The state wage bill has increased by 100,000 people in 15 years
QCOSTARICA – The state wage bill in Costa Rica increased by almost 100,000 between 2005 and 2021, from 223,880 people to 323,230. In terms of percentage, the growth was 44%. However, there is a big difference between autonomous institutions and central government.
In the case of autonomous companies, such as the Instituto Costarricense de Electricidad (ICE), the Instituto Nacional de Seguros (INS), the Refinadora Costarricense de Petroleo (RECOPE) and others, the sector with the most employees of the State, growth was 50% while the number of vacancies rose from 118,350 to 177,400.
Meanwhile, in the central government, the increase in the wage bill was 38%; the number of jobs increased from 105,530 to 145,840.
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The growth rate of the state wage bill has doubled the rate of the country’s population increase in the past 15 years. While the number of inhabitants increased by less than 22% during this period, the public sector wage bill increased by 44%.
The data is derived from the Centralized Collection System of the Caja Costarricense de Seguro Social (CCSS)), which carries the constant pulse of insured employees.
Strong growth of the Arias government
The strongest growth in the public wage bill occurred during Óscar Arias’ second administration (2006-2010).
At the end of the four years of this administration, the wage bill had increased by 23.6%, especially in the case of autonomous institutions. In these institutions, vacancies increased by 28.7% and, in central administration, by 17.8%. In the first, the wage bill increased by 33,750 positions under the Arias administration.
Only in the CCSS, the decentralized institution with the most staff in the country, there was a growth of 11,000 between 2005 and 2010, without this turning into an improvement in medical care, as diagnosed by the Pan American Health Organization (PAHO). .
In addition, wages in La Caja increased by 17.6%, well above inflation.
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Regarding the growth percentages of the state wage bill, the second Arias administration is followed by the mandates of Laura Chinchilla (9.7%) and Luis Guillermo Solís (5%). For its part, in the government of Carlos Alvarado, five months from the arrival, growth was 2%.
The economist José Luis Arce, director of the firm FCS Capital, explained that the country recorded a strong growth in the public wage bill in the period between 2005 and 2013, but especially during the years 2008 and 2009, with an increase by more than 15%. .
“These two years coincide with the government of Óscar Arias, during which there has been a sharp increase in hiring at ICE and CCSS and at the central government level in education and security.
“In fact, this increase, coupled with the even higher wage growth in those same years, is what explains the current budget problem, as there has been strong growth in wage spending,” Arce said.
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Along with the increase in the wage bill, the cost of wages in the state has obviously increased, but not only because of the number of people, but also because of the amount of wages caused by bonuses (“more” in Spanish ).
As a result, the enlargement was more significant: the state’s monthly expenditure on salaries increased from 171.8 billion yen to 351.8 billion yen, according to Centralized collection system (SICERE). Simply put, it increased 104% between 2005 and 2021.
All these data are deflated, that is, the figures for previous years have been updated with inflation to express them in today’s columns.
Again, the strongest growth occurred during Óscar Arias’ second term. Although in this administration the wage bill of the self-employed increased much more than that of the government, the increase in wage expenditure was very similar in the two sectors: 53.7% among the self-employed and 56% in the central government. This means that ministry officials received much higher salary increases.
Then, in the Chinchilla administration, the growth in salary expenditure was 27%, and in the Solís administration, 7%. On the other hand, in Alvarado’s time, the wage burden was instead reduced by -3.5%.
Between 2008 and 2010, the Arias government decided to apply phased increases to the base salaries of ministry officials, after diagnosing their salaries to be much lower than those paid by other state entities.
They were in the 25th percentile and management decided to reduce them to the 50th percentile.
However, “several institutions” have decided to emulate the measure, which has led to a sharp increase in government wage expenditure.
Arce reported that salary spending has widened both due to the growth in the wage bill and due to the salary increases granted in the CCSS, (ICE) and the education sector, in addition to the effect of the wage hitch. professionals from the health sector.
“Small salary increases, like those for police officers, translated into high salaries like those of doctors; this is obviously corrected with the Public Employment Bill (currently under discussion in Congress) and that is why it is as important as the law.
“The other reason is that in that period (Arias administration) it was used as a way to deal with the international financial crisis, yes, very irresponsibly, that public employment was a countercyclical element. The problem is that by doing it with employment and by being inflexible in lowering the wage bill, it leads to the fiscal problem that we currently have, ”he added.
In 2020, the Organization for Economic Co-operation and Development (OECD) named Costa Rica as the country that spends the highest percentage of its income on civil service salaries, among the 38 countries that make up this bloc.
According to the OECD, civil servants’ remuneration represents more than 50% of total income. This organization also criticized the existence of 260 wage premiums in the public sector and differences in the same position of up to 600%.
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