The increase in informal jobs is worrying

The latest data from the 2023 Census, published by the National Institute of Statistics and Census (INEC), reveal a decrease in the unemployment rate in Panama, which reached 8.9%. This represents progress compared to previous periods and is equivalent to 193,200 unemployed in the country. These data also indicate an increase in the economically active population (PEA) to 2,170,786 persons and the employed population to 1,977,586 workers, surpassing the pre-pandemic levels recorded in August 2019.

However, despite this apparent improvement in unemployment figures, there have been significant concerns about the rise of informal jobs in the country. According to data available from INEC for the period from January to June 2023, about 24,000 new employment contracts were processed monthly, compared to 34,200 monthly contracts registered in 2019. In addition, the economy was observed to generate 10,008 jobs per month, as opposed to of 3,079 new informal jobs per month in 2019. This represents a worrying trend, with one-third fewer formal jobs and more than three times the number of informal jobs compared to the pre-pandemic period.

René Quevedo, a business consultant, emphasized that the pandemic did not cause this labor problem, but made it worse. He explained that in the period from August 2012 to April 2022, 59,000 paid jobs in the private sector were lost, while 62,000 public servants and almost 250,000 informal workers were added. Every formal worker who was fired from a private company was replaced by one civil servant and four informal workers in the economy.

In addition, he noted that the six sectors that represent the majority of the private workforce did not create formal jobs in the same proportion. These sectors, which include trade, construction, logistics, industry, hotels/restaurants and other service industries, have contributed significantly to the creation of informal jobs in the country.

Investment has become a key factor in solving this situation. According to the consultant, sSectors such as mining, energy and education have generated formal jobs thanks to investments, while job losses are focused on construction, tourism, trade and information and communications, which is directly related to lower levels of private investment, Queveda assured.

The economically active population increased by 147,000 people, while the labor supply decreased by 205,000 jobs. This has created a deficit of 352,000 people who are looking for decent employment and cannot find it.

In recent years, private companies have lost 407,000 formal jobs, representing 47% of the total number of existing jobs in August 2019. This resulted in a significant reduction in the share of private companies in the country’s workforce, from 48% in 2017 to 43% in 2022.

Foreign direct investment (FDI) was also a prominent topic. According to a recent report, Panama has lost its attractiveness for FDI compared to other countries in the region, such as Mexico, Brazil and Costa Rica. This raises the question of whether investing in Panama is still good business amid this employment context.