Comments
The economy grew 4.9% (annualized) in March and 4.7% in April. Unemployment remains around 10%. More than half the educated workforce want to leave CR for better jobs and a better life style...the cost of living here vs. wages is not seen as fair.
1. AyA -leakage... duh!!!! all one has to do is drive the streets and see all the broken water mains which remain unfixed for weeks. And they need to borrow money to fix the repairs which won't be.
2. Rental Firm suspends service: I don't know the story here but it could be a reflection of the lower demand. Yes, the employees seem to be out of luck; what about the owners of the units they managed? It wouldn't be the first screwing recorded by property mgt. companies.
3. Orotina airport: don't buy land their thinking this is going to happen in your lifetime unless you are under 20 yrs old. It is already behind two years and will likely drift further when the award is contested... remember, it took 25 years of talking before construction started on the highway -San Jose-Caldera- 18 mo. to build and a lifetime rebuilding it.
4. Bribery at Customs: this is not new. What is new is that the revenue collected used to be a source of income to the government. Lately, the revenue just covers the cost of operating the Customs Dept.
5. General Wage Increase: the Communist party continues to ride this hobby horse. Let's see if it gets through the legislature.
6. Big Mac Inflation Index: As you can see, CR is already one of the more expensive countries labor wise and remember, employer overhead social taxes represent another 50%.
1. AyA lost between 47% and 67% of water due to leakage
By Juan Fernando Lara S. jlara@nacion.com.
A water leak in Bello Horizonte de Escazú, in January 2013. AyA says that scenes how are you will decrease thanks to an investment plan to seal leaks in coming years.
An analysis of the Regulatory Authority of Public Services (Aresep) concluded that all regions served by the Costa Rican Institute of Aqueducts and Sewers (AyA) recorded significant levels of water losses..
Specifically, he found losses of 47% to 67% in the six areas where the liquid AyA serves as part of a study of quality of service in 2015. The work also included the Public Service Company of Heredia (ESPH)..
ARESEP amounted between 47% and 50% water lost in the distribution network of AyA for the Metropolitan, Chorotega and Brunca in that year. That percentage rises to 50% and 57% in the Central Pacific and Central East regions, respectively..
However, where the AyA least knows what happens to the water that is distributed in the Huetar Atlantic Region, with 67% loss. In the ESPH, the loss rate was 33%, representing a decrease of six points compared to the 2014 report..
In the case of AyA, the percentages of leaks in the distribution network remain practically similar regarding the study of the 2014.Sergio ARESEP Nunez, deputy manager of Systems Greater Metropolitan Area (GAM) in the AyA, admitted the leakage problem , but he said improvements are already close..
Nunez refers to loan $ 160 million the Institute contracted in 2015 to finance a large project, in order to seal most leaks in pipes and better control resource distributed to its subscribers..
The project Reduction of Unaccounted and improving energy efficiency (RANC-EE) water aims to reduce to 17% the percentage nationwide..
The debt with the Central American Bank for Economic Integration (BCIE) will benefit 1.7 million users in the GAM and aqueducts Limón Guácimo, San Isidro de El General (Perez Zeledon), the Propel (Alajuela), San Ramon , Puntarenas, Liberia and Nicoya..
Nunez, however, warned that ARESEP measurements in the next two years are likely to continue to reflect the current shortcomings because "the impact of this investment plan will in the medium term, in about six years, upon completion of the plan.".
Additional. In their study quality problems ARESEP called good water coming out of the tubes in Costa Rica, but stressed that the sewerage and water treatment remains very similar to that of four years ago coverage, with qualifications ranging from "intermediate" and "poor"..
In 2015, the report said, the AyA sewerage coverage ranged from 11% to 15% in the Central Pacific, Chorotega and Huetar Atlantic regions..
In Brunca and Central East regions increased from 5% .For its part, in the case of ESPH, coverage in Heredia only reached 29% of the province, and the metropolitan area, the AyA fell 52% . All these percentages are almost the same in 2014..
Francisco Angulo, ESPH spokesman said that the company is already working on the replacement of the sanitary network of Heredia and that "soon" environmental sanitation project in process "will improve coverage rates and wastewater treatment"..
ARESEP expects improved results in 2016, with the entry into operation of the treatment plant Tajos in La Uruca (San José)..
Nunez said that plant is already trying to 8% of the wastewater from the GAM and expects the index to rise to 20% within two years and so also reflect subsequent studies ARESEP.
2. Jacó rental firm seems to have suspended services
By the A.M. Costa Rica staff
The vacation rental business Mead Brown in Jacó appears to have stopped servicing its customers.
The company’s Web site is simply an email sign-in now, and the firm’s 24-hour number does not answer.
The Facebook page is not available, according to a statement posted by the social network.
One of the firm’s partners, Michael Brown, has not responded to emails.
Jacó residents report that some of the firm’s employees could not enter the offices late last week because the doors were locked.
