Formal talks between workers and employers started this Wednesday to define Panama’s new minimum wage. Labor Minister Jackeline Muñoz inaugurated the negotiation table with a call for responsibility from both sides. The process is scheduled to last four weeks, aiming for a consensus that balances worker needs with economic stability.
Minister Muñoz urged participants to set aside unrealistic expectations and focus on a sustainable outcome. She emphasized that the decisions made at this table affect not just those with jobs but also job seekers and the broader economy through potential ripple effects.
“We do not have expectations and we call on others not to have expectations either, but we must also be responsible with the amounts, not only for those who are employed, but also for those who are seeking employment, in addition to the cascade effects that could occur,” [Translated from Spanish] said Minister Muñoz. She described the talks as “a frank conversation of four weeks, in which the worker sector and the employer sector will listen to technical presentations and will go to the table to dialogue, to converse, and to mediate.” [Translated from Spanish]
The negotiations will involve technical presentations from both unions and business chambers before direct bargaining begins. This structured approach is designed to ground the discussions in economic data.
Labor Unions Propose a New “Family Wage” Model
A central proposal from the labor sector is the concept of a family wage. This model would expand the traditional minimum wage to cover essential living costs not currently factored in, such as housing, healthcare, and children’s education.
Aniano Pinzón, a representative from the National Council of Organized Workers (Conato), explained the rationale. He argued that these costs are already indirectly transferred to the cost of living and should be formally recognized in compensation.
“This has to be part of the agreement with the business owners, because we know that these costs are transferred to the basic basket of goods and to everything that has to do with workers,” [Translated from Spanish] Pinzón stated. “We are also raising the need to have a family wage. What does this mean? That this family wage can contain other items that are not contemplated in what is known today as the minimum wage.” [Translated from Spanish]
Pinzón recalled that two years ago, the union was demanding a minimum monthly wage of 900 dollars. He suggested that figure might now be updated, potentially by around four percent, though a final number has not been settled on internally.
Business Sector Warns of Job Loss and Informal Economy Growth
The business sector expressed significant reservations about a substantial wage hike. Representatives warned that an excessive increase could backfire, leading to higher unemployment and a larger informal economy.
Juan Arias, a representative from the Chamber of Commerce, highlighted the difficult choices companies might face. He pointed out that businesses unable to absorb a large wage increase might be forced to reduce their workforce.
“A very large increase can bring the entire cascade effect, and what worries us even more is greater unemployment,” [Translated from Spanish] Arias cautioned. “Because companies that cannot support an increase, what are they to do? What will they have to do? Remove someone from the payroll, meaning those people could become unemployed or informal, which is exactly what we have to run from, which is the reality.” [Translated from Spanish]
This concern underscores the delicate task facing the Panama Ministry of Labor as it mediates the talks. The ministry must guide the parties toward an agreement that improves living standards for workers without triggering adverse economic consequences.
A Four-Week Path to a Critical Agreement
All parties now have a four-week window to negotiate and reach a consensus. The outcome is critical for Panama’s economic health and social stability.
Minister Muñoz has invited both sectors to exercise prudence throughout the deliberations. The negotiations are being closely watched by economists and citizens alike, as the new wage floor will directly impact household finances and business operating costs across the nation.