Q COSTARICA — Although Costa Rica is one of the Organization for Economic Cooperation and Development (OECD) member countries with the longest working hours, it is the third-lowest productive country in this group of nations, according to reports from the organization.
What is the reason for the country’s low productivity?
The number of hours worked in Costa Rica has actually increased over the years. According to OECD data from 2023, people in Costa Rica worked 2,073 hours per year, compared to the OECD average of 1,716 hours. And according to OECD data from 2024, Costa Rican workers now work an average of 2,171 hours per year, compared to the average of 1,742 hours. Peru ranks first with 2,252 hours, and Mexico is second with 2,207 hours per worker per year.
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In Costa Rica, the standard workday is eight hours per day, up to a maximum of 48 hours per week, a figure that is already above the world average. Working people in Costa Rica spend an average of 44.34 hours per week on their jobs and 20.5 hours on unpaid domestic work, according to data from the Central American Population Center (CCP) at the University of Costa Rica (UCR).
According to an analysis by the International Labor Organization (ILO), published in December 2024, workers worldwide work an average of 43.9 hours per week.
Colombia is the only Latin American country in the top 15 worldwide, with an average of 46.6 hours per week. In addition to Colombia, seven other Latin American countries have hours worked above the world average: Guatemala, Mexico, Honduras, El Salvador, Peru, and Costa Rica.
And what about productivity?
The most recent OECD productivity study shows that Costa Rica ranks 38th out of 40 OECD countries evaluated. It is the country with the lowest productivity after Mexico and Colombia, according to the “OECD Compendium of Productivity Indicators 2024” report.
Labor productivity is understood as the value measured at market prices for each hour of work, or the real Gross Domestic Product (GDP) per hour worked. Labor productivity in the OECD was US$67.50 per hour in 2022. In Costa Rica, GDP per hour worked was US$29.60, while in Ireland, which ranks first, it was US$162.50.
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Productivity is not only already low, but is actually declining.
According to the “Quarterly Analysis of the Economy” by the Institute for Research in Economic Sciences (IICE) of the University of Costa Rica (UCR), productivity per hour of work decreased 0.26 percentage points in the first quarter of this year.
Why?
For Carlos Montenegro, executive director of the Costa Rican Chamber of Industries (CICR), one factor that undoubtedly explains the country’s long working hours and low hourly productivity compared to most OECD countries is that around 40% of jobs in our country are in the informal sector, a sector characterized by longer hours than in the formal sector, traditional low-value-added activities, and very low wages, which, furthermore, are not covered by social security contributions.
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Another factor is the country’s low spending on innovation and development relative to GDP.
Montenegro also noted that for several years, Costa Rica has faced a dual economic growth pattern, with strong dynamism in Free Trade Zone activities, such as medical devices, the electronics industry, and specialized business services. While most formal activities under the Definitive Regime are less dynamic, meaning that productivity has increased at a much slower pace than those under the Special Regimes.
When consulted on this matter, the Costa Rican Union of Chambers and Associations of the Private Business Sector (UCCAEP) stated that micro, small, and medium-sized enterprises, which make up 97.5% of the national productive fabric, face limitations in access to technology, digitalization, financing, and human talent training, which restricts their ability to generate more value for each hour worked.
Additionally, in economies where physical and technological capital has not been sufficiently incorporated into the production process, as in the case of Costa Rica, the marginal productivity of labor tends to stagnate; this is a clear and evident symptom of underinvestment in innovation and human capital, it noted.
Finally, the Uccaep recognized that the lack of alignment between educational offerings and the needs of the productive sector affects productivity, and gaps in technical, digital, and management skills persist, limiting workers’ ability to effectively integrate into high-value-added sectors.
For Luis Carlos Olivares, an economist, lawyer specializing in public policy, and vice president of the Market and Consumer Rights Observatory (Omercon), among the factors that influence productivity per hour worked are: the technical development of jobs and workers’ ability or access to make efficient and optimal use of the technological resources available to them; workers’ technical capabilities; the gaps (educational, technological, and infrastructure) that exist between regions; and market conditions, such as those that present competition issues.
For his part, economist Luis Paulino Vargas explained that a primary factor affecting productivity is technology, as more advanced and modern technologies versus more backward or rudimentary technologies determine higher or lower productivity. A second factor is that companies with better management organizations will foster better organization of the division of labor in terms of processes and collaboration.
And a third, which he pointed out as “extremely important and decisive,” is the motivation, sense of belonging, and interest of employees, something that is only possible when employees are in a work environment that makes them feel good, appreciated, and valued. “It is possible that in the case of Costa Rica, all three of these elements fail,” Vargas stated.
“We don’t have a motivated, identified workforce because we have a corporate culture that is very prone to, let’s say, milking people for their blood, exploiting them to the limit, believing that this way they will achieve greater efficiency in a context where, furthermore, the job is very vulnerable and the person knows that at any moment, for the slightest infraction, they can be fired, so that the person also has no reason to feel identified with the company for which they work,” Vargas complained.
Translated and adapted from SemanarioUniversidad.com. Read the original article, in Spanish, here.
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