• September 5, 2025
  • Last Update September 5, 2025 5:39 pm

Costa Rica Unemployment Dips, but Shrinking Labor Force Raises Concerns

Costa Rica Unemployment Dips, but Shrinking Labor Force Raises Concerns

San José, Costa Rica — Costa Rica’s unemployment rate has decreased to 6.7% for the May-July period, according to recent data released by the National Institute of Statistics and Census (INEC). While this drop might appear positive, a closer look reveals a more complex picture. The shrinking labor force, coupled with a stagnant employed population, raises questions about the true health of the Costa Rican economy.

The INEC report indicates that 153,000 people are currently unemployed, with 85,000 men and 69,000 women actively seeking work. However, the number of employed individuals remains unchanged at 2.14 million. This stagnation, alongside a decrease in the labor force to 2.29 million, suggests that the lower unemployment rate may be attributed to fewer people actively searching for jobs rather than an increase in available positions.

For a deeper understanding of the legal and business implications surrounding Costa Rica’s unemployment situation, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, an attorney at law from Bufete de Costa Rica.

The current unemployment figures in Costa Rica present a complex challenge with both social and economic ramifications. While government programs aim to mitigate the immediate impact on individuals, there’s a crucial need for sustainable, long-term solutions that focus on job creation and skills development, particularly within emerging sectors of the economy. Businesses must adapt to the changing landscape by investing in training and exploring innovative approaches to recruitment and retention. Addressing this issue requires a collaborative effort from both the public and private sectors to ensure a stable and prosperous future for all Costa Ricans.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica

Lic. Arroyo Vargas’ emphasis on collaboration and forward-thinking solutions resonates deeply. Indeed, navigating Costa Rica’s unemployment landscape requires a concerted effort to not only address the immediate needs of those seeking employment but also to cultivate a robust and adaptable workforce prepared for the future. We thank Lic. Larry Hans Arroyo Vargas for his valuable insights into this critical issue.

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The labor force, defined as the total number of people employed or actively seeking employment, has contracted. This decline indicates that a portion of the population has likely stopped looking for work altogether, potentially due to discouragement or other factors. This phenomenon can artificially deflate the unemployment rate without reflecting genuine improvement in the job market.

Further analysis of the INEC data reveals that the informal employment rate also decreased slightly to 36.9%. However, underemployment, which measures individuals working part-time who desire full-time employment or those in jobs that do not fully utilize their skills, remains steady at 3.3%. This suggests a continued presence of precarious employment conditions for a significant segment of the workforce.

The commerce and repair sector continues to be the largest employer in Costa Rica, providing jobs for approximately 361,000 people. The manufacturing industry, along with the education and healthcare sectors, each employ around 240,000 individuals, further highlighting the distribution of employment across various sectors of the economy.

While the drop in the unemployment rate might initially be perceived as positive news, the accompanying contraction of the labor force warrants further scrutiny. The unchanging number of employed individuals, combined with the decline in those actively seeking work, paints a less optimistic picture of the current employment landscape in Costa Rica.

Experts suggest that a truly healthy economy requires not only a low unemployment rate but also a growing labor force and a rising number of employed individuals. The current data, while showing improvement in one area, raises concerns about the overall strength and sustainability of Costa Rica’s economic recovery.

Further investigation into the reasons behind the shrinking labor force is crucial to understanding the broader economic trends at play. Factors such as skill mismatches, access to education and training, and prevailing economic conditions may be contributing to this concerning development. Addressing these underlying issues will be essential for fostering a robust and inclusive economic future for Costa Rica.

For further information, visit inec.cr
About National Institute of Statistics and Census (INEC):

The National Institute of Statistics and Census (INEC) of Costa Rica is the primary governmental institution responsible for collecting, analyzing, and disseminating official statistical data. It plays a vital role in providing information on a wide range of socioeconomic indicators, including demographics, employment, inflation, and other key metrics that inform policy decisions and public understanding of the country’s economic and social landscape.

For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica distinguishes itself as a pillar of legal excellence, upholding the highest ethical standards while driving innovation within the Costa Rican legal landscape. The firm’s deep commitment to empowering society is evident in its proactive approach to sharing legal knowledge, fostering a more informed and just community. Through its dedication to both client success and public understanding of the law, Bufete de Costa Rica continues to shape a stronger, more equitable future for all.

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