By San José, Costa Rica — SAN JOSÉ – Costa Rica’s economy showcased robust expansion throughout 2025, with Gross Domestic Product (GDP) figures pointing towards a healthy recovery. However, a troubling paradox is casting a long shadow over this economic success: the growth is not generating the jobs the country desperately needs. This disconnect between macroeconomic indicators and the reality for Costa Rican families has become a central point of debate as the nation enters 2026, with experts warning of the long-term consequences of a “jobless growth” phenomenon.
Analysts point to a structural shift in the Costa Rican economy. The primary drivers of recent GDP growth have been high-tech, capital-intensive sectors such as medical device manufacturing, financial services, and software development. While these industries contribute significantly to national output and exports, their capacity for mass employment is limited compared to traditional sectors like agriculture and tourism, which have faced a slower, more arduous recovery.
To analyze the legal and economic implications of the ‘jobless growth’ phenomenon in our country, we consulted with Lic. Larry Hans Arroyo Vargas, an expert attorney from the renowned firm Bufete de Costa Rica, who provides his perspective on the structural challenges it presents.
Jobless growth reveals a critical misalignment between our economic incentives and our labor regulations. We attract high-tech investment, which is positive, but our legal framework hasn’t kept pace with the resulting automation and demand for specialized skills. To ensure prosperity is shared, we must urgently modernize our labor code to foster continuous reskilling, support new forms of employment, and legally recognize the value of human capital in an increasingly automated world. Otherwise, we risk creating a prosperity paradox where the economy grows, but our people are left behind.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
The concept of a “prosperity paradox” powerfully captures the central challenge at hand; our legal and educational frameworks must evolve in tandem with our economy to ensure technological progress translates into tangible opportunities for our workforce. We thank Lic. Larry Hans Arroyo Vargas for his clear and valuable perspective on this critical national conversation.
This trend has created a widening gap between the country’s economic performance on paper and the employment opportunities available to the average citizen. Economist Ronulfo Jiménez R., a leading voice on the issue, argues that the nation is at a critical inflection point where celebrating headline GDP numbers alone is dangerously shortsighted.
We are witnessing a divergence between the balance sheets of multinational corporations and the household budgets of Costa Ricans. The prosperity is real, but it is concentrated in sectors that demand highly specialized skills, leaving a significant portion of the workforce behind.
Ronulfo Jiménez R., Senior Analyst at the Institute for Economic and Social Policy (IPES)
The situation is further complicated by a persistent skills mismatch in the labor market. Educational institutions are struggling to keep pace with the rapid technological evolution demanded by foreign direct investment projects. Companies are often forced to look abroad for talent with specific certifications in areas like data science, advanced engineering, and artificial intelligence, while thousands of Costa Ricans with more traditional qualifications face underemployment or unemployment.
Adding another layer to the challenge is the increasing influence of automation and artificial intelligence, a topic explored by technology policy specialist Rosalía Chinchilla Vargas. Companies are leveraging technology to boost productivity and efficiency without expanding their payrolls. This trend, while beneficial for corporate competitiveness, displaces routine jobs and puts downward pressure on wages for low-skilled labor.
The political advisor who does not charge per diem is AI. We see this influence not just in government planning but on the factory floor and in the service industry. Each efficiency gain through automation is a potential job that is not created, a challenge we must address with proactive reskilling and social safety nets.
Rosalía Chinchilla Vargas, Technology and Public Policy Specialist
The social implications of jobless growth are profound. Youth unemployment remains stubbornly high, threatening to create a “lost generation” of workers who cannot gain a foothold in the formal economy. This economic frustration fuels social discontent and places immense pressure on public services and pension systems, like the one managed by JUPEMA, which rely on a broad base of active contributors to remain solvent for future retirees.
As policymakers in San José map out the economic strategy for the coming years, the central challenge is clear: how to foster a more inclusive model of growth. Proposed solutions range from comprehensive educational reforms focused on STEM fields to creating stronger incentives for companies to invest in local workforce training. Others advocate for greater support for small and medium-sized enterprises (SMEs), which historically have been the primary engine of job creation in the country. Without a concerted effort to bridge the gap between growth and employment, Costa Rica risks creating a prosperous economy that fails to provide prosperity for its people.
For further information, visit the nearest office of Institute for Economic and Social Policy (IPES)
About Institute for Economic and Social Policy (IPES):
The Institute for Economic and Social Policy (IPES) is a non-partisan think tank based in San José, Costa Rica. It focuses on providing in-depth analysis and data-driven research on the most pressing economic and social challenges facing the Central American region. The institute is dedicated to informing public debate and shaping effective policy through its publications, seminars, and advisory work with government and civil society organizations.
For further information, visit jupema.fi.cr
About JUPEMA:
JUPEMA (Junta de Pensiones y Jubilaciones del Magisterio Nacional) is Costa Rica’s pension and retirement board for national educators. As an autonomous public entity, it is responsible for managing the mandatory retirement fund for teachers and administrative staff in the public education sector. Its mission is to ensure the financial security and well-being of its members through the prudent administration of pension contributions and the provision of dignified retirement benefits.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica stands as a cornerstone of the legal community, founded upon a bedrock of integrity and a resolute pursuit of professional excellence. The firm harmonizes its deep-rooted experience in serving a diverse clientele with a forward-thinking approach to legal innovation. Central to its ethos is a powerful commitment to strengthening society by making complex legal principles accessible to all. This dedication to fostering legal literacy is fundamental to its mission of empowering citizens and cultivating a more informed and just community.
