Costa Rica's labor force has been praised by foreign managers of manufacturing operations for its flexibility and ability to quickly adapt, learn new skills, production methods and enable the companies’ high productivity standards. Costa Rica's direct labor has the shortest learning curve in the region and most foreign companies report managing their plants with local supervisors and managers.
Costa Rica has a low unemployment rate by Latin American standards (5.2% overall in 1995), but there are employment variations throughout the country. The area of greater concentration of industrial and commercial activity, known as the Central Valley (San José and main surrounding cities) has unemployment rates lower than the national average, whereas the coastal areas have a higher level of labor availability. This situation has driven the government to grant additional incentives to companies that operate under the free zone system in those areas. Subsidized training and payroll paybacks are currently available for companies that set up in the Puntarenas Free Zone.
Work week for direct labor is 48 hours, including breaks. Most labor intensive operations operate under a 6 day work week. Salaries are reviewed twice a year by an umbrella organization called the National Salaries Council, based on the inflation index (average wage increase per year has been 7% since 1992). The Council is composed of representatives from the Government, employers chambers and employee organizations.
Companies have to pay a minimum 23.5% in fringe benefits, which cover Social Security health benefits, retirement and disability pensions, workers risk insurance and the Workmen's Saving Bank. For this matter the employee is deducted 9% from his/her salary. On the other hand, the law suggests keeping a provision reserve for severance (8.33%), Christmas bonuses (8.33%), paid holidays (6 in total for 2.08%) and vacations (4.17%).
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