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20 years

Intel, BofA closures will cost already-struggling CCSS millions per year

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April 11th, 2014 (InsideCostaRica.com) The recent closure of Intel’s manufacturing operations and the closure of a large Bank of America facility will cost the country’s already struggling healthcare system $16 million USD per year, according to Gustavo Picado, finance manager for the Costa Rican Social Security System (CCSS).

 

“These are two major companies but the institution has income from other employers, despite [the significant loss] one would hope it doesn’t have a significant effect,” Picado said.

 

“Today it’s about these two companies, but every day we have cases of employers leaving,” Picado said.

 

However, Picado pointed out that the loss of Intel and Bank of America hurts CCSS as they were amongst the few employers who paid their contributions in a timely manner.

 

Picado added that salaries at Intel were 15% to 30% higher than the national average, which provided greater revenue for CCSS.

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  • Paul

    I find it hard to believe that the government is decrying the loss of CAJA monies when they do not pay their CAJA for their own employees. Such a sham. I guess the CAJA will increase for gringos in the near future.

  • Ben

    Caja should tell us how many companies are leaving now. Intel is not the problem the problem is we need to change how we do business in Costa Rica.

    • mhogan

      Does the word “Ethics” strike you? How about less arrogance?

      • Ben

        Did you read my Comments or just think i was against open markets. Open markets worked well in 2008 crash did the US open markets work well. There was 30 million people in the USA lost there homes due to forclosers. You mean free market of no controls. Rich will always win if there are no controls on the Markets. Costa Rica and Latin America are doing fine they will figure out what works. I spend time in Panama even Panama has limit on there Markets. Panama is seeing the light on Taxes for people out of country just like Costa Rica.

        • Karen Mata

          “Costa Rica…is doing fine.” For the record CR has throughout its history been this close to bankruptcy.

          I find it surprising too, as when I think of all the inventions over the past century plus from the airplane to all the sophisticated electronics to lunar landings to medical breakthroughs I know this all came from the mind of a tico.

          • Ben

            Karen when you write do some looking at your own country you come from. Meaning when the US is debt free then you can speak about other countries. Just a Thought. Good luck where ever you are. Hands Off Panama and Costa Rica.

          • McDemon

            Don’t forget Benny, Costa Rica was the FIRST country in the HISTORY OF THE WORLD to default on its debts. The only reason it is still on the map is the investment by foreign government, people and companies. Karen is right. The government is a whore. They took the “Friendship Bridge” from Taiwan and kicked them to the curb at the behest of the Chinese in return for a football stadium. I assume the latest overture to Russia will result in the souring of relations with China in exchange for a Vodka distillery and a Lada factory. Your government is simply sticking it’s dick in the wettest holes it can find and that will lead to nothing but a bad case of herpes!

          • Ben

            Costa Rica never defaulted on Debts. They just don´t print money to keep thing going like the US federal reserve.

          • mhogan

            Guess we shouldn’t believe everything we read. The author, James Kaiser wrote of the 1980′s: A Decade of Crisis: By 1980 … Costa Rica could not even pay the interest on its debt. By 1981 Costa Rica defaulted on its foreign debt. Inflation topped 100% and the colon lost roughly 70% of its value against the dollar. In 1981, the U.S. gave Costa Rica $20 million in economic assistance. The following year that jumped to $90 million. From 1983-1985, the U.S. gave $200 million a year to Costa Rica. These cash infusions stabilized the banking system, which had run out of foreign reserves. At the same time, Costa Rica turned to the IMF and the World Bank for emergency loans. In return, Costa Rica was required to reduce the size of government, eliminate trade barriers and privatize government-run businesses. Now, doesn’t it seem logical that if CR is again on a road to fiscal irresponsibility, they would begin the process that got them out of the first fine mess they were in in 1980 instead of foolishly turning away foreign investors with obscene regulations, heavy taxation and burgeoning government?

          • reo-sales

            Costa Rica Default are out of control (1828, 1874, 1895, 1901, 1932, 1962, 1981, 1983, 1984

          • Lav

            Geez… I wonder which country bought a large portion of the USAs debt… Could it be China?

            Foot meet mouth… Pot meet kettle.

          • McDemon

            Nice to meet you kettle. How does your foot taste? Had you read my other comments you’d have seen that I pointed out following the lead of the US Government is the fastest way to kill the Costa Rican economy. The US has destroyed themselves and only through sheer market dominance and slight of hand has been able to keep the economy artificially alive.

          • Karen Mata

            To paraphrase Kris Kristofferson, “Honey, when we want any oil (grease?) from you (&Canada), we’ll squeeze your head.”

          • Lav

            Karen has a short memory… I think she forgot her country recently had to shut down its government while it figured out how much to raise its debt ceiling.

    • McDemon

      That’s really funny. When I suggested the very same thing, you called me a Neo-Con slavery supporter. You sir are nothing but an ill-informed nationalist troll.

