Bad Idea: Increasing the Minimum Wage

In a context of high unemployment and informal work any increase in the amount of the minimum wage produces more unemployment, more informality, and consequently, more poverty and inequality.

Wednesday, October 14, 2015

In Costa Rica, the latest numbers released by the National Statistics Institute (INEC) located unemployment during the first quarter of 2015 at 10.1%. If you add those who are not unemployed but who have informal jobs, which is 45.3% of the working population, you can tell why almost half of the population in Costa Rica who wants to work do not get better incomes if the minimum wage is increased.

On the contrary, as expressed in the Legislative Assembly by Natalia Diaz, member of the Libertarian Movement Party, during discussion of a bill that seeks to increase the minimum wage: "... a minimum wage increase would cause more unemployment, informality, inequality and poverty ... if an employer has a budget of 600,000 colones to hire staff, today they could provide jobs for two people providing the current minimum wage of around 250 000 colones ... but if the reform is approved, with the same budget they could only hire one person, because the minimum wage would be more than 300,000 colones as per the initiative [proposal]. "

"... According to the text of the initiative, taking into account that determining the appropriate minimum wage for unskilled jobs for the second half of 2014 is established as ¢9321.97 per day worked (¢223,727.28 a month), if introduced the minimum wage would increase by 40.44% (¢90,281.91)."

More on this topic

Guatemala and the Minimum Wage Discussion

December 2018

For agricultural businessmen, the proposal to change the minimum wage discussed nationwide jeopardizes the jobs and incomes of about 500,000 people working in agriculture.

The guild assures that in addition to the 500,000 direct jobs that could be lost, if the proposal is approved, nearly 1 million indirect jobs would also be put at risk.

Raising the Minimum Wage with 10% Unemployment

April 2016

Costa Rican industrialists warn that increasing the minimum wage in the private sector by 34% will cause more unemployment and encourage more companies to operate unofficially.

The bill concerning the minimum wage will endanger plans for new hires in the private sector, and its passage into law could cause more informality and more unemployment.

Costa Rica: More Informal Employment

November 2015

In the last year the number of people with jobs outside the formal market grew by nearly 3%, showing the deterioration of the competitiveness of the Costa Rican economy.

From a statement by the Costa Rican Union of Chambers and Associations of Private Business Sector (UCCAEP):

Want More Unemployment? Increase the Minimum Wage

March 2015

Trade unionists who promote it, the officials who estimate it, the rulers who decree it, are not part of the legion of unemployed who surely would work for less than the official minimum wage.


The unemployed have no voice, in principle because they do not pay a sindical fee, and if they did have one, they would not raise it, because it feels devoid of the dignity necessary to do so, because they are used to adopting a very humble position in job interviews. Nothing further impoverishes the human spirit that lack of gainful income of one form or another.

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