Are Robots, Machines and AI Replacing Ticos at Work?

    Fall in employment rate “is unusual” and an urgent analysis is required to stop the problem, according to experts

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    “The process of accelerated price increases that Costa Rica is experiencing is making automation advance faster,” said Eli Feinzaig, head of the Progressive Liberal Party faction.

    The employed population in Costa Rica was reduced by more than 91 thousand jobs for the last quarter of last year compared to the same period in 2022.These are jobs that disappeared and at this moment no one knows why.

    Technology at fault

    Entrepreneurs, economists and deputies have different hypotheses, but one of the ones that sounds the most strongly is related to the automation of services and tasks through machines, robots and Artificial Intelligence.

    To this, we should add some conditions that accelerate the replacement of Costa Rican workers with machines, such as, for example, the appreciation of the colon against the dollar, the high energy cost and high social charges, which would motivate companies to invest. in technology to reduce costs and hire fewer staff.

    Other possible explanations are related to the existing divorce between available jobs and the capacity of the workforce, in addition to the difficulties that companies outside free zones face to stay afloat.

    Unusual and worrying

    Regardless of which of these explanations has more weight, the experts consulted point out that the loss of jobs is something “unusual and worrying,” which is why a diagnosis must be made as soon as possible to prevent the number of employed people from continuing down.

    “The reduction in the number of jobs may be associated with the transformation of employment. Today, automation, the use of artificial intelligence and digital platforms and shared services that can be used in the cloud, make companies more optimal in their current expenses and, with it, in their payroll.

    This means that if before a company needed 10 people in Costa Rica, now, with all the technology, one is required here and the other 9 can be replaced by artificial intelligence or another country with a lower economy of scale,” said Daniel Suchar, economic analyst.

    Meanwhile, Eli Feinzaig, economist and faction leader of the Progressive Liberal Party, adds that this automation that Suchar describes is accelerating in the country due to how expensive it is to produce in Costa Rica.

    As an example, he gave the 15% energy increase that companies are already paying and the appreciation of the colon against the dollar, which hits the income of free zones, tourism and the export sector.

    “The process of accelerated cost increases that Costa Rica is experiencing is making automation advance faster and some jobs are being lost in the process of implementing robots and machines. Companies seek to produce at a lower cost,” said Feinzaig.

    Drop in the employment rate

    The two experts consulted and others warn that the drop in the employment rate requires immediate attention. In that sense, Fernando Rodríguez, economist at the National University and former Minister of Finance, warns that the macroeconomic achievements of the Rodrigo Chaves government do not necessarily translate into jobs and that it is necessary to study the phenomenon.

    “We are undoubtedly facing an unprecedented situation. What is growing in our economy is mainly free zones, with minimal (or no) impact on employment, while the rest of the sectors are growing little or are stagnant, and their growth is not driving job creation. If more is not invested and the government does not reactivate spending in certain important areas (security, for example), economic growth will be difficult; We will be left watching how a small group of activities grow with a very poor connection with the rest of the economy,” Rodríguez said.

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