    • Glen MacDonald

      This is just a question (not an attack :-) so please don’t misinterpret: have you ever read the book entitled “Confessions of an Economic Hit Man”, by John Perkins? I ask because your discussion with Karen Mata touches on the main theme of the book: US interference in foreign nation’s economic affairs.

  • McDemon

    They won’t fix the problems that are leading to companies leaving. They will simply continue to shift the shortfall more and more to expats until they too begin to leave for Nica or Panama. Good luck maintaining employment levels and your precious caja system then. Have fun returning to the pineapple plantations, 80%+ rates of inflation and the evaporation of the middle class. Buh Bye!

    • Ben

      You guys still don´t get it. Expats aka US citizen are not the most important thing. Do Expats in USA come first in US? NO they do not. Its time for other countries to come into Costa Rica. Canada,Russia,China,New Zealand,Brazil,Germany,Finland,Norway. All of these countries are intrested in Costa Rica. US citizens are welcome but don´t come and go as if you own the place. You don´t. Thank God William Walker never got control of Latin America.

      • McDemon

        Chip on your shoulder much? My comment was all encompassing of expats. By definition that means Canada,Russia,China,New Zealand,Brazil,Germany,Finland,Norway. The actions of the Costa Rican government are making it more and more difficult for business from all countries to conduct operations here. As a result of dropping revenue because companies are leaving or choosing to go to panama or elsewhere, the burden gets shifted to expats. That is empirical fact.

        • Ben

          Another Neo Con shows his hand in Latin America. Slavery was gone many years ago but you seem to like Slavery. Expat do not have a right to vote they are visitors of Central America, Panama and Costa Rica and more. Learn that we have are own way of doing thing in Central America and South America. Respect them or go back to your country you are from. Its that simple. Just because you invest does not make you rights. Good luck to being a Neo Con in Costa Rica or Panama. Neo Cons are scary in both countries. Panama and Costa Rica are moving closer together soon the the border will be open between countries.

          • McDemon

            You nationalists are quite funny. Slavery? Neo-Con? Instead of throwing around nebulous words which do nothing to address anything I have actually written, how about pointing out what is incorrect in my statement. The FACT is, the country has been trying to close it’s fiscal gap by jacking up taxes and fees which apply disproportionately to expats and foreign companies, and tourists. That is a FACT. Another FACT is that the Costa Rican economy only took off in the 80′s due to massive FOREIGN business investment. That was subsequently sustained by a massive FOREIGN investment in real estate and further buoyed by a massive increase in FOREIGN tourists. Costa Rica is not an economic island, nor is any other nation. The problem is you think so highly of what Costa Rica has to offer that you think people will continue to pay exorbitant prices and continue to act as the piggy bank for corrupt officials. The FACT is you are wrong. WHEN the foreign investment dries up, unemployment will soar. When unemployment soars, so too will crime. People will simply spend their investment and vacation dollars in Panama or Nicaragua. The Costa Rican government is biting the hands that feed them. This my Nationalist friend is a FACT. So you can continue to banter around words that distract from the point or address them head on. Oh….By the way, as a resident I have EVERY right Costa Ricans have except voting. As with most other countries in the world, there are nothing but crooks and liars running for office so it is a privilege I don’t even miss and wouldn’t waste my time exercising if I had it.

          • Karen Mata

            C’mon Ben, spit it out. You’ve been typing for half an hour….zzzzz

          • Karen Mata

            Ben, even you can easily learn touch typing online….

          • Ben

            Your making me laugh. See you later Karen i enjoy the Coversation maybe later. You and Mcdemon seem okay in my books. Your right on Many issue i can say this. There are no perfect society.

          • Karen Mata

            Have a beer and see a ballgame sometime.
            I even learned Spanish (to communicate with my son)

          • Ben

            Your right on many thing but you need to learn that no country is perfect. No political system is perfect. I agree that Costa Rica and USA are not perfect goverment. Intel made Three billion in profits last three months. Bank of America made 13 billion in profits last year. Let get real on why they came to Costa Rica lower wages and taxes than the USA thats a fact. I love Costa Rica and Panama i have homes in both place and I do business in both places. Does Costa Rican deserve good goverment yes they do. Does the USA deserve good goverment yes they do.Intel is a very big problem Costa Rica gave them tax breaks, Land to build on, Lower import and export tarriffs that any place in the America´s. Intel screwed Costa Rica lets get that straight now. If Intel was in US they would have to pay much more to staff and in Taxes.

