San José, Costa Rica, since 1956

Private sector start pay-raise talks at 6 percent

Costa Rica´s principal business association announced Monday that it is willing to begin negotiations for increase in minimum salaries at 6 percent.

The nation´s minimum wages – which vary depending on the industry – are adjusted twice a year through a negotiation between labor leaders, private business and the government.

The raise would apply to the first half of 2009.

Last week, labor leaders called for salary increases of between 12 and 16 percent for public and private sector workers in order to keep pace with the rising cost of living.

Inflation has surged 15.77 percent during the past 12 months, the highest year-over-year increase since 1998, according to the National Statistics and Census Institute.

The Union of Private Sector Chambers and Associations (UCCAEP), which represents 42 private business chambers, said in a statement it “recognizes that inflation for the second semester of 2008 will be above 6 percent.”

However, UCCAEP said that for more than six months it has been warning that a lack of credit availability, both in credit lines and business loans, is “squeezing” the private sector, while the Legislative Assembly´s failure to pass the Central American Free-Trade Agreement with the United States (CAFTA) is generating “uncertainty” among businesses.

UCCAEP called for the eventual minimum salary increase to take into consideration “the country´s social and economic reality.” It also noted that 98 percent of businesses in Costa Rica are medium-, small- and micro-sized, and salary increases hit their finances the hardest.

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