The Costa Rican Coalition of Development Initiatives (CINDE), the State of the Nation Program (PEN) and the National Institute of Statistics and Censuses (INEC), analyzed the country’s employment figures, the multinational sector data for 2023 and the reality of How Costa Rican human resources are prepared and their relationship with the market.
The meeting stated that Costa Rica faces issues of competitiveness and preparing talent for employability, so the country must accelerate the pace. For the first time in the last 15 years, employment data in the multinational sector slowed down, which requires paying closer attention to the issues that affect the country. It is proposed that we are facing a new employment dynamic.
Jorge Vargas Cullell, Director of the State of the Nation Program, commented that the known history has always been the challenge between the growth of production but not that of employment, especially in small companies that face a hostile business environment. which even makes them more vulnerable to subsistence compared to large producers and companies within the free zone regime.
“The business park is made up of around 77,000 formal companies, of which the majority are small in size. The contribution to sales and employment made by these micro businesses represents only 14% and 15% of the total, respectively. For their part, the largest companies, although they are equivalent to 2% of the business park, are responsible for most of the formal employment and 62% of the country’s sales,” said Cullell.
“Now we are facing a story that is not so well known. The data are showing us the slowdown in the generation of net employment in multinational companies in sectors that have been highly dynamic,” he added.
Deceleration in net employment of multinational companies
According to CINDE data, 2023 closed with a count of 5,574 net jobs. This represents only 27% of the employment generated in 2022. The data responds to real data from 429 companies in the services, tourism infrastructure, medical devices and advanced manufacturing sectors.
“We see in 2023 the slowdown in terms of net employment in dynamic and solid sectors such as life sciences, services, tourism infrastructure and advanced manufacturing. This calls us to immediate reflection and, above all, to take prompt actions that help us address the global challenges and local competitiveness that impacted the generation of greater opportunities for Costa Ricans,” said MarianelaUrgellés, General Director of CINDE.
“While it is true that there are elements of global impact and post-pandemic stabilization, which may be part of the reasons that caused the drop in employment, we clearly see great job opportunities soon in aspects of the business climate that are in the hands of Costa Rica. For years we have raised our voices as CINDE about the existing talent gap and the shortage of bilingual personnel, for example. Likewise, issues such as new non-fiscal incentives and stabilization of local conditions are elements of competitiveness that we have yet to address,” reinforced Vanessa Gibson, Director of Investment Climate at CINDE.
CINDE reports the net employment of multinational companies in corporate services, life sciences, advanced manufacturing and tourism infrastructure based on real employment data verified with CCSS figures.For the first time, the life sciences sector was the main generator of net jobs, adding 4,720 (85% of the total), followed by the services sector with 1,455 jobs.
For its part, the advanced manufacturing sector showed negative figures. In the balance between total jobs generated and those lost, the sector registers – 634 jobs.
CINDE explained that, although the Life Sciences sector sustained net employment and had positive growth, but less than in previous years. And in the case of manufacturing, they indicated that it continues to show great challenges; According to CINDE criteria, recovery opportunities are seen with the development of the semiconductor supply chain.
Finally, CINDE mentioned that, for the second consecutive year, the majority of net jobs are women. Female employment represented 55.5% of the total generated.Within the figures presented, it is also mentioned that, of the universe of 429 companies analyzed, this year 35% decreased in their payrolls versus 23% in 2022.
A perfect storm or an anomalous year?
According to INEC data presented by Pilar Ramos, Statistics Dissemination Coordinator, employment behavior has been affected in a sustained manner in recent years, showing a drop in employment in young people, more evident in women, and an increase in number of unemployed people with completed secondary school
Vargas Cullell added that it is important to analyze the new data provided by CINDE on the slowdown of a sector such as the multinational, which has typically been growing at higher rates than the rest of the economy.
According to CINDE, some of the potential reasons that may explain the decrease are the impact of competing elements in the global economy, such as:
– Hiring freeze, influence of the main trading partner (USA), competition in special regimes, pandemic rebound in foreign direct investment flows and talent shortage.
At the local level, the following were identified as potential reasons:
– the deterioration in elements of competitiveness and uncertainty, the arrival of new, but smaller-scale projects and more controlled reinvestments in terms of employment; the direct relationship between what the US market is facing and the shortage of talent that meets the companies’ demand.
Call to take action
Vanessa Gibson from CINDE reinforced the message of seeking to match the supply and demand of national talent by seeking to improve English language skills and continuous training in areas of high demand on a global scale.
For his part, Vargas Cullell indicated that we are facing a moment in which we must insist, prevent and adapt country measures. Topics such as job prospecting, generation of a robust employment policy and strengthening of development policy make up part of the immediate call to action.Currently, 187,985 people work for multinational services, manufacturing, life sciences and tourism infrastructure companies supported by CINDE.