          • Karen Mata

            “Intel screwed Costa Rica.” ???
            I feel better already

          • Ben

            That comment made me sad. We want the best for small countries. We want the best for Costa Rica

          • McDemon

            Agreed. No government is perfect and the governments generally do not represent the people of their countries, rather they represent their own interests. That said, the Costa Rican government is approaching their fiscal problem in a way which will do nothing but create more issues. The US government is long ago bankrupt but they have been successful in putting enough band-aids on the bullet wounds that the patient has yet to die. Following the lead of the USG will lead to a much quicker death for the Costa Rican economy. Businesses will go to where they can make the largest profits. That is a mater of fact. But another fact is that the people working for BOA were making 30%+ more than average salaries for similar jobs so this was not a situation of some foreign company coming in and taking advantage. The people who worked there benefited tremendously. There was an economic reality which these companies saw which caused them to incur the immense expense of shutting down and relocating. It certainly wasn’t the payroll…..The see the writing on the wall that many pounds of flesh will be exacted from their hinds to cover the fiscal shortfall of the government. Why would they want to stay here and be taken advantage of like that? If you were an investor in their stock, you’d be screaming for them to reduce costs and leave for greener pastures.

          • Ben

            Again your right on many issue, Intel is gone now its time to move on next move new goverment. I hope they will be better than stupied PLN.

      • Karen Mata

        The fact is CR has always been something of a whore based economy from street to political level.
        You presently have your hand out to Russia in “Hey my fren” fashion.
        The limited resources from the west reflect your strategic importance.
        Wake up to the fact as to who is in control though. Google, “US Military makes itself at home in Costa Rica.”

        • Ben

          Karen I was sad to read your comments. Lets talk about what you said and how the US really feels about Costa Rica and Latin America. I guess you are a Neo Con Karen. Thats fine in US to be a Neo Con but in Costa Rica or Panama say your a right wing is very scary for Latin America. Karen you know nothing of history and how US has hurt the people of Latin America. The US military are not in Costa Rica they are not in Panama. If you call Latin America a whore you except slavery. That what makes me so sad that US citizen still like Slavery. The US military are not in country Panama or Costa Rica. Karen say no to Slavery.

          • Karen Mata

            Remember once again, my friend, the post concerning how the local women feel towards tico men.
            Not you of course, but all other tico men,
            were referred to as repugnant by several of my girl friends.

          • Karen Mata

            It’s clear that you are infatuated.
            Go away pathetic, little man. This site is not for you.

          • http://insidecostarica.com/ Timothy Williams

            This site is for anyone who cares to read it, and all are welcome to share their opinions in the comments.

            We also would encourage commenters to attempt to debate the story or issue rather than resort to personal attacks or name calling.

            Tim Williams
            Editor
            Inside Costa Rica

          • Karen Mata

            Dear Mr. Williams:

            I appreciate the wonderful forum you provide for the community.

            When this gentleman asked how many countries the US had screwed, I felt compelled to help, as I question his math skills.

            I do try to be factually correct, and only respond in kind.

            Best,

          • http://insidecostarica.com/ Timothy Williams

            Karen, as a side note, I just edited my comment above and added a P.S. to be clear.

          • Karen Mata

            Thanks, Mr. Williams.

            I think you can frequently see that beneath any hard-edged veneer there is a jocular tone to many of the comments.

          • Karen Mata

            Always helpful to have a ready excuse.
            No puedo and no es mi culpa are the favored.
            Were it not for us and the industrial world, you’d certainly be # Juan.
            But rather you are 9 Juan Juan, an emergency waiting to happen.

          • Karen Mata

            The w word was applied directly to CR, pal, not latin america

      • Karen Mata

        As a tico, why do you find the need to scour postings in an expat news source?
        Were I in the states, I’d be hardly aware of the Mexicans, and certainly not sniffing about their online postings.

  • Ken Morris

    Back to the story, I question the arithmetic. Yes, laying off a bunch of people will result in the CCSS losing those payroll taxes, but none of the unemployed people will be insured or therefore using medical services (unless it’s an emergency) until they re-enroll with another job or self-employment income. Also, on the average, workers contribute less to the system than they cost it, so losing slightly higher-wage workers’ contributions shouldn’t harm the CCSS.

    Picado may have a short term cash flow problem on his hands, but if the CCSS was remotely well-managed, it shouldn’t operate on a short term basis but have plans for these kinds of setbacks. Who responsibly runs an insurance and pension system based upon annual revenues?

    It therefore sounds like Picado is basically admitting that the CCSS is poorly managed. Duh, who would’ve thunk?

    Although he does add the practical zinger, that lots of other companies don’t pay their taxes, at least until hounded enough, and then the CCSS cuts them a discount deal to settle up. From the companies’ standpoint, it makes sense not to pay, since they end up paying less when they finally negotiate a settlement.

    It’s this nonsense, I suspect, that accounts for the CCSS’s woes, not a few companies closing.

    • Ben

      Your right lots of Gambling house and Casino don´t pay taxes and are hidden in the shadows. I expect most will leave when they start to relize the goverment is looking for them.

  • disgusted

    My friend closed his business a bar/restaurant. Hired 4 employees, plus his family. He said the city taxes and on going threats of closing and officials doing a shakedown for a bribe was the final straw. Plus he does not understand why business has to pay 3 times rate for power and water as compared to residential. He threw in the towel ..

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