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Informality takes over labor activity in Panama

By Mary Triny Zea

Of the 10,000 new informal workers added monthly to the Panamanian economy, 9,000 come from commerce, construction, tourism, industry, logistics, and other service activities, said consultant and economist René Quevedo.

“These sectors are no longer attractive for private investment”, he commented, pointing out that in all these sectors, small, medium, and micro formal and informal companies have significant participation as suppliers.

Today, more than 40% of the MSMEs have closed their operations, mostly affected by the pandemic, adding workers to the ranks of unemployment and informality.

tourism, Informality takes over labor activity in Panama
A Venezuelan immigrant serves soup to a customer in a Panama City restaurant (Photo internet reproduction)

“We go from generating a little more than 3,000 informal per month (3,079) in 2019 to more than 10,000 in 2022″, highlighted Quevedo.

Eduardo Gil, from Convergencia Sindical, argued that “we must be careful with statistics” because the problem is bigger “since informality is much higher”.

The data of total informal employment and by sex from 2019 to 2022 register, according to the National Institute of Statistics, the following results: 716,113 informal workers in 2019, 677,875 in 2021, and 737,922 in 2022.

However, when comparing 2022 with 2021, the result shows an increase of 60,047 new informal workers from one period to the other, an inter-annual variation of 0.7 percentage points and 3.4 percentage points in relation to 2019.

Analyzed by sex, these same data show that in 2019 there were a total of 392,025 male informal workers, and in 2022 about 430,904; that is, 38,879 new male informal workers, and as for women, in 2019, there were a total of 324,088 and in 2022 about 307,018, reflecting a decrease of 17,070 fewer women in informality, a reduction of 5.2%.

However, the document states that “it is noteworthy that 108,715 workers, equivalent to 14.7% of the total work in formal sector companies, which suggests that illegal and unfair labor contracting practices are being applied in these companies”.

The Ministry of Labor and Labor Development reported that in the first quarter of 2023, it processed 60,000 contracts at a rate of 20,000 per month, the same average as 2022, versus 33,626 per month in the first quarter of 2019.

According to the World Bank, Panama’s employment rate in 2022 reached 62.3%, and the unemployment rate fell to 9.9% but still lagged behind 2019 levels.

Before the Covid-19 pandemic, Panama’s economy grew four times the regional average, propelling it to high-income country status.

From 2014 to 2019, Panama’s GDP grew at an average rate of 4.7%, while the Latin America and Caribbean region grew at an average of 1.1%.

In 2020, GDP contracted by 18%, the most significant in the region due to the pandemic, according to the World Bank.

With information from Bloomberg

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