A Word About Unemployment in Panama (Looming Labor Shortage)
Thursday, January 20 2011 @ 03:48 PM UTC
Contributed by: Don Winner
There Is A Downside: However, back when I was studying international business in college many moons ago something similar was happening in the United States. The unemployment levels dropped down to about 4% or so and all of a sudden the fast-food places and employers with minimum wage jobs available could not fill them. There was too much work available and not enough people to fill all of the positions. The question I had at the time was "then why does the unemployment number never seem to drop below 4%." The answer is both simple and obvious - for ever 100 people out there who are within the working age group, there are at least four dudes who are outright lazy and who simply don't want to work. And now in Panama we're starting to get down to that number. Once you hit that level, a couple of things start to happen.
Higher Wages: It doesn't take long for the workers to figure out that they can make a lateral move from one company to another to secure a higher paying job. Those with skills, experience, and education become more highly sought after. Employers have to offer more money to attract qualified workers, and pay more to their existing work force to keep them on the job. So, more people will be making more money, but there is an inflationary element as businesses are forced to pass those higher costs of doing business on to their customers. But everyone has more money to spend, so the two things cancel themselves out at a macro level.
Worker Shortage: This is already happening in Panama. The next article I'm going to publish talks about how the government is practically begging people to become drivers for the new Metro Bus system. They're only paying about $585 dollars per month (if I remember right) and apparently that's not enough money to attract qualified candidates. So, there are more jobs than workers (at that rate). Answer - offer more money. This situation with the Metro Buses is just the tip of the iceberg - an early indication of what will eventually become a much bigger and much more serious problem - a labor shortage in Panama. There has always been a shortage of quality skilled labor, for example those with particular skills (bilingual for example) or trained to do specific jobs. But now the economy is expanding in all directions so even those with minimal skills and experience will still be able to get better paying jobs.
Openings For Foreigners: Last year the Panamanian government started making some moves to grow the labor force. Specifically, they started to "legalize" those foreigners who have been living in Panama and working illegally for years. The concept is simple - give those people a legal immigration status so they can go out and get legal, regular, normal, on-the-books jobs. They held several of these "immigration fairs" all around the country, and by now that pot has probably run pretty much dry. I expect that the next step will be do open the doors a crack to foreigners. They will do this in a very selective manner, and they will allow in people on short term contracts to take specific jobs - construction, for example. Then in the future if the construction market dries up, they can pull those permits and kindly ask the now-unemployed people to return to their country of origin. The foreigners will be expected to take the lowest paying and least desirable jobs - like Mexican grape pickers in Southern California. Panama needs someone to do the work, and they will have to find a way to strike a balance between allowing foreigners in to work, while keeping unemployment low, and at the same time working against inflation. It's a balancing act.
That's The Big Picture: Now, you will probably see about 100 articles over the next year or so discussing the various details of these kinds of issues. There will be a lot more about this over time, not less. Heads up. If you have good and skilled employees, hang on to them...
Copyright 2011 by Don Winner for Panama-Guide.com. Go ahead and use whatever you like as long as you credit the source. Salud.