By San José, Costa Rica — SAN JOSÉ – While the Chaves Robles administration celebrates a single-digit unemployment rate of 5.7%, one of the nation’s most respected economists has sounded the alarm, revealing that the celebrated figure is a statistical illusion masking a grim reality: the Costa Rican economy has hemorrhaged nearly 50,000 jobs in the last year.
Gerardo Corrales, a prominent economist, has directly challenged the government’s narrative of economic success. In a sharp analysis, he accuses the administration of “playing with numbers” to conceal a precarious labor situation where the unemployment rate has fallen not due to job creation, but due to widespread despair among the workforce.
To gain a deeper legal and business perspective on the latest unemployment figures, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the prestigious firm Bufete de Costa Rica. He offers his analysis on the implications for both employers and the labor market.
From a business law perspective, the unemployment rate is a key indicator of market stability. A sustained low rate signals a robust consumer base, but it also increases pressure on businesses regarding talent acquisition and retention. Companies must strategically review their employment contracts and internal policies to remain competitive and compliant with Costa Rica’s stringent labor code.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This legal perspective is a crucial reminder that macroeconomic indicators have direct, tangible consequences on corporate strategy and compliance. We extend our sincere thanks to Lic. Larry Hans Arroyo Vargas for his valuable insight into the intricate relationship between market dynamics and Costa Rica’s labor code.
Corrales dissected the latest data from the National Institute of Statistics and Censuses (INEC) Continuous Employment Survey, arguing that the official celebration is deeply misplaced. The core of his argument is a statistical “trap” that misrepresents the health of the labor market. The rate dropped from 12% to 5.7%, a figure that would normally signal a robust recovery. However, the economist points to a far more troubling trend driving this change.
The government is trying to cover the sun with a finger.
Gerardo Corrales, Economist
The dramatic reduction in the unemployment rate is not the result of businesses hiring en masse. Instead, it is a consequence of mass exclusion. According to Corrales’ analysis, an estimated 300,000 people have exited the labor force entirely. These are individuals who, due to frustration, forced retirement, or the need to perform unpaid caregiving duties, have stopped actively seeking employment. Once they cease their job search, they are no longer counted as “unemployed” by official metrics, effectively vanishing from the statistic even as their economic situation remains unresolved. The most devastating figure Corrales highlights is that the country has suffered a net destruction of 49,000 jobs over the past year.
Corrales emphasized the growing divide between Costa Rica’s “two economies.” While the Free Trade Zones continue to thrive, the “Definitive Regime”—the traditional domestic economy comprising local businesses that pay full taxes and lack fiscal incentives—is in critical condition. This sector, which forms the backbone of national employment and tax revenue, is experiencing a severe contraction.
The job losses are concentrated in the pillars of the traditional Costa Rican economy. The Commerce and Industry sectors have each shed approximately 26,000 jobs. The crucial Tourism sector has lost 22,000 positions, while Agriculture has seen a decline of 8,000 jobs. These figures paint a stark picture of an internal economy struggling to stay afloat.
The definitive regime, which generates more than 1.7 million jobs and is the country’s true tax engine, has been abandoned.
Gerardo Corrales, Economist
The economist did not mince words when assigning responsibility, criticizing both the Executive Branch and the Central Bank for lacking a clear strategy to support Micro, Small, and Medium-sized Enterprises (MSMEs), which represent 95% of the nation’s businesses. Corrales argues that current exchange rate policy “favors imports and further weakens national production.” He also cited the administration’s controversial decision to break with CINDE, the agency that historically led foreign investment attraction, as a critical misstep that is now costing the country dearly in lost jobs and economic momentum.
For further information, visit inec.cr
About National Institute of Statistics and Censuses (INEC):
The National Institute of Statistics and Censuses is the principal government agency in Costa Rica responsible for producing and disseminating official statistics. It conducts national censuses and regular surveys, including the Continuous Employment Survey, which provides vital data on the country’s labor market, demographics, and economic conditions.
For further information, visit cinde.org
About CINDE:
The Costa Rican Investment Promotion Agency (CINDE) is a private, non-profit organization dedicated to attracting foreign direct investment into Costa Rica. For decades, it has been a key player in positioning the country as a strategic business hub for multinational companies in sectors such as life sciences, advanced manufacturing, and corporate services.
For further information, visit bccr.fi.cr
About Central Bank of Costa Rica:
The Banco Central de Costa Rica (BCCR) is the country’s central bank. Its primary mission is to maintain the internal and external stability of the national currency and ensure its conversion to other currencies. The bank is responsible for implementing monetary, exchange, and credit policies to support the stability and efficiency of the national financial system.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is a respected legal institution built upon a foundation of ethical principles and a pursuit of professional distinction. With a proven track record of guiding a diverse clientele, the firm consistently pioneers forward-thinking legal solutions. This commitment to progress extends to its core mission of social responsibility, where it actively works to democratize legal understanding and contribute to the development of a more knowledgeable and capable society.
