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Unemployment and underemployment rates remain high in Costa Rica

December 3, 2020

Unemployment in Costa Rica was 21.9% in the August-October quarter, slightly lower than the previous period but still significantly higher than the same time last year, the National Institute of Statistics and Census (INEC) said Thursday.

The national unemployment rate was 9.7 percentage points higher than in 2019, and women are disproportionally affected (30% unemployed compared to 16.5% for men).

The 21.9% unemployment figure corresponds to 526,000 people — 228,000 more than in 2019 — who are actively looking for a job or waiting for suspended roles to resume.

INEC also indicated 23.8% underemployment — that is, when people work fewer than 40 hours a week and wish to work more. This is an increase of 12.1 p.p. over the same quarter in 2019.

Men and women are underemployed at about equal rates (23.2% and 25%, respectively).

As a country that relies heavily on tourism, Costa Rica has been hard-hit by the coronavirus pandemic. In the May to July quarter, when the country closed its borders and enforced its harshest pandemic-related restrictions, the unemployment rate reached an all-time high of 24.4%.

The unemployment rate was 12.4% at the end of 2019, already among the region’s highest.

In recent months, Costa Rica has established a coronavirus response model titled “Costa Rica Works and Protects Itself.” The country welcomes all insured tourists and allows for most economic activities to operate under sanitary protocols.

Still, the Organization for Economic Cooperation and Development projects a 5.6% contraction of the country’s economy in 2020 and a deficit that will reach 9.5% of GDP.

While the OECD predicts a gradual recovery in 2021 and 2022, it warned that Costa Rica must rush structural reforms to address its growing public debt.

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