Ten percent of the population of Costa Rica is foreign and in that group Nicaraguans represent 82 percent of the total, so they are considered to be the ones that contribute the most.
In the midst of the growing xenophobia faced by Nicaraguan workers living in Costa Rica, which even the authorities point out to absorb, through public services, much of the nation’s budget, a study concluded that between 2017 and 2021 they contributed about 7 percent of the Gross Domestic Product (GDP) each year.
This contribution was made mainly by Nicaraguans, since according to official figures, 10 percent of Costa Rica’s population is foreign and among them Nicaraguans represent 82 percent of the total, with almost half a million people.
Foreign workers contributed directly to 7 percent of GDP and a positive net fiscal balance during 2017-2021. The macroeconomic impact of the foreign population is through the labor market and production, through the labor force; the fiscal balance by paying taxes; and current account through the sending of remittances, since Nicaraguans who migrated to the United States and left their families in Costa Rica send more money in remittances than those who follow their families in Costa Rica send to their families in Nicaragua, says Valeria Lentini Gilli, economist at the United Nations Agency for Refugees (Acnur) of Costa Rica.
Lentini, together with Santiago Acosta-Ormaechea and Ivania García Cascante, of the International Monetary Fund (IMF), and Josué Sibaja Morales and Pablo Vega García, of the Inter-American Development Bank (IDB), with contributions from Ana Aguilera, of the World Bank (WB), Felipe Muñoz (IDB), Arnaldo Posadas (IDB) and Annalaura Sacco (FMI) carried out the study Characteristics and economic impact of migrants and refugees in Costa Rica, published at the end of last year.
Nica workers are complementary
Yesterday during the forum: Nicaraguan Migrants’ contribution to the Costa Rican Economy, organized by the Center for Information and Services of Health Advisory (Cisas-Costa Rica), Lentini accompanied by researchers Luis Oviedo, of the University of Costa Rica (UCR) and Abelardo Morales, and Ana Quirós, of Cisas, highlighted the historic complementary role that Nicaraguan labour has played in the Costa Rican labour market, where it contributes mainly in agriculture, construction, housing, trade and domestic service- Oh, it’s just that.
Nicaraguans participate in a segmented labour market, which often complements native workers rather than replace them, but faces significant challenges in obtaining legal resident status and formal jobs. In urban areas, 30 percent of Nicaraguan men work in construction, while in rural areas, where informality is more frequent, 56 percent work mainly in agriculture, Lentini explained.
He added that at the national level, 34 per cent of Nicaraguan women work in paid domestic jobs, and in rural areas 24 per cent also work in the housing sector. Job complementarity is stronger than substitution, the latter being more frequent among low-skilled workers.
The researchers clarified that according to the measurement mechanism used to contribute foreign workers to Costa Rica’s GDP, it may be more than 7 percent per year than they determined.
Nica workers earn less and are poorer
According to researchers, because they have less schooling, Nicaraguans work in informality and low-skilled activities in which they receive low wages and therefore face higher levels of poverty. 55 percent of Nicaraguans have informal jobs, surpassing the proportion of nationals of 42 percent. Nicaraguans also experience higher poverty and extreme poverty rates, 32 per cent and 9 per cent, respectively; while Costa Ricans have 25 per cent in general poverty and 7 per cent in extreme poverty.
For researchers, the contribution of Nicaraguan migrants is not limited to the economic field, but also to others such as politics and culture, but also the demographic, since foreign-born workers are younger than their native peers, which helps to mitigate the ageing population and the fall in the birth rate.
Oviedo stressed that currently out of ten births, two are children of foreign women; in addition, thanks to the contribution of Nicaraguan women in the field of domestic work, many Costa Ricans can enter the labour market.
With regard to the contribution of foreign workers to Costa Rica’s fiscal balance sheet and current account, the researchers explained that the tax balance is made through the payment of taxes through consumption. This, according to the study, allows foreigners in the formal labour market to more than compensate for the tax cost of the services and welfare transfers they receive with their social security contributions and taxes.
More remittances come in than they leave
Oviedo even points out that higher-income foreign households spend more than Costa Rican households of that level, therefore, pay more taxes than local ones. Access to services for migrants by less than 5 per cent and if they represent 10 per cent of the population it means they are not receiving what they should.
While in the current account it is through sending remittances. Outgoing remittances from Costa Rica account for a small fraction of GDP and, in general, has been a net recipient of remittances. Outgoing personal remittances averaged 0.6 percent of GDP, and 78 percent was sent to Nicaragua… Although 69 percent of Nicaraguans in Costa Rica said they send remittances, their low wages have limited the total amount of capital outflows in this category. It is important to note that Costa Rica’s remittance inflows have exceeded outflows by 0.2 percent of GDP during 2017-2022, the report explains.
According to the researchers, this change was caused by Nicaraguans who crumbled to the United States and left their families in Costa Rica, since the average amount of shipments they make for the breadwinner of their families is higher than the amount of those who work in Costa Rica and send money to their families in Nicaragua. It is also not that everything they earn is going to Nicaragua, according to a survey only 33 percent of Nicaraguan households send remittances to their families, Oviedo said.
Recommendations for the authorities
According to Lentini, when they presented this study to the Costa Rican authorities, Central Bank officials told them that the data surprised them because it was believed that what was coming out was more than it entered, but confirmed that due to the amount of the shipments that are arriving from the United States are greater than those leaving Costa Rica for Nicaragua.
Given the evidence that the contribution of Nicaraguans’ foreign population to the economy is greater than the investment the country makes in them, because it also receives help from international agencies for certain programmes, Acnur’s official believes that the Government of Costa Rica should strengthen its capacities to facilitate the formalization of migrants.
It also recommends expediting mechanisms to enable them to obtain legal resident status; simplify procedures and improve computer systems and interoperability; encourage the registration and retention of migrant workers in the Costa Rican Social Security Fund (CCSS) and allow initial health-only registration, reduce periods of acquisition of rights; and incorporate pension portability.
This article has been translated after first appearing in La Prensani