Simplicity and complexity in practice

Costa Rica – from 520 to 23 rates

Costa Rica introduced minimum wages in 1933, establishing a minimum wage per day, which developed at the cantonal level and later at provincial level. The system was structured by sector of activity and occupation, but also included differences by region, enterprise size (determined by amount of sales) and skill level. Despite some initial simplification in the 1960s, the minimum wage system tended to cover as many occupations as possible with specific minimum wages. The 1987 wage decree included 520 specific minimum wages.

The minimum wage system became increasingly difficult to manage. The National Wage Council therefore started a simplification process merging similar occupations and by 1992 it was reduced to 72 minimum wages. The simplification process continued and by 1997 the sectoral dimension had been eliminated and the system was based mainly on skill level and some specific occupations (like domestic work). The number of rates was reduced to 23.
The core of the system now consists of minimum wages established for unskilled, semi-skilled, skilled and specialized workers, plus five additional rates depending on educational level. The minimum wage which applies to unskilled workers not covered by any other specific rate is known as the salario minimo minimorum and serves as the wage floor, below which no wage can be set with the exception of domestic work which has a separate, and lower, occupational minimum wage.

The remaining degree of detail provided by the minimum wage system both highlights and partially compensates for the weakness of labour institutions, with a low level of unionization in the private sector and a very limited coverage of collective bargaining.

Costa Rica: for the historical reference, see Rojas and Murillo (1997) “Minimum wage fixing in Costa Rica”, labour law and labour relations briefing note nº 10, ILO, Geneva. For the present system, see Trejos (2014) “Costa Rica: un esfuerzo para mejorar la aplicación de los salaries mínimos”, in Marinakis (2014) Incumplimiento con el salario mínimo en América Latina, ILO, Santiago