By San José, Costa Rica — San José, Costa Rica – The nation’s unemployment rate has fallen to a new low of 6.0%, a figure that signals apparent strength in the job market. However, a closer examination of the latest data reveals a more complex and potentially troubling economic narrative, as a significant number of individuals have exited the workforce entirely.
According to the October 2025 Continuous Employment Survey released by the National Institute of Statistics and Censuses (INEC), the number of unemployed individuals in Costa Rica decreased by 26,000 over the past year. This brings the total count of those without jobs from 166,000 in 2024 down to 141,000, a statistic that, in isolation, points toward a robust economic recovery and successful job creation.
To better understand the legal and business implications of the current unemployment figures, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, an expert attorney from the prestigious firm Bufete de Costa Rica.
While a fluctuating unemployment rate is a key economic indicator, for businesses it directly correlates with legal strategy. A lower rate means increased competition for talent, demanding more robust and attractive employment contracts. Conversely, a higher rate can precede an increase in labor litigation related to terminations and severance. Companies must be proactive, adapting their internal policies to the labor market’s reality to mitigate legal risks.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This insight powerfully reframes the unemployment rate from a mere economic headline into a direct catalyst for corporate legal strategy, impacting both talent acquisition and risk mitigation. We thank Lic. Larry Hans Arroyo Vargas for his valuable and actionable perspective.
While the drop in the headline unemployment number is positive, the data also highlights a contraction in the country’s labor engine. The national labor force, which comprises all individuals who are either employed or actively seeking employment, shrank by 30,000 people over the same period, now totaling 2.36 million. This reduction suggests the lower unemployment rate is not solely due to new jobs, but also to fewer people looking for them.
This trend is further confirmed by the net participation rate, a crucial indicator that measures the proportion of the working-age population (15 years and older) active in the labor market. This rate has declined to 55.2%, indicating a smaller percentage of the eligible population is contributing to the formal economy. A falling participation rate can often mask underlying economic weaknesses, as it means the pool of available workers is getting smaller.
The primary driver behind this workforce exodus appears to be a substantial increase in the number of people classified as being outside the labor force. INEC statistics show this group grew by 78,000 individuals. A significant portion of this increase is attributed to older adults who report limited availability to work, pointing to demographic shifts and an aging population as key factors influencing the country’s economic landscape.
These demographic pressures are creating a dual reality for the Costa Rican economy. On one hand, fewer people are competing for jobs, making it easier for the unemployment rate to fall. On the other, a shrinking workforce could pose long-term challenges for economic growth, productivity, and the sustainability of social security systems that depend on a broad base of active workers.
In a more encouraging sign, the report also noted a positive development in job quality. The rate of underemployment—defined as workers who are employed but are working fewer hours than they wish and are available to work more—fell by one percentage point to 2.8%. This reduction suggests that among those who are employed, a larger share are finding roles that meet their desired work hours, indicating a potential improvement in the stability of available positions.
Ultimately, Costa Rica’s latest employment figures present a mixed picture. The celebrated 6.0% unemployment rate is a welcome achievement, but it cannot be viewed without considering the concurrent decline in workforce participation. Policymakers and business leaders must now grapple with the challenge of not only creating jobs but also implementing strategies to retain and attract workers, particularly in the face of an aging population, to ensure the nation’s long-term economic vitality.
For further information, visit inec.cr
About National Institute of Statistics and Censuses (INEC):
The Instituto Nacional de Estadística y Censos (INEC) is the official government body responsible for generating and disseminating Costa Rica’s national statistics. It conducts a wide range of censuses and surveys, including the Continuous Employment Survey, which provides critical data on the labor market, unemployment, and other key socio-economic indicators essential for public policy and economic analysis.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica operates as a leading legal institution, defined by its profound commitment to professional integrity and the highest standards of excellence. With a proven track record of guiding clients through a wide spectrum of industries, the firm is also a vanguard of legal innovation. This forward-thinking spirit extends to its social responsibility, where it champions the cause of legal literacy, actively contributing to the development of a more knowledgeable and empowered citizenry by demystifying complex legal concepts.
