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Amid Inflation, Costa Rica Workers Face Longer Workdays and Cuts to Overtime

On May 1, nearly 10 thousand people rallied in San José, Costa Rica to commemorate International Worker’s Day, marking a significant resurgence in labor’s presence in the streets after a five-year lull. Spanning several blocks of the commercial center, the march was adorned with the bright-colored flags and banners of trade unions, each marching in separate clusters. The magnitude of the protest, arguably the largest since the historic 2018 general strike, broke a stifled silence, expressing renewed outcry from the working class.

Despite the show of solidarity, the country’s labor movement appears to be weaker than ever. Years of unrelenting neoliberal policies have taken a toll, targeting public institutions and their employees, criminalizing strikes, and vilifying labor organizations. Funding cuts and privatization policies that began in 2000 with attempts to privatize the National Institute of Electricity (ICE) took a new, intensified form beginning in 2018 under the administration of President Carlos Alvarado Quesada, undermining public institutions and raising taxes on the working class. In 2020, the enactment of the anti-strike law in response to the 2018 general strike triggered by these reforms unleashed an onslaught of legal persecution, intimidation, and defamation against worker organizations, leaving them demoralized and fragmented. In the private sector, union density has plummeted to less than 2 percent, one of the lowest rates in all of Latin America.

Against this challenging backdrop, the ominous wave of neoliberal reforms has now reached private sector workers. Lawmakers are currently considering a controversial motion spearheaded by the business sector to reform the country’s labor code. If approved, the bill, officially titled Expediente 21.182 but commonly known as the “4×3 law,” would introduce three new workweek modalities: the accumulative workweek, the extended exceptional workday or “4×3” workweek, and the annualized exceptional workday. All three modalities would reduce overtime pay and eliminate the right to an 8-hour workday—a cornerstone of Costa Rica’s century-old labor code. The proposal aggravates existing grievances among private sector workers, fueling a sense of urgency that drove the significant turnout on May 1.

A Law with Impacts on the Working Class

Currently, Costa Rica’s workday limits are defined by mutually inclusive daily and weekly thresholds. If either limit is exceeded, workers are entitled to overtime pay, calculated at 150 percent of their regular salary. According to Ariane Grau Crespo, a sociologist and labor rights activist who has advocated against labor flexibility policies for over 20 years, the bill aims to “cheapen the payment of the labor force…by not paying overtime.” The accumulative workweek modality would extend the regular daily threshold to 10 hours for day shifts, nine hours and 36 minutes for mixed shifts, and seven hours and 12 minutes for nighttime shifts, calculating overtime only on a weekly basis.

The 4×3 workweek rule, for its part, would establish a new workweek structure, wherein employees work 12-hour shifts for four days, followed by three consecutive days off. The first 48 hours would not qualify for overtime compensation, and the accumulation of overtime would only be eligible during the off periods. The 4×3 workweek primarily targets industries that require continuous, 24-hour labor, specifically those related to technical manufacturing and the corporate service sector.

Proponents of the law argue that the three-day off period will increase people’s ability to attend to familial responsibilities. But critics say the change will disproportionately impact women as primary caretakers, exacerbating gender inequality and labor market segmentation. As labor lawyer and former Deputy Minister of Labor Ricardo Marín Azofeifa points out, the 4×3 workday would potentially limit worker’s access to what he calls “vital” family time. Scheduling isn’t just about work and rest, he says, “but the fulfillment and leisure that a worker needs.”

The third modality, known as the exceptional annualized workday, would operate on a four-month calendar, allowing employers to modify work hours according to productivity needs. This modality would primarily apply to sectors with fluctuating labor demand, such as tourism and agriculture. In periods of high or low labor demand, workers could work up to 10 hours per day or as few as six. Under this provision, hourly remuneration would remain constant across all periods, while the monthly income would vary based on the number of hours worked. Overtime compensation would not be regulated by the current 8-hour limit. According to the most recent proposal, employers would be required to provide a 15-day notice for any scheduling changes that could potentially result in a reduction of an individual’s work hours by up to 40 percent.

According to Grau, the provision allowing employers to make last-minute reductions in working hours through the exceptional annualized workday could have perverse impacts on workers’ ability to sustain themselves, particularly in a country with some of the highest consumer debt burdensprices, and accumulated inflation rates in Latin America. “The employer has a time bank to pull from, but the worker doesn’t have a savings bank,” she argues. “They don’t have money saved up for when work hours are reduced to cover their needs.”

