Costa Rica Lost 60,110 Microenterprises in Last 2 Years

Photo of author

By LatAm Reports Editor

The Costa Rican economy has lost 60,110 microenterprises in the last two years, according to data from the National Survey of Microenterprises of Households (Enameh) of the National Institute of Statistics and Censuses (INEC).

In 2022, the number of bundled starts that disappeared amounted to 43.90543,905 compared to the year immediately before. The number of microenterprises fell from 454,650 in 2021 to 410,745, by 2022. That decrease was 9.7 per cent.

Meanwhile, 16,205 micro-enterprises disappeared the previous year compared to 2022. They went from 410,745, in 2022, to 394,540, in 2023, down 3.9 per cent.

Enameh estimated the total number of people leading in 2023 a venture within their own home at 380,614.3,7% menos Sixty-eight per cent of these self-employed were men and 31.4 per cent were women, with an average age of 48.7 years.

What happened?

Although last year the loss of microenterprises slowed, compared to data from 2022, the decline in business continued.

The reduction in the number of such businesses over the past two years occurred in a complex economic environment that affected its development and growth, such as high interest rates, strong appreciation of the colon, high inflation (2022) and unemployment.

Economist Luis Vargas, of the College of Economic Sciences of Costa Rica (CCECR), acknowledged that the decrease in the number of microenterprises reported by INEC in 2022 and 2023 is associated with the country’s economic situation in both years.

On the one hand, let’s remember that companies had to assume much higher prices reflected in the Producer Price Index (PPI). On the other hand, a high interest rate conjuncture that makes these people who have microenterprises more limited resources to carry out their businesses, he explained.

In addition, the final regime, which is outside the free zones, had difficulty recovering.

Microenterprises located in this regime showed little or no growth in their income compared to the high increase in production input costs and also of the credit to move forward, Vargas added.

From the hand

Photograph for illustrative purposes. (File/CRH).

The smaller number of microenterprises in the Costa Rican economy coincides with the destruction of jobs experienced by the labour market last year, according to economist Ronulfo Jiménez, advisor to the Costa Rican Banking Association (ABC).

There is a relationship between this statistic that INEC drew, that the number of microenterprises is reduced, and that proposed by the Continuous Employment Survey on job reduction, he said.

He explained that the destruction of jobs in the labour market is mainly due to the reduction of jobs in the informal sector of the economy.

Is it more associated with certain jobs more of self-employed people or independent persons, which translate into fewer microenterprises. They are two ways of measuring the same phenomenon. The coincidence of the two sources, the Continuous Employment Survey and the National Microenterprise Survey suggest that there is indeed a phenomenon of a reduction in employment in the most informal sectors linked to microenterprises, Jiménez expanded.

This view was also supported by Vargas, who indicated that the decline in the number of microenterprises is undoubtedly associated with the reduction in employment, particularly in the activity of households as employers.

When we compare these figures we observed a high correlation between the decrease in the number of these micro-enterprises and the decrease in the number of jobs in this branch of activity of households as employers, he stressed.

The year-on-year variation in employment between October 2022 and October 2023 revealed a loss of 132,756 jobs in the labour market (-6.0%), based on data from the INEC Continuous Employment Survey.

If analysed by sex, the destruction of jobs has been greater among women: -80.996 (-9.6 per cent). In particular, fewer domestic workers and fewer workers in professional services.

For men, the loss of jobs was -51,760 (-3.8%).

Looking at job losses by age groups year-on-year, between October 2022 and October 2023, only 23 per cent of the nearly 133,000 jobs destroyed were people aged 60 and over.

For people between 25 and 34 years of age, it was 65%, or -86,279. From 35 to 44 years of age it was -1,789.

This article has been translated from the original which first appeared in CR Hoy