The company’s main business is providing a brokerage business for owners of vacation homes and condos in Costa Rica. Many of the owners are U.S. and Canadian expats. Some of the homes managed by the firm are believed to have short-term renters in them now.
Naturally, the firm’s 40 or so employees are anxious because they are expecting severance pay if the firm has closed down.
The rental market in Costa Rica is an important aspect of the tourism business. Mead Brown advertised that it provided rental management services all over the Central Pacific coast and in places as distant as Montezuma and Cóbano on the Nicoya peninsula.
Foreign expats rely on such firms to collect rents and pay utilities and taxes as well as provide some maintenance, depending on the text of the contract. Renters frequently are provided with housekeeping and concierge services. Even more importantly for absentee owners is the service to check out renters so that the property that belongs to the rental stays there.
Mead Brown listings that are available on the Web site of other providers on the internet show daily rents of from $250 to $3,000 a night. The firm also listed tours and fishing trips as services.
3. Officials plan to sign Orotina airport study contract By the A.M. Costa Rica staff
Government officials will take another step today to construct a new jetport in the canton of Orotina. The new airport is supposed to be ready by 2025 and be twice the size of the existing international airport, Juan Santamaría.
The central government is calling today an historic occasion. The plan is to sign a contract for a master plan for the airport. 10 international firms have been competing for the contract, and the successful bidder has not yet been named.
The firm selected will help government officials determine exactly where the new airport will be located within the Alajuela canton and sketch out the details of the airport.
There also are many technical details related to flying that have to be considered.
The firm selected will have a year to do the work and receive about $1.6 million in payment.
The work would start quickly if none of the other bidders challenge the award. This type of work was supposed to have been started in 2014, so government officials are not too hopeful that the airport will be ready by 2025.
The regional Corporación Centroamericana de Servicios de Navegación Aérea is paying for the study.
The new airport is supposed to have two runways, each three miles long to accommodate giant jets.
There are supposed to be 20 boarding ramps, double the capacity of Juan Santamaría. The land area is expected to be about 1,200 hectares or about 2,965 acres.
Bids for the study were due in March.
Attending the ceremony today will be President Luis Guillermo Solís, Carlos Villalta, the minister of Obras Públicas y Transportes, and the tourism minister, Mauricio Ventura. The site will be the Orotina fairgrounds.
4. Rampant bribery at customs called main challenge
By Rommel Téllez, Special to A.M. Costa Rica
Bribery of customs officials is one of the main challenges in the fight against smuggling and fiscal fraud, according to Margarita Villalobos, who heads the Dirección de Inspección Fiscal at the Ministerio de Hacienda.
Last year the agency detected a record amount of products that made their way through customs with false information so importers pay less tax, she said.
This was allowed to happen by corrupt customs clearance officers who likely took bribes from importers, she said.
“In one of the cases we checked, the person in charge of reviewing the merchandise claimed to have cleared an entire container in 10 minutes,” something suspicious since “it took three people three days to completely clear a way smaller container.” she explained. She spoke in an interview with a reporter Tuesday.
Mrs. Villalobos said that stronger measures are taken in these cases and penalties up to termination have been applied to all those connected with this type of plot.
She also blamed what she called a ring of paqueteros for their responsibility in the scams. Paqueteros are a group of companies and individuals who sell themselves as importers without being registered at Ministerio de Hacienda.
They offer their services to small internet shoppers for very low prices and usually import the merchandise by shipping rather than by plane. Once these goods arrive into customs, bribery takes its part, she said.
“It is really risky to rely on these companies because if the merchandise faces any problem, it will be seized indefinitely and the original buyers may never get what they paid for. Probably it’s not their fault but they should have paid more attention with whom they were doing business with.” Mrs. Villalobos added.
According to her, these companies and individuals come from and serve all backgrounds, regardless of gender or socio-economic level.
A similar position is held by Benito Coghi, director of Dirección General de Aduanas, who said that the number of paqueteros are on the rise and only through strict monitoring they can be spotted. He said not only poor or uneducated people fall for these tricks, but also the wealthy and the powerful.
Last October, Hacienda reported a well-known home appliances chain brought in 369 flat screens under the name of individual buyers to avoid tax and then sold those television sets in their stores.
In March, Hacienda officials said they spotted a more elaborate fraud attempt. In this case, importers tried to bring in flat screens under the benefits of the free trade treaty with the United States by lying about the country of origin.
5. Signatures to be sought to double minimum salary
By Rommel Téllez, Special to A.M. Costa Rica
Trade unions will be collecting signatures to allow voters to approve a new minimum wage of about $900 a month for unskilled workers. That is more than double the current legal minimum wage.
The Tribunal Supremo de Elecciones approved the request, which is the initial step toward a referendum.
The request was filed in October by Didier Leitón, a union leader in the banana industry. He sought the approval of bill No. 19.312 through popular vote. Frente Amplio lawmaker José María Villalta introduced that bill, which remains pending in the Asamblea Legislativa.
