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Monday, July 28 2014 @ 02:27 PM EDT

Minimum Wage Increased By 15% to 18%

Employment & JobsThe Executive yesterday approved a minimum wage increase of between 15% and 18%, according to economic activity, occupation and size of companies around the country. The monthly wage of a worker will increase to between $432 and $490 per month. Today the minimum wage is between $376 and $416. The the minimum wage will take effect on 1 January 2012, according to the Executive Decree approved yesterday in the Cabinet and published in the Official Gazette. The new layout brings into Region One - where higher wages are paid - the districts of Capira, Chame, Antón, Natá, Las Tablas, Bugaba and Boquete, which had been in Region Two. Union leader Rafael Chavarria said the increase does not meet the expectations of workers, who demanded $540 per month. Anthony Fletcher, of the Panamanian Association of Business Executives, said the increase is higher than that proposed by the business leaders, and it does not correspond with productivity. For his part, the President of the Chamber of Commerce, Industries and Agriculture of Panama Federico Humbert Arias, said the 15% adjustment would create an increase of about $300 million dollars per year in payrolls throughout the country. And this does not take into account other additional or subsequent increases that will take place within companies. "It is a 'thrust' against the micro and small enterprises, an important part of the engine of our economy," he said. (Prensa)

Editor's Comment: As expected the union leaders wanted more and the business leaders wanted to pay less. This increase basically splits the difference and more than makes up for the increases in cost of living due to inflation (at about 10%) so it also should add somewhat to the true spending power of the poorest Panamanians. This article fails to point out that the true cost of having an employee in Panama is actually about twice the stated wage, once you add in additional expenses for Social Security payments, mandatory vacation time, paid holidays, maternity leave, and the "13th month" bonuses. So, if you're a businessman out there making your plans and doing the math, start with the monthly minimum wage, double it, and multiply times 12. That's about your annual cost per employee. And of course that will be higher if you need skilled labor or anyone who can demand a higher wage, someone who is bilingual, high school or college graduate, skilled in just about anything, etc.

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