#CostaRica 🇨🇷 #BDS_Article: The Labor Market Has Changed, and Costa Rican Legislation Must Change Too

Labor law faces the ongoing challenge of adapting to economic and social changes without losing its protective essence. Modern labor legislation should no longer be viewed solely as a tool for safeguarding essential rights, but also as a driver for encouraging productivity, formal job creation, and competitiveness.

Modernizing Costa Rica’s labor legislation is not merely a legal discussion—it is a necessary condition for preparing the country for the challenges of the future of work.

Five reforms are essential to building a more modern, competitive, and inclusive labor market.

1. Mental Health and Work-Life Balance

Mental health has become one of the main challenges of the modern workplace. What for many years was perceived as a purely personal matter is now recognized as a determining factor in productivity, business sustainability, and employees’ quality of life.

Organizations such as the World Health Organization (WHO) and the International Labour Organization (ILO) have warned about the growing impact that anxiety disorders, depression, and burnout have on employment, organizational performance, and national economies. Costa Rica is no exception to this reality and currently lacks specific legislation on workplace mental health establishing clear preventive obligations, psychosocial risk management mechanisms, and guidelines aimed at promoting healthy work environments.

We must champion initiatives focused on strengthening the prevention of psychosocial risks, ensuring the right to disconnect, fostering healthy organizational environments, and facilitating the early identification and treatment of emotional health issues, recognizing mental health as a fundamental component of both business productivity and dignity at work.

2. Effective Implementation of ILO Convention No. 190 and Approval of Bill No. 20,873 on Workplace Harassment

Violence and harassment in the world of work constitute a growing phenomenon with a direct impact on employees’ health, stability, and productivity. According to the first global survey conducted by the ILO and the Lloyd’s Register Foundation (2023), approximately 743 million workers worldwide have experienced workplace violence and harassment, whether physically, psychologically, or sexually.

In Costa Rica, according to the most recent data included in the Ministry of Labor and Social Security’s 2025 Statistics Report, 276 of the 973 special cases reviewed involved workplace harassment situations.

In this context, the ratification of ILO Convention No. 190 represents an important step forward. However, a significant legislative gap remains regarding the specific regulation of workplace harassment.

It is therefore important to resume discussions regarding the eventual approval of Bill No. 20,873, introduced in 2018, seeking to establish clear mechanisms for the prevention, reporting, investigation, and penalization of psychological harassment and workplace violence.

3. The Impact of Artificial Intelligence on Work

The future has arrived sooner than expected.

Artificial intelligence is already rapidly transforming recruitment, supervision, performance evaluations, operational organization, and decision-making processes within companies, yet Costa Rica still lacks a comprehensive initiative regulating its implementation in the workplace and establishing minimum standards for both employees and employers.

The absence of regulation in areas where AI is already being implemented creates particularly sensitive gaps, especially in human resources functions. Costa Rica must move toward a modern regulatory framework that fosters innovation without compromising essential rights or legal certainty.

4. Bill No. 24,386: Amendment to Article 165 of the Labor Code to Provide Greater Flexibility Regarding Currency in Employment Contracts

Yes, exchange rate matters.

The discussion surrounding greater flexibility in the currency used for wage payments has become particularly relevant in the current economic environment, characterized by the sustained appreciation of the Costa Rican colón against the U.S. dollar.

This situation has directly affected both employees who are paid in U.S. dollars and business sectors linked to service exports, regional operations, and the digital economy, all of which face increasing business viability challenges arising from exchange-rate fluctuations.

Bill No. 24,386 offers an alternative to provide greater flexibility and legal certainty by allowing the parties, by mutual agreement, to modify the currency originally agreed upon in the employment contract when exchange-rate fluctuations negatively affect the continuity of the employment relationship.

This discussion is worth revisiting.

5. 4x3 Work Schedules in Costa Rica

More flexibility, with the same protection level.

The proposed 4x3 exceptional work schedule remains one of the most significant labor debates in the country. It is also a discussion that raises legitimate concerns and apprehensions, which must be addressed through evidence-based analysis and a long-term perspective.

This debate responds to a genuine need to modernize the labor market and adapt to increasingly competitive and global economic dynamics. However, any progress in this area must be built upon a technical and balanced approach capable of reconciling productive flexibility with the effective protection of employees’ health and rights.

It is important to revisit the approach originally proposed in Bill No. 24,290, entitled “Establishment of Exceptional Work Schedules for Specific Exceptional and Highly Qualified Circumstances,” whose purpose was to define more precisely the circumstances under which such schedules would be permitted.

A carefully tailored regulation would allow Costa Rica to move toward more modern labor arrangements without undermining the protective principles that underpin labor law.

The Balance That Will Shape the Future

Costa Rica faces a decisive opportunity to modernize its labor legislation.

The issues discussed above should not be viewed as isolated debates, but rather as part of a comprehensive agenda to tackle critical challenges like unemployment, informality, workforce participation, social inequality, and poverty, particularly among vulnerable populations.

The challenge lies in achieving an intelligent balance between protection and flexibility. The cost of inaction is the loss of employment and innovation opportunities to countries that are adapting to these new realities.

The future of work is not built by choosing between people and competitiveness; it is built by understanding that one depends upon the other, and that the compass must continue to point toward the worker at the center of every decision.

Marco Durante Calvo
Managing Partner, BDS Asesores