Change in Factors for Wage Increase Calculations

The National Wages Council in Costa Rica has included in the new formula national productivity per person and expected inflation, rather than past inflation.

Friday, October 28, 2011

Adjustments will be made based on the level of output and the central bank’s inflation target.

After 13 years of running the same system, private sector worker’s wages in Costa Rica will be adjusted using the new methodology, as announced yesterday by the Ministry of Labour.

From now on, the semi-annual adjustments will be made taking into account the national level of output per person, and the inflation target as defined by the monetary authority.

This modification is intended to better reflect the performance of the country's economic activity, and allow private sector workers to have more money to spend and thus help stimulate the economy further, according to an explanation given by the Minister of Labor, Sandra Piszk.

An article in nacion.com states: "... with the new methodology, you take the central bank’s inflation target for the year and divide it by two.

The 2012 target is 4%, therefore it was decided that the January increase should be half of that, about 2%.

It also takes into account an average increase of GDP per capita annualized over five years (ranging from seven years to two years prior to the year to be adjusted). For the 2012 adjustment, the years from 2005 to 2010 were taken into consideration. Also, if in the previous semester the increase in inflation was higher or lower than the Central Bank's target, the figure is adjusted up or down. "



More on this topic

Costa Rica: Minimum Wage Increased 0.67%

October 2015

From January 2016 an increase of 0.67% will apply to private sector wages of all categories included in the official decree.

The National Wages Council confirmed the government's proposal that the adjustment which will take effect from January 2016 is 0.67% for salaries of workers in the private sector.

Nicaragua: Wages Linked to Productivity

January 2015

The business sector in Nicaragua has suggested that in addition to inflation and economic growth the level of productivity of workers should be taken into account when defining salary adjustments.

According to employers the current legislation has not been changed in 10 years, therefore the method for making adjustments to wages does not reflect the changes that have been experienced in the production structures in companies.

Private Sector Wages Rise by 3.78% Costa Rica

October 2013

The approved increase applies to the first half of 2014.

"The amount approved by the National Wages Council factors in projected inflation of 2.47%, 0.77% of cumulative inflation for the first half of this year and the adjustment for GDP growth in the last five years (0.54%)," says Patricia Recio in Nacion.com.

Private Sector Wages Increase in Costa Rica

June 2012

Between the 2.47% proposed by employers and the 6% sought by union representatives, 5% has been settled on by the Central Bank as a starting point for inflation.

In the restart of negotiations between representatives from the employers, workers and the government over adjustments to private sector salaries in the second half of the year, workers have not gone with a single proposal.

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