In the absence of an agreement, the Executive will determine a new minimum wage

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 says, while labor unions are calling for a comprehensive proposal aimed at reducing inequality, promoting sustainable development and restoring the purchasing power of the working population and their families.

Disagreements about this increase between employers and workers became visible this Thursday when the last meeting of the National Commission for Minimum Wages for 2023 convened by the Ministry of Labor and Labor Development (Mitradel) was held to get acquainted with the conclusions and proposal of the sector of workers and employers. ., 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.

One of the key proposals from the labor sector is the elimination of region 2, given that, in their opinion, there is no economic indicator studied by the National Commission that has shown evidence of a difference in the cost of living between region 1 and region 2.

For the labor sector, the minimum wage adjustment should not be below 32.60% for minimum wages in large companies and 20.3% in small companies, taking into account that an average family of 4 can cover the needs of your normal household requires more than $1,504.09 monthly income.

In this sense, the trade union sector has questioned the mechanism used in the Minimum Wage Regulations to define the size of enterprises, solely based on the number of workers and not with regard to their gross annual income, since they are classified into micro small and Medium by the Authority companies (AMPyME).

The proposal of the labor unions states that when defining the minimum wage, not only food costs, but also all goods and services consumed by households, such as basic services such as electricity, water, fuel, must be taken into account. , internet, housing, health, transportation, education, clothing and recreation.

Total household expenditures, based on the MEF basic food basket, using Engel’s coefficient of 23% (food, drinks and consumption in restaurants), amount to B/.1,530.22. For two (2) household employees to cover this total cost would require a 32.60% increase to the executive adjusted minimum wage in 2021 to an average of $577.01, Conusi and Conato argue.

While the total household expenditure, taking into account the healthy basket (AFR) of MINSA, using the Engel coefficient of 23%; is $1,861.19. For two (2) earners in a household, covering this total cost would require a 61.28% increase to the average minimum wage of $577.01, the document points out.

The low purchasing power and urgent assessment of the minimum wage was supported by the economic researcher Reyes Valverde in his study: “In search of a fair minimum wage: living costs 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 decline in purchasing power due to the impact of the general increase in prices, Conusi and Conato point out.

After evaluating and considering the increase of the minimum wage, the unions conclude that the Panamanian economy not only has the conditions for the adjustment of the minimum wage, but that this adjustment is necessary in order to increase its dynamism.

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

The business sector has argued in various media, including the National Minimum Wage Commission, that due to the economic damage caused by the protests in October and November 2023, there are no conditions for adjusting minimum wages; However, for at least the last 20 years, this has been the unchanging discourse of the employer sector, which every year looks for a different excuse for refusing wage corrections, trade unions question.

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 finished when the evaluations, analyzes and conclusions with the executive authority and the necessary consultations with each of the technicians from the National Government are completed, said the 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.