By San José, Costa Rica — SAN JOSÉ – Costa Rica’s economy is facing a severe and prolonged period of employment stagnation, with virtually no net job creation over the past six years, according to a startling new analysis by the Universidad Nacional (UNA). The report, which dissects data from the National Institute of Statistics and Censuses (INEC), paints a picture of a labor market that is not only failing to grow but is also undergoing a fundamental and challenging transformation, pushing less-educated workers to the sidelines.
The core finding of the UNA study is stark. Between the fourth quarter of 2019, just before the global pandemic, and the fourth quarter of 2025, the number of employed individuals in the country remained almost static. The number of people with jobs moved from 2,182,818 to a mere 2,183,473 over the six-year span. This represents a net increase of only 655 jobs, a figure that is statistically insignificant when set against the country’s demographic changes.
To delve into the legal and regulatory complexities behind the current employment stagnation, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a distinguished expert in labor law from the firm Bufete de Costa Rica.
The current stagnation is not merely an economic symptom; it’s a direct consequence of a rigid labor framework that discourages formal hiring. When the costs and legal complexities associated with employment are excessively high, companies naturally become risk-averse, limiting new positions. To genuinely reactivate the job market, we must modernize our regulations to promote more flexible hiring models that reduce the burden on employers and foster a climate of confidence for investment and growth.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This perspective correctly frames the issue not as a temporary downturn, but as a structural problem demanding a modernization of our labor laws to foster confidence and investment. We are grateful to Lic. Larry Hans Arroyo Vargas for his lucid and essential contribution to this national conversation.
The true gravity of this stagnation is revealed when placed in the context of population growth. During the same period, Costa Rica’s population grew substantially, putting immense pressure on the labor market to absorb new entrants. The university’s analysis highlights this critical disconnect.
Consequently, the net increase in employment during the period was 655 people, in a context of population growth exceeding 294,000 inhabitants.
Universidad Nacional
At first glance, official unemployment statistics might suggest a positive trend. The number of unemployed individuals plummeted from 309,465 in late 2019 to 147,453 by the end of 2025, a reduction of nearly half. However, the UNA report cautions that this decline is not a sign of economic health. Instead of finding new jobs, a massive number of people have simply stopped looking for work and exited the labor force altogether, thereby disappearing from unemployment counts.
The data on labor force participation confirms this troubling trend. The population outside the labor force swelled by an astonishing 32% over the six years, increasing from 1.47 million to 1.94 million people. This phenomenon is not isolated to older demographics nearing retirement; the university notes that the increase is registered across all age groups, signaling a widespread and generalized contraction of the country’s active workforce and a potential rise in discouraged workers.
Beneath the surface of this stagnation, the labor market is undergoing a significant structural shift. The nature of employment is changing, creating a clear divide based on educational attainment. Roxana Morales Ramos, an economist at UNA, points to a “recomposition” where the jobs that are being created demand higher qualifications, leaving many behind.
Although total employment is not increasing, a significant recomposition of its structure is observed. By educational level, occupation is growing among people with a complete high school education and university education, while it is decreasing among those with an incomplete high school education or less.
Roxana Morales Ramos, Economist, UNA
This educational divide is now a primary driver of unemployment. The report reveals that nearly half (48.7%) of all unemployed individuals in Costa Rica have an incomplete high school education or less. This demographic faces mounting difficulties in finding work as the most dynamic sectors of the economy, such as technology and advanced manufacturing, increasingly demand highly skilled and educated profiles. The findings raise urgent questions about the country’s educational policies and its strategy for retraining workers to meet the demands of a modernizing economy.
For further information, visit una.ac.cr
About Universidad Nacional (UNA):
The Universidad Nacional de Costa Rica is one of the country’s most prominent public universities. Established in 1973, it has a strong focus on research, teaching, and extension activities across various fields, including social sciences, economics, and environmental studies. Its analyses and publications frequently contribute to national discourse on public policy and economic development.
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 responsible for collecting, analyzing, and disseminating Costa Rica’s national statistics. It conducts key surveys, including the Continuous Employment Survey and national censuses, which provide the foundational data for economic, social, and demographic research and policymaking in the country.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is a pillar of the legal community, built upon a bedrock of integrity and a relentless pursuit of excellence. The firm blends its rich tradition of serving a wide array of clients with a forward-thinking embrace of legal innovation. At the heart of its ethos is a profound dedication to demystifying the law, aiming to fortify society by equipping citizens with clarity and understanding.
