Panama has been one of the fastest-growing economies in Latin America, yet poverty and inequality remain stubbornly high. A new World Bank report, “Panama: From Growth to Prosperity,” reveals a key problem: the country’s job market isn’t delivering enough quality employment.
The report warns that unless Panama strengthens human capital, through better education, training, and formal job opportunities, inequality will persist. The country ranks poorly on the Human Capital Index, signaling that today’s youth may achieve only half of their potential labor productivity in the future.
Education and Job Market Mismatch
While Panama has improved access to education, many young people still lack the skills employers need. Only 20% of young adult’s complete higher education and even those who do struggle to find jobs that match their qualifications. This creates a disconnect between the labor market and the workforce, worsening job quality and income gaps.
Low-skilled workers earn 74% less than their university-educated peers. Indigenous populations face even harsher inequalities, earning 36% less than non-Indigenous workers.
The Urgent Need for Better Jobs
Technology-driven jobs are growing, but these opportunities mainly benefit wealthier, highly educated workers. Meanwhile, informal, low-paying jobs remain the norm for low-income families. Despite labor income rising by 2.2% annually from 2001-2023, the quality of jobs has declined, hitting the poorest 40% hardest.
In 2023, Panama’s poverty rate stood at 21.7%, with extreme poverty at 9.6%. Without serious labor market reforms, these numbers may not improve.
What Needs to Change?
Experts suggest Panama must focus on three key areas:
- Close regional and ethnic disparities by improving infrastructure and access to services.
- Invest in human capital through stronger education and training programs.
- Enhance social protection policies to build resilience in vulnerable communities.
Panama’s economic growth is impressive, but it won’t reduce poverty unless job quality improves. Strengthening human capital isn’t just a social issue, it’s an economic necessity.
What do you think? Should Panama prioritize job quality over economic expansion? Let us know your thoughts!
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