Minimum wage: What do workers demand and how do they support it?

Every two years there is a debate about what the minimum wage should be so that Panamanians can meet their basic and security needs in the face of rising food and service costs in recent years.

A $1,000 minimum wage is irresponsible and populist, the business sector said, while labor unions demanded pA comprehensive proposal aimed at reducing inequalities, promote sustainable development and recover the purchasing power of the population workers and their families, the document states supported by National Confederation of Independent Trade Union Units (Conusi) and National Council of Organized Workers (Conato).

Disagreements about this increase between employers and workers were shown this Thursday when the last meeting of the Association was held National Minimum Wage Commission 2023 invited by Ministry of Labor and Labor Development (Mitradel) get to know the conclusions and proposals of the sector of workers and employers, He concluded without agreement, leaving the decision to Mithradel.

Both Mitradel and the business sector asked to consider the negative impact that days of protests and road closures have had on various economic sectors in the country over the past two years, combined with the impact of the pandemic that defined the last wage adjustment.

But what does he propose in the labor sector?
One of the keys proposed by the labor sector is the elimination of region 2, dsince in his opinion there is no economic indicator studied by the National Commission that has shown evidence of the difference in cost of living between region 1 and region 2.

For the labor sector the adjustment to the minimum wage must not be below 32.60% for minimum wages of Large companies and 20.3% for small companies, taking into account that for a An average family of 4 can cover the normal needs of their home more than $1,504.09 in monthly income.

In that sense, the trade union sector has questioned the mechanism used in the minimum wage regulations to define company size, based solely on the number of workers, not on on your gross annual income, as classified in Small micromanagement and medium-sized enterprises (AMPyME).

In the proposal of the labor unions, it is stated that when defining the minimum wage, the minimum wage must be think, not only about the price of food, but about all the goods and services they consume homes such as basic services of electricity, water, fuel, internet, housing, health, transportation, education, clothing and recreation.

He Total household expenses, based on MEF basket with basic foodusing Engel coefficient of 23% (Food, drink and consumption in restaurants), is B/.1,530.22. In order for the two (2) wage earners in the household to cover this total cost, requests a 32.60% increase to the 2021 executive adjusted minimum wage of $577.01 average, support Conusi and Conato.

Meanwhile he Total household expensesr, with regard to Healthy basket (AFR) of MINSA, using Engel coefficient of 23%; is $1,861.19. So that two (2) employees a household can cover this total cost, an increase in the minimum wage of 61.28% is required. average of$577.01, the document states.

Low power purchase and the urgent evaluation of the minimum wage was supported by the economic researcher Reyes Valverde in his study: “In Search of a Fair Minimum Wage: Cost of Living and Purchasing Power”.

The economist refers to the low purchasing power that a large part of the Panamanian population has due to the economic activities in which they participate.

The incomes of the working population are increasingly affected by the loss of purchasing power due to the influence of the general increase in prices, point out Conusi and Conato.

“Population the wage earner is losing more and more purchasing power, the loss is estimated to have increased from $17.45 per month in 2016 to $52.16 per month from October 2023, or salary the nominal minimum of $584.44 reduces to a real wage of $532.27,” he states in his conclusions.

How do unions support these adjustments?
After evaluating and considering an increase in the minimum wage, the unions conclude that the Panamanian economy not only has the conditions for adjustment of the minimum wage, but requires this adjustment increase its dynamics.

Likewise, they believe that the business sector overestimates the economic effects of the partial closure during the mining conflict.

He Business sector it was held in various media, including inside National Minimum Wage Commission, that due to the economic effects caused by the protests in October and November 2023, there are no conditions for harmonizing minimum wages; However, for at least the last 20 years, that has been the discourse of the unchanging employer sector, which every year looks for a different excuse to refuse wage corrections, were questioned by the trade unions.

“Businessmen assure that in 21 days of closure November partial daily losses range between 42 and 200 million dollars in 21 days that would be $881.4 and $4,200 million; that is, greater than the losses due to the pandemic which which is clearly incomparable and oversized”, they pointed out in the conclusions before National Minimum Wage Commission.

Juan Antonio Ledezma, president of the Work Committee of the National Council of Private Entrepreneurship (CONEP), pointed out that the employer sector presented its conclusions orally, where he made an analysis of the economic situation in the country and the vision that the sector talks about the current situation and the need to preserve jobs , while trying to create more jobs to reduce informality; Its proposal and conclusions are based on concrete measures to improve competitiveness, productivity and job creation.

The regulation will be ready when the assessments, analyzes and conclusions made with the Executive are completed and when the necessary consultations with each of the technicians from the National Government are completed, Minister of Labor and Labor Development Doris Zapata.

The Minimum Wage Executive Order governing Panama provides for 53 minimum wage rates, 73 economic activities; (36 with national salary); 20 occupations (19 with national salary).

Currently the country has 81 districts and they are considered 2 regions: Region 1 consists of 40 districts and in Region 2 the rest of the districts, details Mitradel.

“As a state, we have a great responsibility in the last revision of the minimum wage as an administration, where it participated all these years in each of the tables so that we could understand that all sectors are necessary to build and dynamize the economy”Zapata concluded.

The National Minimum Wage Commission 2023 The last meeting of presentations ended on December 27, and the deliberations of the executive and technicians will depend on whether the new Minimum Wage Regulation will enter into force in the first or second half of January 2024.