puntarenas was already an affected area, we all had to migrate to work. Now, this has left us worse.

“We no longer have any income and have nowhere to go.”

The MTSS has received 598,554 applications for the Bono Proteger: 36% correspond to independent workers; 22.4% to temporary or informal workers; 21.6% to dismissed people; 12% people with temporary reduction of working hours; and 8% have a temporary contract suspension.

So far, 188,494 emergency financial contributions have been distributed: 54,543 in San José; 31,815 in Alajuela; 19,295 in Puntarenas; 16,197 in Guanacaste; 13,686 in Cartago; 12,757 in Limón; and 9,566 in Heredia, according to the MTSS.

Ericka studied human resources and labor law, fields in which she has never worked. Sometimes, her husband doesn’t receive any jobs for the day and earns just 25% of his typical income.

As a coastal province, where the economic slowdown has historically hit hardest, last year Puntarenas already had an unemployment rate that reached more than 14,000 people, according to INEC data.

For Ericka Espinoza, when Health Minister Daniel Salas or President Carlos Alvarado refer to sanitary measures and restrictions that are gradually being eliminated, it seems that they’re speaking only to a different sector of the population.

“In San José, they talk about gymnasiums, cinemas and swimming schools, and that isn’t relevant to us; here in Puntarenas, there is no cinema,” she stressed.

“The news was so bad that here in my house, we said that we’re not going to watch them anymore,” Ericka said. “We are no longer interested in watching the news.”

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A version of this story was originally published by Semanario Universidad on May 6, 2020. It was translated and republished with permission by The Tico Times. Read the original report at Semanario Universidad here

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