This is the second post in a series talking about immigration reform based off events that are happening now in the US. I am drawing upon my experiences of living in other countries as an American foreigner. I believe that there are parallels that will help with proposing reasonable immigration reform in the US. At this point, I think that we can all agree that immigration policy in the US is a hodgepodge of laws and procedures that seem to have very little cohesion. My intent is to use examples from two opposite ends of the “spectrum” of countries struggling with a porous border to propose reasonable changes to US immigration policy.
My life as a foreigner of American birth in Costa Rica
I lived as one of the owners of a small family business in Costa Rica for almost 10 years to the day. I have a lot of good things to say about Costa Rica both as a place to visit, and a place to live. Of course no place is perfect, and Costa Rica has its fair share of problems. One of those is a struggle with immigration. There are a lot of parallels that can be made between the southern US border and the northern Costa Rican one. Costa Rica spends a lot of time and energy setting policy to control immigration across its northern border. The terrain provides serious challenges to securing its entire length. Stopping every single illegal crossing at the border would require a major expenditure of available resources. Most importantly, the neighboring nation of Nicaragua is constantly struggling with poverty and stability. That creates an incentive to seek better circumstances in Costa Rica. A consular visa is necessary for Nicaraguans to enter the country, but those who cannot get paperwork will risk sneaking across the border. There are even “coyotes” who take payment to help facilitate border crossings
Saturation of Immigrants in the US and Costa Rica
Like the United States, a high percentage of Costa Rica’s population are immigrants. According to the 2011 census, 9% of the population in Costa Rica is composed of immigrants of foreign birth. This is very comparable to the US, where roughly 13% of the population consisted of foreign-born immigrants in 2010. Costa Rica is a net immigration country like the US due to its stability, quality of life, and employment opportunities. Also like the US, Costa Rica experiences periodic waves of nationalism and anti-immigrant attitudes mainly aimed at Nicaraguans. Indeed, Costa Rica struggles with illegal immigration, and that is reflected in the swings in their immigration policy. In 2005, Costa Rica added extremely strict provisions to its immigration law which included criminal penalties for unauthorized immigrants. Within a few years however, most of the controversial provisions were changed to reflect a different strategy for immigration policy. (OECD report here) Additionally, there are foreigners who own property, students, and tourists who frequently overstay their visa or work on a “perpetual tourist” visa despite not having a work permit.
Working as a foreigner in Costa Rica
It is very difficult to get sponsored for a work permit as a foreigner in Costa Rica. Costa Rica has a large pool of well-educated citizens, and an unemployment rate that has ranged from 8-10% over the last decade. Accordingly, employers have a high burden of proof to establish that a certain position cannot be filled by a Costa Rican citizen or permanent resident.
There is however a large need for relatively unskilled labor in the Costa Rican economy in the agriculture, construction and service sectors. Those jobs are a huge draw for Nicaraguans, and it helped fuel the huge increase of migration from Nicaragua to Costa Rica that started in 1984. (see graph here) Jobs in this sector are considered “semi-qualified” or “non-qualified” labor positions, meaning that the educational requirement for obtaining those jobs are relatively low.
Furthermore, despite the large increase in Nicaraguan immigration and competition for low-skilled jobs, wages in that sector have seen a steady incremental growth (page 7). This may seem unbelievable from a North American perspective, but differences in the Labor Laws between the two countries may explain this undeniable trend. These unskilled jobs tend to be undesired ones for Costa Ricans. Workers of today’s generation are looking for skilled jobs that reflect their access to the education system. But the cultural tension created by Nicaraguans seeking work in Costa Rica for less desired jobs is still a divisive subject. For a more in-depth summary of the situation, I would recommend reading this article.
Labor Law in Costa Rica
Before we can talk about why Costa Rica moved away from a strict no tolerance policy to a more inclusive one, we have to talk about Costa Rican labor law. Here is a quick primer:
- Costa Rica has a 48 hour work week for the purposes of paying overtime. Professional (skilled) jobs typically have a 8 hour 5 day week. Unskilled or manual labor jobs typically also work at least a half day on Saturdays.