Despite being presented as an exceptional and voluntary measure that will affect only a small portion of the labor force, the reform has faced criticism from labor leaders, who argue that the wording of the bill would allow it to cover almost all sectors of the economy. Union leaders Obeth Morales Barquero and Lenin Hernández Navas, secretary generals of the National Union of Agribusiness and Related Workers (SINATRAA) and the Nursing Union (SINAE), respectively, raised concerns about the potential application of the law to the agricultural sector, particularly in jobs paid by piece rate. They argue that such an application could worsen already unsafe labor conditions, augmenting what they describe as “modern slavery.”

Many also raise concerns about the prominent role played by the Ministry of Labor and Social Security in implementing and regulating the reform. According to expert sources, Costa Rica’s Ministry of Labor is one of the most outdated in Latin America, lacks legal authority, and has a limited workforce consisting of a mere 88 employees nationwide. Under the proposed legislation, these deficiencies raise doubts about the ministry’s ability to effectively control and enforce the regulations.

Labor Flexibility as a Tool of Neoliberal Accumulation

In the broader political economic context, the law in question is not an isolated case but rather part of a prevailing trend. The business sector, particularly enterprises operating in the country’s free trade zones, has been advocating for this law for over 20 years. Like several other new laws enacted in recent years, such as The Public Employment Framework Law and the Law for the Strengthening of Public Finances, the bill would perpetuate an unjust imbalance: as foreign companies accumulate unregulated capital, the working class bears the burden of financial losses.

The push for increased flexibility in workday regulations in Costa Rica can be traced back to the 1990s, when the government introduced the Free Zone Regime Law and the California-based tech giant Intel entered the country. Upon entering Costa Rica in 1998, Intel played a pioneering role in the implementation of the 4×3 workday by lobbying to obtain special authorization from the Ministry of Labor to use the alternate scheduling system in newly established factories dedicated to the assembly and testing of microprocessors. This, in turn, set the stage for the expansion of 4×3 to other productive sectors in the country.

Since those early years, Intel has played a significant role in shaping Costa Rica’s economic model, guiding it in its transition from import substitution industrialization to an economy increasingly focused on free trade, export promotion, and foreign direct investment. Through collaborations with the Ministry of Education and public universities, Intel tailored the country’s human capital to align with its production needs, assisting in the development of a bilingual, high-skilled workforce that enabled Costa Rica to compete for foreign investment in the Central American region despite having higher wage costs. Since then, service and technology companies have become crucial employers and exporters in the country, predominantly operating within Free Trade Zones.

These Free Trade Zone companies, represented by various business chambers, have repeatedly pushed for the passage of the reform, often in times of economic crisis. While previous attempts, spanning from 2002 to 2014, failed due to robust working-class opposition, the current law is being pushed through in a palpably different national context.

In recent decades, neoliberal policies such as the anti-strike law and the Public Employment Framework Law have not only curtailed labor rights and obstructed worker mobilization, but also profoundly impacted public discourse. The process of insertion into the global economy has come with an onslaught of ideological rhetoric that has gradually molded a collective public perception of Costa Rica as a conflict-free and exceptional country in the region—an image in turn linked to development and economic progress.

According to Grau, similar tools have been used to gain public approval of the 4×3 law. “The attacks on trade unions, the anti-strike law that practically prohibits organization, and the defeat of the 2018 strike against the fiscal plan all contribute to a favorable environment for anti-labor rights sectors to advance,” she says. “And I believe that is what explains why there has been so much progress with a proposal like this at this time, even in terms of public opinion.”

The proposed law, and the arguments used to drive it forward, adhere to familiar neoliberal logic: greater labor flexibility will further remove obstacles to capital, but always at the cost of increasing the precarity faced by the labor force.

The proposed law is currently in its final plenary sessions in the Legislative Assembly. Once the plenary sessions are concluded, it will be left up to a legislative vote and move onto the second debate.

Labor leaders emphasize that nationwide mobilizations are the only viable means to halt the bill’s progress. However, they are acutely aware of the challenging circumstances that hinder the feasibility of such mobilizations in the current context. Specifically, they point to the bill’s targeting of private-sector employees, who have witnessed a decline in numbers and organizational strength in recent years.

Despite these obstacles, there is a growing sense of a shared objective among fragmented organizations as they forge an increasingly unified front against these neoliberal policies. “This reality was evident on May 1,” Hernández says, “when not only workers but also other groups took to the streets to defend social guarantees in our country.”

Source : Nacla