San José, Costa Rica, since 1956

Businesses wary of hiring amid continued political uncertainty, says survey

The high cost of electricity and fluctuating exchange rate ranked among the greatest concerns for Costa Rican businesses during the fourth quarter of 2013, according to the Union of Private-Sector Chambers and Associations’ (UCCAEP) latest Business Pulse survey released Wednesday.

A majority of the 502 businesses surveyed said they do not plan to hire new employees in the first quarter of 2014.

UCCAEP’s president, Jaime Molina, used the survey’s findings as an opportunity to call for a “clear” policy from presidential candidates on expanding private-sector generation of electricity as a remedy for the country’s high cost of power.

“These results are more proof of the urgency to reduce electricity rates in Costa Rica. As a nation we are less attractive to international businesses that would prefer to go elsewhere because of the high cost of production in our country. If the country wants to grow, like the candidates say they want it to grow, Costa Rica is going to need more electricity,” Molina added.

Forty-five percent of businesses surveyed said the cost of electricity had a “high” or “very high” affect on their prices. Molina estimated that the cost of electricity in Costa Rica could be more than 20 percent higher than in other Central American countries.

Molina said that ruling party candidate Johnny Araya had a “clearer” plan for reducing the cost of electricity than opposition candidate Luis Guillermo Solís. The business chamber leader lauded Araya’s support for increasing the amount of privately generated electricity in Costa Rica.

Molina said Solís and his team had yet to convince UCCAEP that they had firm plans for how they would lower the cost of electricity in Costa Rica.

Molina noted that political uncertainty leading up to the Feb. 2 presidential election also weakened private business owners’ levels of confidence in the economy. Business confidence looking forward to the coming first quarter of 2014 dropped 4 percent from the same quarter in 2012.

The survey’s organizers suggested that the continued political uncertainty has kept businesses from hiring. Of those surveyed, 64 percent said they did not plan to hire new staff and 13 percent said they planned layoffs in the first quarter of 2014.

The Central Bank has sold over $60 million since Monday in an attempt to stem the recent devaluation of the Costa Rican currency.

Molina did not comment on the current exchange rate, ₡546.22 to the dollar, according to the Central Bank’s MONEX index Wednesday, but added that sudden drastic changes in the exchange rate were not good for the economy. “When we see changes like this, uncertainty grows, and that doesn’t help us,” he said.

UCCAEP surveyed 502 business owners and managers between Jan. 14 and 28. The survey has a 95 percent level of confidence and a 5.6 percent margin of error.

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To Zach Dyer

You should do a story on the Cost of Renting an apartment for the average Costa Rican compared to there salary they make. Do a story on the cost of imported foods in Costa Rica compared to USA or Canada. Do a story on the average Costa Rican can they afford to buy a house on an average salary.
Do a story on what HP or Intel or any call center pays Costa Rican compared to the USA or Canada.
Just a few idea´s. Look forward to seeing the stories Zach.

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Costa Rica power is not High in Cost compared to Canada or USA. I have a two bedroom house and pay $29 dollars a month in Costa Rica this is not high compared to my brother in Canada that Pays $450 dollars a month for a two bedroom house. My sister in Boston Mass is paying for her two bedroom house pays $320 per month. Business is just looking for better saving on power. ICE your doing a great job. PLN are trying to sell this country for nothing and rip it apart little by little. Job issue is because the rich don´t want to spend. PLN have all the control over jobs but they like keeping the poor low. Its a Fact. Also my Father lives in a small condo in Toronto and pays $ 297 per month for power.
Also USA dollar is a mess. Costa Rica needs to learn not to be like the USA. USA is failed state. USA is 17 Trillion in the hole and has 50 million on food stamps and a military machine that cost 800 billion a year. Costa Rica be your own country. Learn from the mistakes that the USA has made before it to late.

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