The German Supply Chain Due Diligence Act and Costa Rica – a risk analysis


published on 15 September 2022 | reading time approx. 3 minutes

by Arnoldo André Tinoco

For companies in Costa Rica, the introduction of the German Supply Chain Due Dili­gence Act (LkSG) in January 2023 poses some potential risks. This is especially true with regard to the role of national economic activities within the production chains of companies based in Germany. Below is a list of potential risks that companies need to be aware of in terms of compliance with the LkSG when including suppliers from Costa Rica in their production chain. This document provides a brief explanation of the potential risks in Costa Rica regarding the role of national economic activities within the production chains of German-based companies, concerning the German Supply Chain Due Diligence Act (GSCA), which comes into force in January 2023.

Costa Rica has constitutional rank protection for human rights, diversity, and environmental sustainability. The mentioned topics have been duly regulated throughout special laws, rules, and decrees, granting a strong normative framework for their protection and promotion.

However, in some cases, reality may differ from this. The industrial activity in our country does not always respect this national tendency, transgressing not only the law but the high praised integrity of human beings and nature.

Labour rights

Wage and Renumeration

  • Costa Rica has a minimum wage regulation for both private and public workers.
  • The minimum wage is set by the government every year through a public listing, published on the Ministry of Labour website, and may vary depending on the specialty of the labour and the work hours.
  • Every employing company must comply with this obligation.

Social security

  • Both employee and employer must contribute to the Social Security Fund, in charge of the public health system of the country, and disbursing pensions to elders and people with disabilities.
  • The contribution percentage is proportional to the wage or salary of the employee.
  • The Fund is administered by a public institution called Caja Costarricense del Seguro Social (CCSS).

Child labour

  • Child labour is not prohibited in Costa Rica for children between 15 and 17 years old, but it is duly regulated to ensure safety conditions.
  • Official estimations from the Ministry of Labour indicate that approximately 30,000 children, from ages 5 to 17, work in Costa Rica. The most common jobs are related to the farming and agricultural industry and can be found, mostly, near the shores (Puntarenas, Guanacaste, and Limón).
  • Any irregularity regarding this topic should be notified to the Patronato Nacional de la Infancia (public insti­tution for child protection) and the Ministry of Labour.

Immigrant labour

  • Immigrants represent a considerable portion of the country’s workforce, holding the same rights and benefits as the nationals in this matter.
  • However, many of these immigrant workers hold irregular migratory condition in our country. That is one of the reasons why some employers tend to exploit them, forcing them to work in inhuman conditions, to be exposed to chemical substances, and to work below the legal minimum wage and at irregular hours.
  • These conditions represent a clear violation of the country’s regulations and signed international treaties.

Land use and proberty rights

Forestry and environmental regulations

  • Declared as the country with the most biodiversity in terms of diversity in the world, it is no surprise that Costa Rica has strict regulations regarding forestry and environmental conservation.
  • Approximately 25 percent of the country’s territory is protected by special jurisdictions, which prohibit or restrict any kind of economic activity.
  • In the same way, there is vast normative about logging, hunting, fishing, and the regulation of water sources such as rivers, groundwater reserves, and oceans.

Indigenous population

  • There is an active dispute regarding their right to land. Activists claim that past governments and private individuals have stolen properties that have historic significance to these groups.
  • In recent years the dispute has torn violent in some locations, such as Salitre, located in Puntarenas province.

Other potential risks

In addition to the risks described above, the following can also occur:

  • Women discrimination in companies
  • air and water residual pollution and
  • animal rights violations.

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