Paying Your Maid in Costa Rica and Your CAJA Obligations! 

Paying insurance for an hourly maid is expensive for the employers, which explains why the vast majority lack health insurance, pensions, or workers compensation.

The CCSS admits that the cost is high for employers to insure employees by the hour discourages insurance.

This is due, among other things, to the system that has the authority to calculate the charges currently split from a minimum amount contributed of ¢ 180,139.

That base is the same for both those who hire occasional employees (hourly) and those who have half or full time employees.

For example, if an employer pays an employee ¢80,000 a month for cleaning, they would have to pay ¢41,707 for insurance: 52% of the reported base salary.

That amount includes savings insurance, expenditures to other institutions (such as the Joint Institute for Social Assistance and the National Training Institute) and the corresponding contributions to the Work Protection Act (LPT)

An employer that pays the same or more than minimum wage will have, however, a relative cost of 24.17% above the salary reported to the CCSS.

Annual pay of the workers compensation policy needs to be added to those amounts: ¢ 43,555. According to National Insurance Institute (INS), up to September, 45,478 domestic workers had workers compensation.

These costs could explain why only 15% of domestic workers have some type of labor protection, according to data collected in the Household Survey for Costa Rican Social Security Fund (CCSS).

In the case of health insurance, which covers sickness and maternity, it only covers 30%.

For the fourth quarter of 2013, there were 148,540 people that were qualified as domestic employees according to the Continuing Survey of Employment (ECE).

Of those, 60.2% (96,789 people) were cleaners and domestic helpers. 34,944 caregivers (23.4 %) were also identified. The remaining 16.4% had other duties.
The situation of these workers extends to other occasional employees. 

According to the 20th report of the State of the Nation, in addition to domestic service, activities of construction, trade and agriculture account for 60% of workers without social security protection.

The report says that no one recognizes any labor right (for example, vacation, bonuses or severance pay) to 102,380 other people with salaries (6.7%).

In 2013 that (health) insurance protected a little more than 70% of the total PEA (economically active population), which suggests the need for more efforts to extend the coverage contributed in some groups that work in conditions of instability and labor precariousness, as well as the employees in small businesses in the informal sector and those who are self-employed or in domestic service.î

The document states that the condition of these workers deserves a particular strategy affiliation.

Gustavo Picado Chacón, the Financial Manager of the CCSS, recognizes that, while the higher the monthly payment of the minimum contribution base is, the higher the charge. In that management there have been cases of employers that have up to 70% more than the insurance payment.

Changes. The low insurance of these populations does not only mean less contributed revenues for the Fund, but also a future risk for these people in case of sickness, disability or death.

The financial manager of the CCSS, Gustavo Picado Chacón, confirmed that they are designing a new model for these workers who are considered as difficult insurance.

Among other things, the CCSS aims to increase coverage by adjusting their way of working (hourly), the contributing capacity of the employers (especially those of lower income), without implying a financial unbalance for the institution.

That intention has been welcomed by groups like the Association of Domestic Workers (ASTRADOMES).

Its president, Rosita Acosta Ramírez, who worked 30 years without insurance, said that they have been waiting for this for years.

The lack of insurance is one of the complaints that we receive, between 15 and 18 a month. We tell employers if they can’t afford it, don’t have it.

For Eric Briones, head of the Legal Department of Labor Inspection, Ministry of Labor, the proposal is necessary for the country.

The employer who breaks the law, he said, would have penalties ranging from 1 to 23 base salaries. This is between ¢ 400,000 to ¢ 8.5 million.
The technical proposal will be presented in February to the Board of the Fund and the authorities of other institutions, including those of the Treasury and Labor.

Picado didn’t reveal any details, but he said that part of it is the study of occasional workers, principally, of the domestic workers.

Among the findings, Picado mentioned the high turnover of these employees (almost half last a year or less in a job), that 75% have a unique pattern, and growth of hiring this type of services in homes of lower income.

The proposal also includes small and medium company worker, indigenous workers dedicated to harvesting coffee and other crops, and the independent workers with low incomes or less than the minimum wage.

For us, fiscal financing is essential for coverage expansion. The design that we are looking for is one where the State provides resources more intensively.

What we are designing is a method where the State will have to cover the gap between wages of those that report minimum wages and those that don’t, continued Picado.

Among the things that are evaluated is the creation of special coverages.

“These are not new issues. What do we do with the domestic employees, and with the indigenous coffee pickers?  If we don’t seek a special coverage, we will be in bad shape”, Picado explained.

The manager added that it is about a person who makes ¢ 5 million a month and has an employee, for example, who he pays ¢ 100,000 above minimum wage.

“The form and special way of contribution wouldn’t be to benefit those who have the capacity to contribute.

“It would be for those employers who are in the third, fourth, and fiftieth percentile, and are poor but need a domestic employee. To them we can give the designed method”, the manager added.

The Minister of Finance, Helio Fallas, was cautious with the idea. He said that the fiscal situation would not allow new expenses.

“That is not feasible right now. We would have to see how the fiscal reform turns out, because it is clear: right now, with this deficit, it is not possible”, said the Minister.

Our thanks to our friends at La Nación – Costa Rica’s largest and most influential Spanish circulation newspaper for their permission to summarize their articles which originally appeared at Cobro de CCSS hace difícil dar seguro a un empleado ocasional.

Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.