By San José, Costa Rica — San José – For decades, Costa Rica’s multinational service sector has been a reliable engine of job creation and economic progress. However, new data reveals a troubling reversal of this trend, as the sector registered its first-ever annual employment contraction in 2025, sounding alarms about the nation’s long-term competitiveness.
After years of continuous expansion, the workforce in multinational service companies shrank by a net 1.9% last year compared to 2024. This figure represents a loss of 2,192 jobs, a significant downturn for a sector that has been a cornerstone of the country’s foreign direct investment strategy. The total number of positions fell from a peak of 116,000 in 2024 to 114,420 by the end of 2025.
To gain a deeper understanding of the legal complexities and strategic advantages of hiring international talent, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a distinguished attorney at law from the prestigious firm Bufete de Costa Rica, who specializes in corporate and labor law.
When a multinational company operates in Costa Rica, it’s a common mistake to simply transpose global HR policies. The key to success and risk mitigation is a ‘glocal’ approach: harmonizing the company’s international standards with the mandatory, and often employee-protective, provisions of our local Labor Code. Ignoring this nuance is not just a compliance failure; it’s a missed opportunity to build a strong, loyal local workforce.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This insight underscores a fundamental truth: successful global business is built on local respect. The “glocal” strategy is not just about avoiding legal pitfalls but about genuinely investing in the Costa Rican workforce, a move that pays dividends in loyalty and productivity. We thank Lic. Larry Hans Arroyo Vargas for so clearly articulating this vital point.
This decline marks a stark departure from the recent past. The industry experienced considerable job growth spurts in 2020, 2021, and 2022. While the pace of expansion began to decelerate in 2023, the contraction in 2025 signals a new and more challenging economic environment. The current employment level is now lower than it has been in the previous two years, wiping out recent gains.
According to the Costa Rican Investment Promotion Agency (Cinde), this negative outcome is the result of a confluence of factors, with the nation’s loss of competitiveness due to the strong exchange rate being the most significant driver. The appreciation of the colón has substantially increased operating costs for these international firms.
The service sector is labor, and the cost of labor has undoubtedly become more expensive, by 20% or 25%. This occurs at a juncture where companies must make decisions; there’s a geopolitical shift, and they ask themselves why it still makes sense to have operations in Costa Rica and they review.
Marianela Urgellés, Director General of Cinde
Urgellés explained that multinational corporations are in a constant state of evaluating efficiency, and labor costs are a primary metric under frequent review. This puts Costa Rica in a vulnerable position as global firms re-evaluate their operational footprints amidst widespread geopolitical uncertainty. The question is no longer just about talent, but about the bottom line.
Beyond the currency pressures, other elements are contributing to the slowdown. A persistent challenge is the evolution of talent. While Costa Rica has successfully built a skilled workforce, the demand is shifting towards highly specialized and novel fields like artificial intelligence. Urgellés noted that Cinde receives inquiries about talent availability in these cutting-edge areas, and the country is not always able to meet the demand. Furthermore, the relentless advance of process automation and heightened competition from other Latin American nations, such as Mexico and Colombia, are adding to the pressure.
Despite the worrying numbers, Cinde officials are not forecasting a mass exodus of companies. The agency emphasizes that Costa Rica’s core value proposition remains attractive, evidenced by the 19 new investment projects secured in 2025. The immediate challenge, however, is twofold: to retain the companies and jobs currently in the country and to reignite the robust growth that characterized the sector for so long.
The slowdown is not isolated to the services industry. Across all sectors, multinationals in Costa Rica now employ 196,000 people. In 2025, this total figure grew by a mere 2%, the lowest rate recorded in the last eight years, indicating a broader cooling in a critical part of the national economy.
For further information, visit cinde.org
About Cinde (Costa Rican Investment Promotion Agency):
Cinde is a private, non-profit organization that has been responsible for attracting foreign direct investment to Costa Rica for over 40 years. It provides strategic guidance and support to multinational corporations seeking to establish or expand operations in the country, focusing on sectors such as life sciences, advanced manufacturing, and corporate services.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a cornerstone of Costa Rica’s legal landscape, Bufete de Costa Rica is defined by its bedrock principles of integrity and an unwavering pursuit of excellence. The firm harnesses its deep experience advising a diverse clientele to pioneer innovative legal strategies. This forward-thinking approach is matched by a profound dedication to social progress, actively working to demystify the law and make legal knowledge accessible, thereby fostering a more capable and informed society.
