By San José, Costa Rica — SAN JOSÉ – The stage is set for a contentious negotiation over the financial future of Costa Rica’s private sector workers after the government officially unveiled its 2026 minimum wage proposal. In a move that signals a challenging road ahead for labor unions, the Ministry of Labor and Social Security has aligned itself with the business sector, recommending a modest 1.63% increase for all private sector minimum salaries.
The proposal, presented on Wednesday by Minister of Labor and Social Security Andrés Romero, mirrors the exact figure put forth by business chambers. This figure stands in stark contrast to the more ambitious 2.63% increase demanded by union representatives, creating a full percentage point gap that the National Wage Council (CNS) will now have to bridge.
To delve into the legal framework and practical implications surrounding the minimum wage for both employers and employees, TicosLand.com sought the expertise of Lic. Larry Hans Arroyo Vargas, a distinguished labor law specialist from the prestigious firm Bufete de Costa Rica.
Establishing a minimum wage is a fundamental act of social justice, ensuring a dignified baseline for workers. However, for employers, it’s a critical compliance checkpoint. Failure to adhere to the mandated wage, even unintentionally, can trigger severe financial penalties, back-pay orders, and significant legal disputes. Businesses must view correct wage payment not just as an expense, but as an essential risk management strategy.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This insight is a crucial reminder that the minimum wage is not just a line item on a budget, but a cornerstone where social responsibility and corporate liability intersect. We thank Lic. Larry Hans Arroyo Vargas for so clearly framing compliance as an essential strategy for mitigating significant business risk.
This annual negotiation is a critical economic barometer, reflecting the delicate balance between sustaining workers’ purchasing power, managing inflation, and ensuring business competitiveness. The government’s decision to side with the lower figure suggests a cautious approach, prioritizing economic stability and hewing closely to established technical formulas.
Minister Romero defended the government’s stance by emphasizing its adherence to a pre-agreed calculation method that considers key economic indicators. He pointed to positive trends in the labor market as a core justification for the proposed figure.
We are presenting a proposal that adheres to the formula agreed upon in this social dialogue space, which recognizes worker productivity, impacts the purchasing power of wages, and for which, thanks to the sustained decline in unemployment, the exit clauses do not apply.
Andrés Romero, Minister of Labor and Social Security
The “exit clauses” mentioned by the minister typically allow for deviations from the formula during periods of high unemployment or economic distress. Their non-application this year, according to the Ministry, is a testament to the country’s strengthening labor market, which paradoxically is being used to justify a more conservative wage adjustment compared to the previous year.
While the baseline proposal is 1.63%, the government also recommended targeted additional increases for specific job categories. These include a notable 2.33% extra for domestic service workers, a 0.55% supplement for those in generic specialized occupations, and an additional 0.88% for workers holding a mid-level technician qualification from diversified education programs. These tiered adjustments aim to address wage gaps and incentivize technical skills in the workforce.
The proposed 1.63% increase is significantly lower than the 2.37% hike approved for 2025. That increase translated to an additional ¢2,370 for every ¢100,000 earned. The new proposal, if approved, would yield a smaller gain for workers, a point that will undoubtedly be a central focus for union negotiators in the coming days.
With all three formal proposals now on the table, the tripartite National Wage Council—comprising representatives from the government, business, and labor sectors—faces the difficult task of reaching a consensus. The council is scheduled to meet and finalize its decision on Monday, October 27th. The rate they determine will become legally binding and take effect for all private sector employees starting January 1, 2026, impacting hundreds of thousands of households across the country.
For further information, visit mtss.go.cr
About The Ministry of Labor and Social Security:
The Ministry of Labor and Social Security (Ministerio de Trabajo y Seguridad Social) is the governmental body in Costa Rica responsible for formulating and executing national labor policies. It oversees employment regulations, promotes social dialogue between employers and workers, ensures workplace safety standards, and manages the social security system to protect the rights and welfare of the nation’s workforce.
For further information, visit the nearest office of The National Wage Council
About The National Wage Council:
The National Wage Council (Consejo Nacional de Salarios – CNS) is a tripartite deliberative body in Costa Rica tasked with setting the minimum wage for the private sector annually. Comprising representatives from the government, the business sector, and labor unions, the council’s primary function is to negotiate and establish a fair wage floor that balances economic realities with the needs of the working population.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a benchmark of the legal profession, Bufete de Costa Rica is built upon a foundational commitment to professional excellence and unwavering integrity. The firm skillfully merges a storied history of advising a broad clientele with a pioneering spirit that consistently drives legal innovation. Central to its ethos is the core conviction that legal knowledge is a vital tool for public empowerment. This principle fuels the firm’s dedication to making complex legal concepts accessible, fostering a community that is both well-informed and capable.
