Labor activity rose in the last five-year period to the point of reducing unemployment to 4.2%, but there is a lot of underemployment and an underground economy.
More than 200,000 jobs were generated by Panama's existing government during its 5 years of administration, but 42 percent of those jobs are informal, the reason that the new government plans a strategy to change the situation.
The diagnostic given by the current director of micro, small and medium enterprises (Ampyme), Giselle de Calcagno, is that 96 percent of the Panamanian productive workforce is included in this informal job sector, the reason why the new government to will turn this agency into a ministry and give it the importance it requires within the Panamanian economy.
In 2008, Panama's PIB reached $20,000 million with a 9.5 percent growth, which is expected to diminish to 4 percent. Employment rose to 1.42 million people at the end of last year. Panama's newly named Vice-Minister of Economy and Finance, Frank De Lima, suggested that the new government, that will take office on July 1, will create a development trust for the micro, small and medium enterprises, in addition to the $5 million administrated now by the Ampyme, and that it will ensure that the State becomes a bank sponsor, so that these enterprises can have access to credit with low interest rates.
De Lima explained that 60 percent ($12,000 million) of the Panamanian economy is generated by the informal sector which doesn't pay tax, making it necessary to create conditions such as making the Labor Code more flexible in this segment, and allowing employees to create a retirement fund so they can be formalized.Another step is to help increase the hiring of Panamanian sailors and help merchant officers obtain postgraduate degrees since the maritime industry pays more for higher levels of education and Panama has the highest number of ships under its flag of all world merchant fleets.To promote the strengthening of tourism, agricultural, banking, insurance and technology clusters, which have strengths and competitive advantages; promoting research and development in private corporations, study centers and the State, and the study of English as a Second Language, are all part of a strategy to increase formal employment.
On the other hand, Alma Cortes, future Labor Minister, recognized that employment increased over the past five years, but a great part of this labor is within the informal sector, which doesn't allow employees a better situation, since they don't have access to the banking sector.
She announced that the incoming government of President-elect, Ricardo Martinelli, will eliminate the salary zoning at national level, so that anywhere in the country "equal work will get equal pay," a formula that can be applied, assuring that the Labor Code will not be modified and that one of her first tasks will be to listen to central trade unions. Meanwhile, economist Alexis Soto warned that if the government doesn't take action, by the end of the year the economy could register a two percent increase in the rate of unemployment, which means about 60,000 employees losing their jobs.
His recommendation was to redirect construction, telecommunications, and agricultural activities to maintain employment, for example, addressing the deficit of 150,000 houses of social interest and using the country's machinery.
Creating fiscal stimuli, even if doing this implies a sacrifice, orienting investors so that the supply and demand is balanced, will help face the crisis and help the country not to fall into deflation.He considered that tourism is well prepared to resist the crisis, since it is supported by a State political basis that has been in place for the past 15 years. De Calcagno, on the other hand, highlighted that "emprendimiento"(no esta en el diccionario) " empowerment is very important, because the support given to the micro and small entrepreneurs is a palliative to overcome the actual crisis.
Micro, small and medium entrepreneurs make up 96 percent of the private enterprise sector, almost the totality of the labor sector, amounting to more than a million working people, she stated.
Micro, small and medium entrepreneurs make up 96 percent of the private enterprise sector, almost the totality of the labor sector, amounting to more than a million working people, she stated.
To stimulate the entrepreneur's cultural development, to create better conditions for access to micro credit, to educate administrative and technical service industry businessmen, are all part of the process.De Calcagno said that the sector grew by 82 percent in the past five years, but that it is necessary to reduce informality and create normal conditions, since these businesses don't pay income tax during their first two years of operation if they don't bill more than $150,000 per year.