The initiative would force the Consejo Nacional de Salarios to approve wages that guarantee workers enough income for housing, bills, food, education and recreational activities for a family, according to a union description.
The new minimum wage would only apply to unskilled workers in the private sector and would go into effect over five years, so that companies will have time to adjust to the new rules, according to the proposal.
The election tribunal said that the referendum would be legal since it does not modify the Constitution or address any subject that is in the exclusive domain of legislators.
Union members and supporters must collect at least 160,000 signatures, which represents 5 percent of the latest electoral roll, once the resolution is published in the official daily La Gaceta.
The signatures must be collected in the following 10 months. If the objective is reached, the election tribunal has the obligation to organize the countrywide vote no later than six months before the next presidential elections, according to the electoral code.
“We've met with experts from TSE and members of the main unions in the country. We are designing the ballots and waiting for the resolution to be published in La Gaceta to fully start the campaign.” said Albino Vargas, president of the Asociación Nacional de Empleados Públicos y Privados, one of the biggest workers unions in the country.
The referendum would be the second in the history of Costa Rica. The first one took place in 2007 to determine whether Costa Rica would join the Central American Free Trade Agreement with U.S and Dominican Republic. Voters approved the agreement then.
In Costa Rica, minimum salaries for private industry are updated every six months and they vary according to the job category and education level of workers. The daily income for a trabajador no calificado is a bit less than 10,000 colons a day and a bit more than $18, based on the current rate of exchange. The Spanish term means an unskilled worker.
The basic income right now is about $437 for a full month’s work, according to data from Ministerio de Trabajo.
The job categories involved include gardeners, construction workers, dishwashers, supermarket demonstrators, pool cleaners and even disc jockeys. Each now has the same daily wage of 9,663.04 colons a day or $437 for a normal month with six-day weeks.
If the law were put into place today, the minimum salary would be close to $900, according to methodology proposed in the bill.
“Employers will say that it will force companies to go to cheaper countries,” said Vargas. “However, we believe it will strengthen the internal production and accelerate the economy by increasing the purchasing power of the people. Most important, it creates dignified labor relationships, which is the essence of this proposal.”
Employers also would face double the cost of social charges, such as monthly payments to the Caja Costarricense de Seguro Social and worker insurance premiums. Both are based on salaries paid.
Current minimum wages that are lower than the proposed amount but higher than what is paid a trabajador no calificado today also most likely would increase.
Several U.S. states have raised the minimum wage including California where a successful ballot initiative sets a $15 hourly minimum wage by 2021. Labor advocates also are pushing for a federal minimum wage of that amount.
6. Exchange rate may fall further According to the Big Mac Index
The exchange rate in Costa Rica has room to fall further, according to the Big Mac Index, which produces the British magazine The Economist.
This would favor importers and renters or have loans in dollars. However, it would be negative for exporting companies or those who earn in dollars and spend in colones.
According to the report published in January of each year, the purchase price of the dollar could be ¢ 436, ¢ instead of 531, which was recorded at that time and today.
Roxana Morales, an economist at the National University (UNA) said that in effect the colon continues to strengthen against the dollar unlike other Latin American currencies.
That finding means that every time people need less colones to buy dollars.
Asked about the issue, the economist said that there is an effect in terms of trade because low inflation in Costa Rica offset the costs relative to other countries.
So far, the Central Bank has insisted that the dollar has the exact price that dictates the economy, and that is the answer given to groups pushing for a rise in the currency.
The Big Mac Index is intended to signal whether the currencies of different countries are at the right level against the dollar, but economists believe that the data should be viewed with caution because there are other variables involved and are not taken into account.
PURCHASING POWER IS THE MAYOR?
A compilation of the index hamburger made this week by CNN in Spanish Costa Rica ranks as the third highest purchasing power in Latin America, second only to Puerto Rico and Argentina.
To reach this conclusion calculate the minimum monthly wage of an unskilled worker and the number of hours a person must labor in those countries to buy a Big Mac.
In Costa Rica it is said that the minimum monthly wage is $ 530, that is ¢ 284,000, while in Guatemala it is at $ 356 or ¢ 191,000 and in El Salvador $ 251 which is equal to ¢ 134,000.
Experts are not so sure you can say that the purchasing power is best when the study does not include other variables.
According to the economist Oswald Céspedes, if all the cost of living is measured by the power to buy a hamburger'd all be millionaires.
"It may be that not so expensive to buy a Big Mac, but grab it as a measuring stick that is not representative of the purchasing power of Costa Rica," he added.
Nationally a hamburger costs ¢ 2.156, being one of the most expensive prices compared with Mexico, Uruguay, Colombia, Argentina, Chile and El Salvador.
According to Cespedes, if an index where the cost of public services or some other good basic food, probably Costa Rica would be in last place because it is a country too expensive compare it to.
"The index says the country has purchasing power because wages are high, but that reduces the competitiveness of companies and hinders the workers themselves get employment because higher wages less contracting capacity," he added.
