San José, Costa Rica, since 1956

President Solís announces goal to create 217,000 jobs during his term

President Luis Guillermo Solís’ administration set an ambitious goal to create 217,000 jobs and integrate more workers into the formal sector during the next four years, at a press conference Thursday morning. The business community, however, did not share the president’s enthusiasm.

Alongside Labor Minister Victor Morales and Economy Minister Welmar Ramos, the president presented his administration’s National Employment and Production Strategy. Solís said the strategy would make employment a national priority, including its addition as a variable in the Central Bank’s macroeconomic planning. Costa Rica’s unemployment rate was 8.5 percent – or more than 188,000 people – in 2013, according to the National Household Survey.

President Solís stressed that his government’s push for quality fair-paying jobs was not at odds with Costa Rica’s international competitiveness.

The plan had a particular focus on working mothers and people with disabilities. The national unemployment rate is 8.5 percent, but the rate is higher among women, reaching 10.8 percent. Some 65 percent of the 188,00 unemployed Ticos have a disability. The Economy Ministry will work with the National Training Institute and technical colleges to train 9,600 students, and offer entrepreneurship classes to another 5,000 women to reach these groups and young people who have left school.

The presentation played on Solís’ campaign promise to reinvigorate the national economy through government promotion, entrepreneurship training and social support for working mothers and other groups. The plan includes the creation of PROEMPRESA, a public-private organization dedicated to promoting and developing the national economy and encouraging the domestic market. PROEMPRESA would use PROCOMER, a private entity tasked with improving Costa Rica’s exports, as a model. The business promotion entity would require legislative approval.

Morales said the national employment plan also would work to simplify the the permissions and paperwork required to open a legal business in an attempt to bring more workers into the formal economy where they can demand a minimum wage and insurance coverage from their employers.

Solís stressed that his plan was not a top-down mandate from San José to the provinces and he hoped it took pineapple workers, cattle ranchers and others into consideration.

It seems one group in San José felt left out.

Union of Private-Sector Chambers and Associations (UCCAEP) President Ronald Jiménez criticized the president’s efforts and bristled at not being consulted by the Labor Ministry or other agencies to design the employment strategy.

“It’s incredible that an initiative that seeks to generate employment would not even consult the largest generator of jobs in the country. Jobs are not created by decree but rather are a product of a serious of policies that should be followed to improve the business climate,” Jiménez said, according to a statement.

Figures credit the private sector with between 80 and 85 percent of the jobs created in Costa Rica.

Solís told critics during his speech that he urged them to constructively contribute to the plan’s ambitions.

“The only thing that keeps us from it is will,” Solís said.

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Ken Morris

I see four possible problems.

First, failing to consult with UCCAEP was at least a political if not also a substantive mistake. I’m not sure how involved a self-appointed private-sector group needs to be in an announcement of administration goals. Sometimes these groups are more intent upon preserving their existing profits than improving the overall economy, and anyway the announcement was more about goals than policies, but it does seem to have been a political mistake not to have at least given them a heads up.

Second, and perhaps related, while I believe that government must play a large role in economic development, as presented the Solís plan does have the whiff of more government bureaucracy when at the end of the day jobs are created or not by the private sector. Are we sure we need another government agency?

Third, I don’t understand either courses on entrepreneaurship or CR’s self-conception as a country of entrepreneaurs. Although I’m sure some of these skills can be taught and learned, it seems to me that the kind of person likely to become an entrepreneaur is not the kind likely to sit through training on entrepreneaurship. Real entrepreneaurs are genuine self-starters driven by passions, and often as not they come from outside the system. Past a point, trying to train entrepreneurs is an oxymoron. An emphasis on training entrepreneurs therefore strikes me as reflecting a fundamental misunderstanding of entrepreneurship. Related, I don’t see CR’s culture as emphasizing the kinds of business startups and innovations that are the hallmark of entrepreneaurship. Rather, it’s a technocratic culture given to emphasizing training for jobs in a bureaucracy owned by someone else. Thus, I fear that Solís may be misunderstanding entrepreneurship, which I actually think is the biggest economic lack in CR.

Fourth, the core obstacles to business development (and thus jobs) in CR are bloated government bureaucracies and lack of access to credit. The country always ranks low on scales of ease of starting a business, primarily because of all the blasted government bureaucrats who stand in the way. (I suspect that high taxes are far less of an obstacle to business than is government red tape.) Clearly, a main thing the government needs to do is streamline its role in business creation so that businesses can actually be created, yet Solís doesn’t appear to have made this crucial point. However, one thing government should do is clamp down on the banks’ hesitance to lend money at other than excessively high interest rates, as well as all the red tape involved in getting financing. Just by watching, I think that the biggest reason for small business failure in CR is undercapitalization, and by reading I see that the banking sector is hands down the most profitable part of the economy. If passionate entrepreneurs can’t access capital at fair terms, they can’t succeed, and if the banking sector isn’t overhauled, the only successful business in CR will be banking.

These reservations stated, the good thing is that Solís has gone on record announcing a strong goal for economic development. This is dangerous for a politician, since it establishes a benchmark against which he can be measured and criticized. It is therefore a credit to Solís’ integrity that he has taken this noble risk. Meanwhile, since we don’t yet know whether or not he will fail, our job is now to help him succeed. It’s really only a statement of the goal at this point, not a lot about the means, and it’s in everyone’s interest to help him reach the goal. I for one haven’t turned against him yet, even though I obviously have reservations that I hope will be addressed as the policies unfold.

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Jolene Knorr

We need to foster our economy, investments and education in hand with the private sector needs. Government institutions in this country are pure bureaucracy. The private sector can not be left out.

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Rick Nelson

The whole country is suffering from lack of opportunities and investment. It is certainly a complicated task he has at hand BUT the problem is trying to please everyone, this will never happen. What CR needs is somebody willing to go against the flow and against the polls and remedy issues. If this party compromises with all power groups NOTHING will come of it. Someone like Rafael Correa of Ecuador is what is required, and that takes guts.

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Susan Fletcher

Great idea! Needs to concentrate on Guanacaste! ICT built the super hype for tourism over the past 35 years in Guanacaste. However these past 6 years is dismal on that front. The area suffers terribly with unemployment and zero job growth. Work in that Mr. President.

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