- Minimum wages are determined by occupation. It is set by the National Council on Wages and revised every 6 months. Employers are free to pay “market rate,” but must follow any incremental wage increases in their industry to stay in compliance with wage minimums.
- Employers (individuals or incorporated businesses) must pay into the Social Security System, which is a combination of single payer health care, pension, and disability payments. Employer contribution is 26% of the actual salary of the employee. Employee contribution is 9%.
- Employers must take out a national Workman’s Compensation policy and keep it in good standing, otherwise they are personally responsible to pay any health costs for workplace related injuries
- Employees are entitled to two weeks paid vacation for every 50 consecutive weeks with an employer. There are 5 national paid vacation days each year on top of that, and every employer must pay a year end bonus to each employee between the 1rst and 20th of the month of December. The amount of the bonus is equal to one month’s salary, which is equal to the total amount paid in the last 12 months divided by 12.
A typical illegal employment situation in Costa Rica
Let’s look at a very typical scenario. You own a house in Costa Rica. By nature of living in a tropical environment, it is imperative that the house get a solid cleaning every day. So you hire a cleaner to work for you full time. To do so legally, you fill out your paperwork to register with the Social Security Administration. Then you find an employee that you can trust to clean your house, and you pay them slightly more than the legal minimum monthly salary. In 2018 the monthly salary for a domestic employee is ₡183,939.51 colones,or $324.69 per month. So you pay $350 per month. You withhold $31.50 from their paycheck for the SSA, and your monthly payment to the government based on their salary is a total of $122.50 per month. You also pay for a special domestic workers policy for workman’s comp. That costs about $80 for the year. The total cost for your legal employee is roughly $480 per month. The legal employee only sees $318.50 a month but gets a year-end salary bonus of one month’s pay with two weeks of paid vacation. (At this salary level, most employees take the vacation as a cash sum) Total cost for the year: about $6275.
Or, you can illegally hire someone who would be happy to work for $400 per month without insurance or a bonus or vacation pay. Total annual cost to you: $4800. You pay less andyour employee gets more cash per month in their hand. They also don’t have to worry about alternative math. In other words, getting shorted for vacation or bonus pay at the end of the year. Everyone is happy. Except for the SSA, which depends on employers paying into the system to keep it afloat.
Fines for employers who do not conform with labor law
Employers who do not comply with the labor laws, especially registration and payment with the Social Security Administration, will face civil fines to the tune of 360,000 colones per non-registered employee, plus legal fees. ( roughly $640 US dollars + fees today) If an employer hires an undocumented worker in Costa Rica, the fine is twice to twelve times the base salary of an “Oficinista 1” announced in November of the year prior to the infraction. For 2018, the base salary is 431,000 colones. So the minimum fine for employing an individual undocumented worker in Costa Rica is US$1,521. By comparison in the US, employers who are guilty of hiring undocumented workers face relatively light fines. The minimum for first offenses of hiring undocumented workers in the US is $539 per employee. For a method of comparing how steep the fine in CR relative to the US, GDP per capita PPP (adjusted purchase power parity) in CR was $15,750. In the US, it was $54225 in 2017. If you adjust for disparity in GDP, the minimum fine would be roughly equivalent to $5236 for the first time offense of hiring a single undocumented worker in Costa Rica.
Policy changes that integrate harsh controls with grace
When the policy changes in Costa Rica repealed some of the strictest measures to deal with illegal immigrants set out in the immigration law of 2005, they also set in motion laws designed to facilitate integration of those immigrants into the country. First was establishing steep fines for employers. Although the new immigration laws were put into effect in 2010, it wasn’t until July 31 of 2014 that the fines for employers started being enforced. I believe that Costa Rica realized that they had to do something to ensure that necessary positions in the manual labor sectors continued to be filled, and that employers paid into the SSA system regardless of who was filling those jobs. They also set out an amnesty period to encourage people working illegally at the time to start the process of becoming documented. Primarily, they set a time period when immigrants working illegally could apply for the work permits set out by the bilateral agreement between Nicaragua and Costa Rica without having to leave the country and apply at the consulate in Nicaragua.
