By Wendy Anders

With more than 40 per cent of its workforce engaged in informal labor, Costa Rica’s Labor Ministry was pleased to reach an agreement under the auspices of the International Labor Organization (ILO) with employers, workers, and other governmental representatives on bringing these workers into the country’s formal labor force.

The Labor Ministry, the Social Security Agency (CCSS), the Ministry of Economy, the Women’s Institute as well as the Private Sector Employee’s Union (Uccaep) and other trade unions and government agencies committed to developing a strategy and action plan to address informal labor over the next six months.

These strategies for incorporating informal workers into the formal economy will then be put into action, said the Labor Ministry.

The recently signed Tripartite Agreement is a mechanism for implementing the ILO’s recommendation 204 on the transition from an informal to a formal economy in Costa Rica which was presented during the ILO General Assembly on June 1, 2015.

The agreement aims to promote the creation, maintenance and sustainability of businesses and decent jobs in the formal economy, and consistent macroeconomic policies on employment, social protection, and other social issues with the goal of preventing informal labor in the formal economy.

“Working on informality affects workers’ quality of life and social security, and also formal employers, because informality is unfair competition, and is a challenge for institutions,” said Minister of Labor and Social Security Carlos Alvarado Quesada.

The act was signed by the president of the Legislative Assembly, Antonio Alvarez Desanti, and the Director of the ILO Office for Central America, Panama and the Dominican Republic Carmen Moreno.

The ILO defines the informal economy as all economic activities that are insufficiently covered by formal systems or are not covered at all.

Moreno, stressed “the importance of addressing the challenges of formalizing employment in Costa Rica from a multidisciplinary, interagency and participatory approach to ensure a comprehensive design that contemplates the challenges of decent work.” In addition, she said the initiative “reflects the aspiration of Costa Rican society to make decent work a central element of public policy.”

According to the National Institute of Statistics and Census (INEC), the country recorded 825,142 workers engaged in informal employment in the first quarter of 2016, the equivalent of 41.4 percent of the total workforce. According to the INEC, informality affects three out of ten salaried workers and eight out of ten independently contracted workers.

In an effort to increase formal employment in Costa Rica, Economy Minister Welmer Ramos said he has proposed legislation that would temporarily exonerate small and medium businesses from mandatory social security contributions slated for the social agencies IMAS and FODESAF. Because small companies are “key to the country’s economic and social development,” he wishes to find ways to strengthen their operations. Ramos also said he is “working together with the CCSS to complement this legislation with a temporary exemption from a percentage of employers contributions to state health and maternity insurance.”