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OECD Reviews of Labour Market and Social Policies: Costa Rica

image of OECD Reviews of Labour Market and Social Policies: Costa Rica

Costa Rica has recorded many social and economic achievements and currently enjoys one of the highest levels of well-being in the OECD. But progress has come to a standstill in most recent years and challenges have emerged along several social and labour market dimensions. Existing policies are outdated and no longer effective in today’s dynamic, export oriented economy which requires greater flexibility and more high skilled workers. How can Costa Rica better respond to the challenges of technological change and globalisation whilst minimising the transition costs it endures as it moves to a higher and a more sustainable path to inclusive growth? This report provides comprehensive analysis of Costa Rica’s policies and practices compared with best practice in the field of labour, social and migration from across the OECD and other countries in the Latin American region.  It contains several recommendations to tackle key challenges facing Costa Rica, including low labour utilisation, increasing inequality, high poverty and high-risk of economic exclusion especially of the low skilled and migrants.  This report will be of interest in Costa Rica as well as other countries looking to promote a more dynamic and an inclusive economy.

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Making a successful transition to a more inclusive labour market in Costa Rica

Costa Rica needs to make the most of labour market policy levers that help workers navigate a flexible labour market in a way that unlocks the potential for sustained wage and productivity growth and encourages the creation of good-quality employment. This includes: i) a stronger, well-developed collective bargaining framework; ii) greater employment security via better enforcement of minimum wages as well as a well-designed unemployment insurance system; iii) removal of existing barriers to labour force participation and access to formal jobs of under-represented groups; and iv) investment in active labour market policies and upskilling programmes. The new Labour Procedure Reform passed in 2016 is a step in the right direction and in particular can help to foster better working conditions. Nevertheless, strong efforts will be critical for their successful implementation.

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