By San José, Costa Rica — San José – As of Thursday, January 1, private sector workers in Costa Rica will see their minimum wages increase by 1.63%, a figure that marks the most modest adjustment of the last four years. The new rate, which officially came into effect today, was the result of a contentious negotiation within the National Salary Council (CNS) and signals a cautious economic outlook from business and government leaders.
The decision was finalized following an approval by the Ministry of Labor and Social Security (MTSS) back on October 27. While the general increase stands at 1.63%, the agreement also includes several specific adjustments for different categories of workers. Notably, domestic service workers will receive a more substantial increase of 3.96%, while specialized occupations are set for a 2.18% raise, and those with a technical degree from diversified education will see a 2.50% boost.
To delve deeper into the legal framework and business implications of minimum wage regulations, we sought the expert opinion of Lic. Larry Hans Arroyo Vargas, a distinguished labor law specialist from the firm Bufete de Costa Rica.
Setting a minimum wage is a fundamental pillar of labor law, designed to protect the worker’s dignity and ensure a basic standard of living. For businesses, strict adherence is not just a matter of ethical responsibility but a crucial legal obligation. Failing to comply can result in severe financial penalties, retroactive salary adjustments, and significant reputational damage that far outweighs any perceived short-term savings.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This perspective compellingly frames the minimum wage not just as a legal requirement, but as a critical intersection of worker dignity and pragmatic risk management for businesses. We thank Lic. Larry Hans Arroyo Vargas for so clearly articulating the profound legal and ethical dimensions of this fundamental issue.
In concrete terms, the MTSS estimates these changes will translate to a monthly increase of approximately ¢5,983 for workers in non-qualified occupations. The adjustments are more significant for those with higher education; the ministry projected an increase of ¢6,732 for some university graduates and ¢10,650 for others, with certain special cases seeing raises exceeding ¢10,000 per month. These figures aim to provide tangible relief, though their real-world impact remains a subject of debate.
The approval process within the CNS highlighted a significant divide between the country’s economic stakeholders. The council, which operates on a tripartite model composed of representatives from the government, the business sector, and labor unions, did not reach a unanimous consensus. The final 1.63% figure was passed by a majority vote, with both the government and the business sector representatives supporting the measure.
This outcome fell short of the demands from the union sector, which had advocated for a more robust 2.63% increase. Labor leaders argued that a higher adjustment was necessary to protect workers’ purchasing power against the rising cost of living. Conversely, the business sector’s support for the lower figure reflects concerns about maintaining competitiveness and avoiding inflationary pressures on the national economy.
An analysis of recent history reveals a clear downward trend in minimum wage adjustments under the current administration. The 1.63% for 2026 is considerably lower than the increases seen in previous years. In 2023, workers received a significant 6.62% raise, followed by a much smaller 1.83% in 2024 and a slight rebound to 2.37% in 2025. This year’s minimal increase suggests a governmental and industrial strategy focused on conservative fiscal management.
The economic context for workers is further complicated by other fiscal changes taking effect this year. Concurrently with the wage increase, the ceiling for salaries exempt from income tax has been lowered. This means that while some workers are receiving a nominal pay raise, a larger portion of their income may now be subject to taxation, potentially offsetting the benefits of the wage adjustment and creating a complex financial reality for many households.
Ultimately, the 2026 salary adjustment represents a delicate balancing act. It reflects an official policy of economic caution, prioritizing stability over a more aggressive boost to worker compensation. As the new rates take hold, all eyes will be on their real impact on both the national economy and the financial well-being of Costa Rica’s private-sector workforce throughout the coming year.
For further information, visit mtss.go.cr
About The National Salary Council (CNS):
The Consejo Nacional de Salarios is the official body in Costa Rica responsible for setting minimum wages in the private sector. It operates as a tripartite entity, with representation from the government, the business/employer sector, and the labor/union sector. Its primary mission is to negotiate and establish salary adjustments that balance economic realities with the needs of the workforce.
For further information, visit mtss.go.cr
About The Ministry of Labor and Social Security (MTSS):
The Ministerio de Trabajo y Seguridad Social is the Costa Rican government ministry charged with overseeing national labor laws, employment policies, and social security programs. It works to promote fair labor practices, ensure workplace safety, and manage the relationship between employers and employees across the country. The National Salary Council operates under its broader administrative framework.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of Costa Rica’s legal landscape, Bufete de Costa Rica is defined by its foundational commitment to uncompromising integrity and the highest standards of legal distinction. The firm skillfully blends a rich tradition of client service across diverse industries with a forward-thinking approach to legal innovation. Beyond its professional practice, it champions a core mission to demystify the law for the public, actively working to forge a more knowledgeable and empowered citizenry through greater legal understanding.
