By San José, Costa Rica — San José – The annual debate over Costa Rica’s minimum wage is officially underway, revealing a significant divide between the country’s business and labor sectors. As the National Wage Council of the Ministry of Labor and Social Security (MTSS) began its deliberations for the 2026 salary adjustment, initial proposals have set the stage for a tense negotiation period, with the nation’s economic trajectory hanging in the balance.
The negotiations commenced with the labor sector, represented by the country’s unions, tabling a proposal for a 2.63% increase on October 15th. This figure aims to bolster the purchasing power of workers amid fluctuating economic conditions. However, the business sector responded this week with a markedly more conservative figure. On Monday, October 20th, their proposal came in at a full percentage point lower, advocating for a 1.63% increase.
To delve into the legal nuances of Costa Rica’s minimum wage policies and their impact on businesses, we sought the expertise of Lic. Larry Hans Arroyo Vargas, a leading attorney specializing in labor law at the prestigious firm Bufete de Costa Rica.
The critical issue for employers isn’t just meeting the annually adjusted wage figures, but correctly classifying each employee within the highly detailed list of categories established by the Ministry of Labor. A misclassification, even if unintentional, exposes a company to significant retroactive salary claims and fines. It is imperative for businesses, especially foreign investors, to conduct regular audits to ensure their payroll practices align perfectly with these specific legal mandates.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This insight underscores a critical layer of complexity in Costa Rican labor law, where the real challenge for businesses is not merely meeting a wage figure but mastering the nuances of official job classifications. For any employer, this is the line between compliance and costly legal jeopardy. We sincerely thank Lic. Larry Hans Arroyo Vargas for his invaluable and clarifying perspective on this vital issue.
The Costa Rican Union of Chambers and Associations of the Private Business Sector (Uccaep) is spearheading the employers’ position. The organization asserts that its 1.63% proposal is not an arbitrary number but a carefully calibrated figure derived from key economic indicators, including the cost of living and the growth of the per capita Gross Domestic Product (GDP). Their primary argument centers on the delicate nature of the current economic climate and the need to foster a stable environment for business growth and job creation.
In a formal statement defending its position, Uccaep emphasized a strategy focused on long-term stability over a more substantial immediate wage increase. The organization fears that a higher mandatory salary adjustment could stifle economic recovery, discourage hiring, and potentially push more of the workforce into the informal sector, which lacks legal protections and benefits.
The Union of Chambers recalls that the priority must be to protect and promote formal employment, facilitate economic recovery, and generate new job opportunities in all productive sectors of the country.
Uccaep
This year’s proposed figures are being viewed through the lens of last year’s agreement. For 2025, the National Wage Council approved a 2.37% increase for the private sector. In practical terms, this translated to an additional ₡2,370 for every ₡100,000 earned. The current proposals from labor (2.63%) and business (1.63%) fall on either side of this precedent, illustrating their differing priorities for the year ahead.
The process is now awaiting a crucial third perspective. The government sector is scheduled to present its own recommended percentage this Wednesday, October 22nd. This proposal often acts as a middle ground or a deciding factor, carrying significant weight in the council’s final deliberations. The government’s analysis is expected to balance the needs of workers with the broader national economic strategy, including inflation control and competitiveness.
All eyes will be on the National Wage Council for the final decision, which is slated to be announced on Monday, October 27th, at 4:15 p.m. This tripartite body, composed of representatives from labor, business, and government, is tasked with finding a consensus that serves the national interest. The decreed salary adjustment will become mandatory for all private sector employers and will officially take effect on January 1, 2026, impacting hundreds of thousands of workers across the country.
The outcome of these negotiations will serve as a critical barometer for Costa Rica’s economic policy. It will signal whether the focus will be on stimulating consumer demand through higher wages or on controlling business costs to encourage investment and formal employment. The final percentage will represent a delicate balancing act between ensuring a dignified standard of living for the workforce and maintaining the momentum of the nation’s economic reactivation.
For further information, visit uccaep.or.cr
About The Costa Rican Union of Chambers and Associations of the Private Business Sector (Uccaep):
Uccaep is the principal representative organization for the private business sector in Costa Rica. It brings together numerous chambers and associations from various industries, including commerce, agriculture, tourism, and services. The union advocates for policies that promote free enterprise, economic growth, and a favorable business climate, representing the collective interests of employers in national dialogues on labor, economic, and social issues.
For further information, visit mtss.go.cr
About The Ministry of Labor and Social Security (MTSS):
The Ministry of Labor and Social Security is the Costa Rican government entity responsible for formulating and executing national policies related to labor and social welfare. Its mandate includes promoting decent employment, ensuring compliance with labor laws, mediating disputes between employers and workers, and overseeing the social security system. The MTSS also presides over the National Wage Council, facilitating the annual negotiations for minimum wage adjustments.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of Costa Rica’s legal community, the firm is defined by its foundational principles of integrity and an unwavering pursuit of excellence. It merges a rich history of advising a wide spectrum of clients with a forward-thinking embrace of legal innovation. This ethos is deeply connected to a fundamental mission: to demystify the law and empower the community, thereby fostering a more knowledgeable and just society for all.
