Although the latest report on the work of the National Institute of Statistics and Population Census shows that the number of the employed population slightly exceeds the level before the pandemic (August 2019), experts and businessmen predict that with the crisis that Panama is experiencing, unemployment will increase.
As René Quevedo, an employment expert, explains, Panama is an economy where 70% of work is done in person, so any restriction on mobility creates unemployment.
“We have already seen what happened with the measures adopted to control the pandemic, which destroyed more than 400,000 formal jobs in the private sector (2020-2021), 47% of those that existed in 2019.”
Three-quarters of those jobs were workers with less than 11 years of schooling, earning less than $750 a month.
The most affected sectors, with protests and street closures, are domestic trade, logistics, hotels/restaurants, construction, industry and services, where there has been a dramatic deterioration in confidence in private investment, and consequently, they mostly create informal employment.
The percentages of informal employment in these sectors are: domestic trade (54%), construction (73%), logistics (61%), industry (64%), hotels/restaurants (62%) and other service activities (87%), levels much more than the informality of work in the economy as a whole (47.4%, August 2023).
As stated by the business sector, the current crisis costs between 90 and 100 million dollars per day, mostly affecting micro-entrepreneurs.
For reference, 2 out of every 3 retail jobs are informal or employees of companies with less than 10 employees.
According to experts, activities that represent the backbone of the domestic sector of the economy (domestic trade, construction, logistics, industry, hotels/restaurants and other service activities) are no longer attractive for private investment, and consequently generate mostly informal employment.
On the other hand, 70% of the foreign direct investment (FDI) that has entered the country since Panama has Investment Grade (2010) has gone to the Colón Free Zone, Minera Panamá and Banking Center, activities related to the sector. on the economy.
Other sectors, such as industry (5% of foreign direct investment that entered the country), logistics (7%) and tourism (2%) did not attract the interest of foreign capital in the same proportion.
Quevedo suggests that it is urgent to convey the belief that investing in Panama is good business, since without private investment we will continue to create informal workers and condemn the Social Security Fund (CSS) to death, because without contributors CSS does not exist.
INEC’s latest performance report raises several considerations. In the post-pandemic period (October 2022 to August 2023), the Panamanian economy created 194,229, and the employed population today slightly exceeds the pre-pandemic level (August 2019). However, when this period is divided into two periods, October 2021-April 2022 and May 2022-August 2023, several patterns are observed.
Among the patterns is the fact that the pace of job creation has decreased, from 17,000 new jobs per month (October 2021 – April 2022) to around 5,800 per month (May 2022 – August 2023).
The quality of employment has improved. Between October 2021 and April 2022, 42% of new jobs were formal, while between April 2022 and August 2023, that percentage rose to 66%.
However, a third less formal jobs are being created than before the pandemic. Between January and August 2023, Mitradel processed an average of 22,998 new contracts per month, 31% less than the 33,400 per month the entity processed in the same period in 2019.
Also, there was a decrease of 47,228 unemployed persons (May 2022 – August 2023), of which 57% found formal employment, and 43% entered the informal sector.
The number of informally employed increased by 27,249 workers, but the percentage of informality among the non-agricultural employed population decreased from 48.2% (April 2022) to 47.4% (August 2023).
Currently, more than 765 thousand informal workers work in the Panamanian economy.
Source: Panama America
I am Jason Root, author with 24 Instant News. I specialize in the Economy section, and have been writing for this sector for the past three years. My work focuses on the latest economic developments around the world and how these developments impact businesses and people’s lives. I also write about current trends in economics, business strategies and investments.
