Costa Rica: Examples of How to be Like Greece

Information about salaries of officials at the state run telecoms company has been released, which include the more than $4000 a month paid to a chauffeur.

Friday, July 10, 2015

EDITORIAL

An article in Prensalibre.cr reports that "... deputy Otto Guevara unveiled the list of salaries of 22000 officials working in the Costa Rican Electricity Institute (ICE) and Radiographic Costarricense (RACSA) and National Power and Light Company (CNFL), which included details of a light vehicle chauffer earning ¢2,132,854 ($4,000) a month. It also highlighted the 854,000 colones ($1,600) paid to a floral arranger and 6 million colones ($11,200) a month received by a public accountant and auditor, while a human resources assistant earns 3,372,536 ($6,300). "

Added to these monthly stipends are other benefits such as "... annuities of 3.56%, 30 days of vacation, 24 year severance and bonuses for redundancy, zoning, and sick leave."

Data released by the legislator confirmed what is common knowledge in Costa Rica: wages paid by the state are double those paid by the private sector for the same job profiles.

This economically unsound policy feeds the predilection of Costa Rican university students, who "dream of being public servants" , because in addition to privileged wages, they enjoy job security practically for life.

On top of this the Costa Rican Electricity Institute is in the public pillory over disclosed information relating to its financial statements for the previous financial period, which include losses of tens of millions of dollars in its own operations and those of its subsidiaries, losses of hundreds of thousands of cell phone customers, as well as details of other ruinous business deals.

Its enough to see the package of austerity measures that Greece has to take on in order to get over the catastrophic crisis that it finds itself in, as a warning of the similarities with the route being taken by Costa Rica.



More on this topic

Central America Fiscal Outlook

July 2015

With the exception of improvements in Nicaragua and Honduras, in the rest of the Central American countries problems in public finances range from latent in Panama and already serious in Guatemala, to critical in Costa Rica and El Salvador.

From the report "Macrofiscal Profiles: 4th Edition" by the Central American Institute for Fiscal Studies (Icefi):

Company In Problems Raises Owner's Salaries

July 2014

While the "owners" of the "business" of the State of Costa Rica -public employees - are raising their salaries by at least 4%, their "workers" - the private sector - , were given an increase of 2.35%.

EDITORIAL

As if they lived on Mars, two senior level officials in the government of Costa Rica, the Deputy Ministers of Finance and Labor stated that there will not be any problem with adjusting the salaries of state officials at a percentage that will offset previous inflation - 4.14% - arguing that the increased expense "falls within the available budget."

Inevitable Reforms to Wages and Public Pensions

November 2013

"Costa Rica is the only country in the region where the salaries of public employees exceed those of the private sector."

An editorial in Nacion.com discusses Central Government schemes for salaries and pensions, describing them as "nothing short of chaotic and unsustainable."

The Risks of an Uncontrolled Fiscal Deficit

July 2011

Increased public spending in Costa Rica, especially in the payment of wages, has become a threat to the entire economy and should be corrected by cuts or higher taxes.

Overspending in the public sector and in the decentralization of institutions has meant that for the present year, 2011, a higher deficit than ever before in the last ten years has been projected.

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