Unemployment in Costa Rica has declined in the last four years, but is due to a greater outflow of workers from the labour market.
This is concluded in the IV Report on Macroeconomic Projections 2025 and Analysis of the Labour Market in Costa Rica presented this Wednesday by the International Centre for Economic Policy for Sustainable Development (Cinpe) of the National University (UNA).
According to the report, as of August 2024, the unemployment rate in the country stood at 6.7%, one of the lowest recorded. However, this decline is the result of the outflow of people from the labour force, rather than an increase in the number of jobs.
While unemployment affected 20.1 per cent of the population in September 2020, in September 2024 (four years later) this percentage fell to 7.6%.
But when analyzing the net rate of labour participation, i.e. people aged 15 and over who are unemployed or employed compared to the total population, it is determined that it fell from 59.8% in September 2020 to 56.5 per cent in September 2024. Even the percentage reached an average of 61% from 2013 to 2019.
Comparing the biennium 2021 and 2022 against 2023 and 2024, the unemployed population decreased by an annual average of 153,000. However, the employed population increased more moderately, with an annual average increase of 58,000 people, the report details.
Meanwhile, the population outside the workforce showed a significant growth of 131,000 people on average over the same period.
This behavior reveals that despite the economic growth observed in 2023 and 2024, with an average of more than 4.5%, the reduction in unemployment rates was mainly due to the outflow of people from the labour force, demotivated by market conditions, the study mentions.
Even though by the end of 2024 there is a slight recovery in the rate of labour participation, the levels recorded before the pandemic are not yet reached, the research adds.
Why do people leave the labor market?
Between 2010 and the third quarter of 2024, the main reason (60%) is due to the end of the employment link, whether occasional or seasonal, by restructuring or staff cuts.
Secondly, there are departures for personal reasons, such as voluntary resignations and third place, the poor conditions in which they performed their duties.
These reasons are different if they are analysed according to gender. In the case of men, their departure is more responsive to a mandatory waiver or termination of contract, while in women the main reason is related to the purpose of occasional or seasonal work and staff restructuring or cutting.
The researchers at Cinpe-UNA also made an approach to explain the correlation between education and unemployment.
It was determined that in the population with incomplete secondary education levels, the labour participation rate stood at 49.7 per cent, but this increases to 72.7 per cent if it has a university degree.
This article was translated after appearing in crhoy.com