WB: education and employment, challenges of attracting investment

Education and the labor market are among the challenges Panama faces to increase its competitiveness and continue to attract investment, World Bank (WB) President David Malpass said during a visit to the Central American country.

“Given the global challenges,” which include upheavals caused by Russia’s invasion of Ukraine, rising interest rates and debt, among other things, “the competitiveness of Panama and its neighbors is even more important,” said the 67-year-old economist.

Malpass, who will leave the presidency of the multilateral in the middle of this year, which he assumed in 2019, spoke to EFE in the capital of Panama as part of a tour that ends this Monday in Panama and the Dominican Republic, countries that he considers “key in trade, economic activity in the Caribbean basin and logistics in the region”.

CHALLENGES
To improve the investment climate, Panama must improve education, as well as “attract a skilled workforce and allow that workforce to enter the economy. In fact, reduce the gap between the formal and informal economy,” Malpass said.

A recent report by Panama’s main employers’ association revealed that 8 out of 10 students in the country do not reach the minimum reading proficiency level; In science, 9 out of 10 young people do not solve the minimum requirements, and in mathematics, almost 100% do not pass this test.

“In other words, our students do not have the minimum foundations for their student and professional development,” said the Chamber of Commerce, Industry and Agriculture of Panama (CCIAP).

Regarding the labor market, according to official statistics, Panama has an unemployment rate of 9.9% and informality of 48.2%.

PROGRESS AND ADVANTAGES OF PANAMA
Malpass said that in terms of progress, “Panama is making significant progress in terms of a logistics hub and with the operation of the interoceanic canal,” as well as with the approval and implementation of the law that regulates public-private partnerships.

Also, he added, “progress is visible compared to the gray list” of the Task Force on International Financial Actions (GAFI), in which Panama was included in 2019.

At the last plenary meeting of the FATF, on February 24, “Panama received an upgrade in its action plan (to exit the gray list), and thus the country is making progress on long-held goals, with 13 actions out of 15 established by the agency in June 2019 “, the Panamanian government said at the time.

“Panama presents a much better security image than other countries in the region. These are all advantages (…) that will help competitiveness,” said Malpass.

In this regard, he added that it is “important” that the country continues to “progress in terms of fiscal sustainability, including pensions and pension finances”.

Panama’s pension system is going through a long-term crisis and one of its two subsystems will soon run out of funds.

Local analysts and international organizations have said that while the solution to the pension crisis includes measures that may be unpopular, such as raising the retirement age or quotas between workers and employers, continuing to avoid the issue as previous governments have done could end up as costly to the country as the loss of investment grade.