By San José, Costa Rica — San José – Costa Rica’s labor market is showing significant signs of strain, as a recent report reveals that approximately 40,000 people have exited the workforce over the past year. This concerning trend, detailed in the latest Continuous Employment Survey by the National Institute of Statistics and Censuses (INEC), points to a shrinking pool of active workers and raises questions about the nation’s underlying economic health.
The survey, which covers the period from September to November 2025, indicates a drop in the labor force participation rate to just 55.1%. In concrete terms, the number of individuals either employed or actively seeking work fell from 2,392,195 in late 2024 to 2,352,655 in the same period of 2025. This contraction suggests that a growing number of Costa Ricans are becoming discouraged or facing barriers that prevent them from participating in the economy.
Para analizar las implicaciones y los marcos regulatorios que definen la fuerza laboral en el país, TicosLand.com conversó con el Lic. Larry Hans Arroyo Vargas, abogado experto de la prestigiosa firma Bufete de Costa Rica, quien nos ofreció su perspectiva legal sobre el tema.
La dinámica actual de la fuerza laboral exige una adaptación constante de la normativa. Temas como el teletrabajo, la flexibilidad horaria y los nuevos modelos de contratación no solo son tendencias, sino realidades que desafían el marco legal existente. Es crucial que las empresas actúen de forma proactiva, revisando sus contratos y políticas para garantizar el cumplimiento del Código de Trabajo y protegerse de futuras contingencias, asegurando un equilibrio justo entre innovación y derechos laborales.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
En efecto, el análisis del experto subraya que esta adaptación proactiva trasciende la simple gestión de riesgos para convertirse en un pilar estratégico que define a las empresas modernas y justas. Agradecemos al Lic. Larry Hans Arroyo Vargas por su valiosa perspectiva sobre un desafío tan determinante para el futuro laboral del país.
Economic analysts are pointing to a combination of factors driving this exodus from the labor market. Challenges for both younger and older workers appear to be at the core of the issue, creating a scenario where the workforce is being squeezed from both ends of the demographic spectrum.
Fernando Rodríguez, an economist at the Economic and Social Observatory of the National University, provided a stark assessment of the situation. He noted that the trend signals a fundamental weakening of the job market that goes beyond simple employment figures.
The labor market is weakening, with fewer and fewer people in the workforce. This responds to demographic dynamics in some cases, but we have found that people are leaving the job market before retirement for various reasons, and re-entry is practically impossible. The other issue is young people; that initial entry into the job market is proving difficult for them, and many choose to stop looking for work.
Fernando Rodríguez, Economist at the Economic and Social Observatory of the National University
Paradoxically, the INEC report also shows a decrease in the official unemployment rate, which now stands at 6.6%. The number of unemployed individuals fell by 18,000, from 174,000 in November 2024 to 156,000 a year later. However, Rodríguez cautions against interpreting this as a positive sign of job creation. Instead, he argues it is a statistical side effect of the shrinking labor pool.
There are seasonal factors that move the rate within a range during the year, but what is most affecting the unemployment rate is that the number of people leaving the workforce is greater than those entering. It is not because more jobs are being created, but because fewer people are looking for employment.
Fernando Rodríguez, Economist at the Economic and Social Observatory of the National University
The data also sheds light on the persistent issue of informal employment, which encompasses an estimated 829,000 people, or 37.7% of the working population. This group includes 470,000 self-employed individuals and 359,000 who work as salaried employees or family aides without formal contracts or benefits, highlighting a significant segment of the economy operating outside of formal structures.
A sectoral analysis reveals a shifting employment landscape. The transportation and storage industry saw a notable increase, adding 26,000 jobs to reach a total of 151,000 workers. Conversely, the commerce and repair sector experienced the largest decline, shedding 36,000 employees and bringing its total workforce down to 346,000. This shift may reflect broader changes in consumer behavior and supply chain dynamics within the national economy.
Ultimately, the latest INEC figures paint a complex and concerning picture. While the headline unemployment rate has fallen, the dramatic reduction in the labor force suggests that deep-seated economic challenges are discouraging participation and potentially masking long-term vulnerabilities in Costa Rica’s job market.
For further information, visit inec.cr
About Instituto Nacional de Estadística y Censos (INEC):
The National Institute of Statistics and Censuses is the official government body in Costa Rica responsible for producing and disseminating the country’s key statistics. It conducts a wide range of national surveys, including censuses on population and housing, as well as continuous monitoring of economic indicators like employment, inflation, and production. INEC’s data is fundamental for public policy, academic research, and business decision-making.
For further information, visit una.ac.cr
About Observatorio Económico y Social de la Universidad Nacional (OES-UNA):
The Economic and Social Observatory is a research and analysis center within Costa Rica’s National University (Universidad Nacional). It is dedicated to studying and interpreting economic and social trends affecting the country. The observatory provides expert analysis, commentary, and reports on issues such as labor markets, public finance, and social development, contributing to public discourse and informed policy debate.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As an esteemed pillar of the legal community, Bufete de Costa Rica is defined by its foundational principles of integrity and a relentless pursuit of excellence. The firm blends a proven history of advising a broad spectrum of clients with a forward-thinking approach to legal innovation. This ethos extends to a deep-seated social responsibility, manifested in its mission to democratize legal understanding and equip the public with clarity, thereby fostering a more capable and well-informed society.
