On September 10, 2018, the labor unions of Costa Rica government employees went on strike against a tax-reform bill that seeks to address a growing fiscal deficit. The new law plans to substitute the current sales tax of 13 percent for a value-added tax by the same percentage, allowing the government to collect taxes on services also, thus raising more funds.
The largest groups of protesters come from educators, health workers, and employees of the state-owned electric company (ICE). Strikers fear that rising taxes coupled with a freeze on government employee salaries would punish the middle class while allowing corporations and the rich to profit through loopholes. Very typical thinking of socialistic leaning unions.
The government says that 80 percent of the new taxes fall on the richest 20 percent of the population. And do we really believe what governments say? I always question it myself.
The strike began with thousands of citizens marching peacefully through the streets the first couple of days chanting, “A united people will never be defeated.” Protests against the Costa Rica government continued during the first week, and there were sparks of violence initiated by the union employees. An employee of the national refinery was arrested for sabotaging the institution’s electrical grid. Some highways were blocked by protestors, causing traffic to back up for miles. There was also a pipeline spill in Puntarenas for which sabotage is suspected and was most likely the cause.
More than 50 percent of public schools were completely closed and others were left with a skeleton crew for the past 4 weeks while employees of the Ministry of Education were on strike. Healthcare took a hit as government operated clinics and hospitals around the country were left understaffed, resulting in the suspension of 3,552 surgeries and the cancellation of over 111,000 appointments.
I agree with one thing–the employees do have a right to strike. It is built into their contracts between the union and the government. But that’s does not give them the right to block roads, damage personal property, and cause vandalism.
Unions claim, (key word here is CLAIM) that the reform creates a higher tax burden for the lower income sectors. However, when you talk to the locals, taxes seem to be a secondary issue. What’s really fueling their anger is the profligate waste of any tax money the government collects, which goes to pay enormous government salaries, benefits and pensions. Some pensions are as much as $30,000 per month, and the pension can be inherited by the pensioner’s descendants upon his demise.
Now here is the kicker, in my opinion. The union employees don’t want taxes raised, and they don’t want their pensions cut or capped. But, then they complain about the government not cutting high government salaries or pensions of its employees. HELLO!! They are part of the same Costa Rica government that hires them and pays them!! Please tell me if I am missing something here.
A week after the strike started, the Catholic Church stepped in to try to mediate an agreement between the unions and the government. After 100 hours of negotiation, the talks came to a dead halt after an agreement could not be reached. Because the unions would not negotiate, it was their way or no way at all.
Last week, the Labor Court deemed the strike illegal. The judges ruled that health services, electricity, phone service and education are essential to life; therefore, employees are forbidden to join a movement that affects the general population. The Labor Code requires that at least 50 percent of the workers support the action; the national insurer (INS) did not meet that criteria and their strike was also deemed illegal. The ICE and INS trade unions will have to pay fines.
After the ruling, the labor unions of the Social Security Service negotiated an agreement with authorities and returned to their work on Monday, October 9. The agreement basically guaranteed that there would be no reprisals against workers who participated in the strike if they just return to work. If they refuse, they risk being fired.
Personally, I wish the government would have fired them all, just like President Reagan did in the US in the 80’s when the air traffic controller went on strike in the U.S.
All other unions have until the end of this week to accept the agreement, according to Labor Minister Steven Nunez. Those who resume their work would not be docked pay for the days they participated in the strike. The agreement includes provisions for future dialogue and would allow unions to negotiate measures to be included in the tax reform. Meanwhile, the Legislative Assembly started voting on tax reforms in an accelerated way and passed it by a narrow margin. Now the law is sent to the supreme court of Costa Rica to see if there is anything written in the law that is unconstitutional. If there is, it will be sent back to the Legislative Assembly to be rewritten and voted on again.
On a positive note, there have not been any protests in the Playa Hermosa, Playa del Coco and surrounding areas. There were a few in Liberia and by the Liberia International Airport, but that only lasted 2 days. So don’t be scared to come and visit–all is still very “Pura Vida”.
We shall see where this Costa Rica government employee strike finally ends up. Stay tuned.