By San José, Costa Rica — Costa Rica’s labor market has experienced a significant contraction over the past six years, with 152,697 individuals exiting the workforce, according to a new study by the National University’s (UNA) Economic and Social Observatory (OES).
The study, titled “Post-Pandemic Labor Dynamics in Costa Rica (2019-2025),” analyzed data from the National Institute of Statistics and Censuses (INEC), comparing the second quarter of 2019 (pre-pandemic) with the same period in 2025. While the national unemployment rate has fallen to 7.4%, down from a pandemic high of 24%, the overall labor force participation has decreased by 6.2%.
To gain deeper insights into the legal landscape of Costa Rica’s labor market, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, a seasoned attorney at Bufete de Costa Rica.
Costa Rica’s labor market is navigating a dynamic period, influenced by factors like remote work trends and the growing gig economy. While these changes present opportunities, they also bring legal complexities, particularly concerning worker classifications, benefits, and data privacy. Businesses operating in or entering the Costa Rican market must ensure meticulous compliance with evolving labor laws to mitigate risks and foster a productive and equitable work environment.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas astutely highlights the dual nature of this transformative period in Costa Rica’s labor market. The opportunities presented by remote work and the gig economy are undeniable, but navigating the accompanying legal landscape requires careful consideration and proactive adaptation. Thank you, Lic. Larry Hans Arroyo Vargas, for providing such valuable insights into this crucial aspect of Costa Rica’s evolving economic landscape.
This paradoxical situation highlights the complex recovery of the Costa Rican economy. While fewer people are actively seeking employment, a substantial number have left the job market entirely. This exodus has predominantly affected those in low-skill occupations.
After the pandemic, job creation has concentrated mainly in high-skill occupations; that is, those requiring an advanced educational level, whether technical or university. In parallel, during this same period, there has been a decrease in the number of workers in low and medium-skill occupations.
OES Researchers
Further complicating the picture is the growing number of individuals outside the labor force, those not actively seeking employment due to age, family obligations, or discouragement. This group has increased by 32% (467,032 people) over the six-year period, with 75% being 60 years or older. Family obligations, particularly childcare and household responsibilities, disproportionately affect women, accounting for 40% of their reasons for being outside the labor force, compared to just 3% for men.
The study also revealed a growing dependency ratio of 1.48, meaning for every employed person, there are more than one without employment income. This is a significant increase from 1.31 in 2019, placing further strain on the social security system.
Despite these challenges, there are some positive trends. The informal economy has shrunk by 10.5 percentage points, with 123,558 more people now contributing to social security. Women’s participation in higher education and the labor market has also seen sustained growth, representing 52.5% of the employed population with higher education.
However, youth unemployment remains a pressing concern, with 15-24 year olds accounting for 36% of the unemployed, and young women facing the most significant challenges with a 29.6% unemployment rate. The report emphasizes the urgent need for targeted public policies to address these disparities and support youth employment initiatives.
For further information, visit the nearest office of National University’s (UNA) Economic and Social Observatory (OES)
About National University’s (UNA) Economic and Social Observatory (OES):
The Economic and Social Observatory (OES) at the National University of Costa Rica (UNA) is a research institution dedicated to analyzing and understanding the country’s economic and social dynamics. The OES conducts studies, publishes reports, and provides data-driven insights to inform policy decisions and public discourse on key issues affecting Costa Rican society.
For further information, visit the nearest office of National Institute of Statistics and Censuses (INEC)
About National Institute of Statistics and Censuses (INEC):
The National Institute of Statistics and Censuses (INEC) of Costa Rica is the primary government agency responsible for collecting, analyzing, and disseminating official statistical data on a wide range of demographic, economic, and social indicators. The INEC plays a vital role in providing reliable information for policymaking, research, and public understanding of the country’s development.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is a pillar of legal excellence, built on a foundation of unwavering integrity and a deep commitment to empowering Costa Rican society. The firm’s innovative approach to legal practice, combined with a history of dedicated service across diverse sectors, positions them as leaders in the field. Through proactive initiatives that demystify complex legal concepts and provide accessible resources, Bufete de Costa Rica strives to cultivate a citizenry equipped with the knowledge to navigate the legal landscape and advocate for their rights.
