No matter what Panama is emerging as the Latin American country that will have the highest growth in 2023, with 5.1%, which is not reflected in the number of inhabitants.
This growth will occur according to the Economic Commission for Latin America and the Caribbean (ECLAC), an agency dependent on the United Nations Organization.
For employment expert René Quevedo, the dichotomy between gross domestic product growth and citizens’ perception that this growth is not reaching the people has an explanation.
He points out that after the fourth worst economic contraction in the world (2020) and the loss of 47% of formal jobs in private companies (2020-2021), the economy and employment in Panama continue to recover, but in different ways. Panama is at an urgent labor crossroads. The World Bank estimates that Panama’s economy will grow by 5.7% in 2023 and 5.8% in 2024.
He points out that growth is driven by the services sector, led by wholesale and retail trade, transportation, storage and communications. “Unfortunately, these sectors generate mostly informal employment, especially trade (54%) and transport/warehousing (61%), as a result of a loss of confidence in the climate for private investment in these activities.“.
According to him specialist, the labor crisis, it’s not about employment, it’s about trust. State wages and subsidies are today a refuge for those who cannot find work in an economy that does not create quality jobs, because confidence has been lost that investing in Panama is good business. “The pandemic did not cause the phenomenon, it made it worse“.
Between August 2012 and April 2022, 59,000 paid jobs in private companies were lost, while 62,000 civil servants and almost 250,000 informal workers were added. That is, every formal worker of a private company that lost its job in that decade, they were replaced in the economy by one civil servant and four informal workers.
In that period, the six sectors that today contribute two-thirds of the private workforce, as a block, only created informal employment. These sectors are trade, construction, logistics, industry, hotels/restaurants and other service activities, which represent 4 out of every 5 new jobs created in 2022 and 9 thousand out of 10 thousand new informal jobs included in the economy every month.
There is a direct relationship between private investment and the quality of employment. Mithradel From the processed 445,000 new employment contracts in 2017 to 240,000 in 2022, the economy lost 205,000 employment contracts, while the economically active population grew by 147,000 people. In other words, the supply of vacancies decreased (-205 thousand), and the demand increased (+147 thousand), which means that today at least 352 thousand Panamanians are looking for decent employment, but cannot find it. This phenomenon was dramatized (like last year) by long queues at the Job Fair Concert in Atlapa last week.
In that period (2017-2022), we went from generating around 1,900 informal workers per month (2017) to more than 10,000 in 2022, young people between the ages of 15 and 29. only got 1 out of every 50 jobs created by the economy and the number of “NEET” increased by 56% in that age group. HE generated formal employment where there was investment: mining, energy and education, but 90% of the workforce reduction occurred in 4 sectors: construction (50%), tourism (19%), trade (14%) and information and communications (7%), directly related reductions with lower levels of private investment.
Recently, A reduction in the unemployment rate was announced, from 9.9% in April 2022 to 8.9% in July 2023. However, the number of illegal workers will not be known until October 30, 2023, when INEC will publish the Report on the State of the Employed Population from August 2023. However, according to data from INECbetween January and June 2023. Mithradel processed 148,950 new employment contracts, compared to 202,108 that the entity processed in the same period in 2019, while we went from generating 3,079 new informal contracts per month (2019) to 10,008 in 2022.
“We create 28 less formal jobs and more than three times more informal jobs than before the pandemic, which would mean that the reduction in the unemployment rate will continue to be a consequence of the increase in informal jobs. This panorama creates insecurity among the population. In fact, the Panamanian index of consumer confidence, published by the Chamber of Commerce and The Marketing groupstated that in July 2023, 45% of respondents felt that they were unlikely to find a job in the next 12 months“.
“It is urgent to attract private, domestic and foreign investments. Without private investment, we will continue to create informal workers, condemning CSS to death and dependent on loans to finance subsidies and government wages. We are moving towards an economy of informal and civil servants, financed by borrowed money“he indicated.
For his part, economist, René bropoints out that the recovery in terms of employment is slower, because units productive, enterprises that create the most jobs are micro and small enterprises and these barely recover.
“Also for example, there are sectors that generate plenty of jobs as construction, who has not yet recovered. In fact, the sectors that grew and that explain the high growth i highly the country’s growth prospects are articulating This is due to the dynamics of logistics, international trade, and financial services, but part of employment is still lagging behind.“Shows bro.
He believes that measures must be taken to support micro and small businesses and give opportunities to new ones.
