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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 Existing policies are outdated and no longer effective in today’s dynamic, export oriented economy which requires greater flexibility and more high skilled workers.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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Strong socio-economic performance but progress has stalled recently in Costa Rica

Costa Rica has recorded many social and economic achievements and currently enjoys levels of well-being similar to the OECD average. But recent years have seen serious strains arise in the social contract. Unemployment has increased steadily since the global crisis to well above its historical average and it is now higher than the Latin American average. Increasing inequality, little progress in tackling poverty and a high risk of economic exclusion of the low-skilled all call for policy reforms that promote a more dynamic and inclusive economy that better responds to the challenges of technological change and globalisation. Existing policies are outdated and no longer effective in today’s dynamic, export-oriented economy which requires greater flexibility and more high skilled and technically-skilled workers. Immigration, mainly of low-skilled labour from Nicaragua, has been high in the past three decades but migration policy has only recently shifted to link migration with integration and economic development.

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