Panama is still in the midst of a worsening labor crisis

The economy and employment are recovering at very different speeds in Panama, amid a worsening labor crisis, he warns labor analyst, René Quevedo.

He Gross domestic product has grown above neighboring countries, however, last year Ministry of Labor and Labor Development processed 20,000 new employment contracts per month, compared to 32,000 generated at the same time in 2019, according to Chief Controller of the Republicwe are generating 10,000 new informal workers per month compared to 5,000 in 2019, warns Quevedo.

The above indicates that we are creating 36 percent fewer formal jobs and more than three times more informal jobs than in the year before the pandemic, he added.

These figures show a collapse, with the private sector losing 407,000 formal jobs as a result of the pandemic, 364,000 lost in 2020 and 43,000 workers suspended and not returning their contracts, representing around 47% of all wage jobs that existed before the pandemic, from which the country has yet to recover.

For experts, a major problem is the significant deterioration of the climate for private investment. Quevedo does not attribute this situation only to the covid-19 pandemic, he claims that since 2017, Panama has already resented the decline that resulted from the completion of some works such as Panama Canal Expansion Project.

Precarity is highly concentrated in the sectors that generate the largest number of jobs, such as trade, construction, industry, tourism, logistics and other services, which represent two-thirds of private jobs.

In the last decade, these sectors, as a block, created only informal jobs. “In fact, of the 10,000 informal jobs that the economy creates per month, 9,000 come from these six sectors,” Quevedo pointed out.’

47.6%

in percentage it was informal employment in October 2021.

48.2%

in April 2022, which means an increase of 0.6 percentage points.

These sectors are no longer attractive for private investment, which is why there is an urgent need to restore confidence that investing in Panama is profitable, in a country where mining and the energy sector have monopolized the attraction of foreign investment and capital formation in recent years. However, these are sectors that involve more capital than labor.

Panama was one of the countries that lost the most foreign investment during the pandemic and it must recover, he said.

In addition to the lack of jobs, high demand and low availability of jobs, companies are also much more selective in selecting personnel, according to the expert.

According to ManpowerGroup Employment Outlook Survey64% of Panamanian employers are having difficulty recruiting qualified staff, which is contradictory since at last year’s job fair 25,000 people competed for 2,000 jobs, with historical figures from Mitradel showing that only 36% of those vacancies were filled. , he added.

For analysts, the reality is that we are facing a complicated situation where unemployment has fallen because the number of informal and civil servants has increased, but we have a severe labor crisis that is getting worse.

Out of every 100 new jobs created by the economy, according to the reports of the Office of the Supervisor, 60 are informal, 10 are civil servants, and the remaining 24 are temporary. We live in a time of high temporality of job insecurity which is not a temporary phenomenon. “The pandemic did not create this phenomenon, it made it visible”concludes Quevedo.

For Quevedo, reversing this reality will depend on the ability of decision makers to create confidence in the country’s private investment climate. The creation of formal jobs in the country is crucial when we have a worrying situation in Disability, old age and death of the Social Insurance Fund.

“If we do not create trust, there will be no private investment, and if there is no private investment, there will be no creation of formal jobs and no collaborators. Without collaborators, CSS is doomed, whatever we do,” he said.