Labor Market: How Many Years Will the Recovery Take?

Due to the economic crisis it is estimated that by the end of 2020 Panama will have 400 thousand new unemployed and the unemployment rate will climb to 25%, assuming that the country generates between 45 thousand to 50 thousand jobs annually, it will take about eight years for the recovery to take place.

Thursday, December 10, 2020

The outbreak of covid-19 caused a serious economic crisis in the country, since due to the spread of the disease the authorities have decreed severe home quarantines, mobility restrictions and have limited some productive activities.

Official reports state that because of the health emergency, Panamanian economic activity reached its lowest point in May 2020, the month in which an annual fall of 31% was registered.

According to the latest official data available, in August 2019 the unemployment rate at the national level rose to 7%, but due to the drop in production, the authorities predict that the level of unemployment will climb to 25% by the end of 2020.

The increase from 7% to 25% in the level of unemployment, is equivalent to 400 thousand new unemployed in the country, according to estimates by the Ministry of Labor Development (Mitradel).

Under normal conditions the Panamanian economy generates between 45,000 and 50,000 jobs each year. If these levels of job creation are maintained, it would take 8 years for employment to return to pre-crisis levels.

Check out the "System for monitoring the markets and economic situation in the countries of Central America", developed by CentralAmericaData.

Rene Quevedo, labor consultant, told that "... within the loss of jobs, young people and women are definitely the most affected population. 51% of all jobs at risk or already lost due to the crisis belong to young people under 30."

Quevedo added that "... initially the impact of covid-19 was in seven economic sectors: commerce, industry, logistics, tourism, hotels and restaurants, services, and then construction was added, among other additions, according to data from the Comptroller General's Office."

According to forecasts by the International Monetary Fund that were released in October 2020, it is expected that the Panamanian economy will fall 6% in 2020 and grow 4% in 2021.

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