Additionally, they established a grace period before implementing a fine for foreigners who overstay their visa (also a common occurrence in Costa Rica) of $100 USD for each month an individual spends in the country after the expiration of their visa. The 2010 immigration law also stipulated barring people from reentry into the country for 3 times the amount of time that they were non-compliant in their status as a foreigner in CR.
Overstaying your visa in Costa Rica
If you enter the country on a temporary visa (currently is a 30 day consular visa for Nicaragua and a few other countries, and a 90 day landing visa for visitors from developed countries like the US) and stay in the country for 3 months past the expiration date on your visa, you will be expected to pay $300 before you can leave the country. You also may be barred from reentry for up to 9 months. But that isn’t all. There is a possibility that once you are no longer compliant on your visa, when you leave the country you may be assessed penalties that includes any amount of time when you were non-compliant since the immigration law went into effect March 1, 2010. The grace period to avoid enforcement of the 2010 law for non-compliant foreigners ended this April of 2018. That is, they passed the law and gave 8 years of notice before enforcing fines to set a zero-tolerance policy of overstaying a visa.
I would like to note here that these changes in policy for what happens to foreigners who overstay their visas effect more than just Nicaraguans looking for jobs. There are many expats from the US and Europe who participate in “permanent tourist” visas in Costa Rica. That is, they leave the country before their 90 day visa expires for 72 hours to get a renewed tourist visa upon returning to Costa Rica. Typically, people would go to Nicaragua or Panama on a “visa run” and it involved a cottage hospitality industry set for attractive destinations within a day’s travel over the respective borders. Most of the foreigners that I knew who regularly did visa runs did not run businesses. Some of them owned property but did not have the language abilities to negotiate the sometimes byzantine bureaucratic system that exists in Costa Rica to apply for appropriate resident status. Others did have the language skills necessary, but the process was still long and arduous. Hiring a local lawyer with experience in the system speeds up the process, but I know that there are expats who out of general principle refused to spend money on legal advice. There are also a great number of expats from the US, EU, and affluent south american countries who worked illegally on “permanent tourist” visas.
A policy that shifts towards widespread compliance over time
Next time I will look at an example at the other end of the spectrum, and talk about immigration issues in Taiwan. But before the wrap up let’s summarize Costa Rica’s response to their immigration issues. After an abrupt change in immigration law that led to relatively draconian measures dealing with immigrants, Costa Rica chose to implement a more gradual change to policy with the goal of radically reducing illegal immigration. First, they put employers on notice that they would face hefty fines for employing foreigners illegally. In effect, attempting to reduce the supply of jobs that attracted illegal workers. But they also established a grace period before enforcing the fines. Secondly, they set a path to allow for those working illegally to become documented. I believe that this helped maintain the stability of the labor market for unskilled work during the period of policy change. Lastly, they established a direct economic incentive for foreigners to keep their visa in good status via a fine structure. As added incentive, a time factor that makes staying in the country illegally have increased consequences the longer you stay undocumented. Notably, during this entire 8 year period, they have also made upgrades to the physical border, border agents, and the equipment necessary to patrol the border.
Watching immigration reform unfold in Costa Rica
Watching the situation on the ground unfold since I first moved to the country in 2006, I have to say that the overall impression of Costa Rica’s struggle with immigration is that they are doing a good job in a balancing act. I love Costa Rica. I love the people there, and I understand how the tensions have led to some real difficulties in the country. I also know how difficult it can be to negotiate the legal system. So it’s no surprise that people give up and try to make the best of the situation in front of them. There were moments during the 10 years that I lived there where it seemed that the government was never going to be able to implement a rational immigration policy. With hindsight, the changes they have made in the last 8 years make a lot of sense. One of the things that happens when you live as a foreigner in another country is that you tend to cultivate a sense of disdain towards annoying cultural norms, and the national bureaucracy. I admit that I too developed a distinct eye-roll for certain aspects of policy implementation in Costa Rica.
Now, I have to remind myself that this is a country that has seen great social stability. Plus, a steady rate of economic growth since it abolished its military in 1948. Their success came despite great external pressures of social volatility and economic hardship in surrounding countries. It should not be dismissed as an accident or idealistic experiment. I believe that this country does have something to offer by way of reasonable governance, regardless of how I may feel about the bureaucracy.