Costa Rica Adopts New Methodology for Adjustments to Wage Increase

On October 31, 2016, Costa Rica’s National Wages Council (“Consejo Nacional de Salarios”) approved a proposal to change the formula and timeframe of wage increases for employees in the private sector. With the new methodology, minimum wages in the private sector will now increase only once per year, beginning on January 1, 2017.

Traditionally, the National Wages Council met every six months and decided upon minimum wage increases for the public and private sectors. With the approved changes, minimum wages in the private sector will increase once annually, while wages in the public sector will continue to increase on January and July of each year. The new methodology includes a new formula for calculating increases, based on both the increase in the cost of living and the growth of the per capita Gross Domestic Product.

Private sector employers must increase wages only for employees whose salary is at the minimum wage level. For all other employees, any salary adjustment is voluntary. However, employers who raise wages of employees that earn more than the minimum should be aware that a vested right to increases could exist.

Once the increase is published on the Official Gazette, the Ministry of Labor and Social Security will publish the list of minimum wages per occupation on its official page, here, where previous lists of minimum wages remain available. 

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.