Caribbean & Central America - May 2025

On 23 April leading teachers’ union Asociación de Profesores (Asoprof) began strike action in protest against Panama’s President José Raúl Mulino’s controversial reform of the social security system (CSS) – protests which other unions have since joined. Here we look at the approved legislation which has stoked discontent.

Upon taking office in July 2024, President Mulino made it clear that reforming the CSS would be a priority as the pension system, known as Invalidez, Vejez, y Muerte (IVM), has been running massive shortfalls which have been highlighted as a major concern by international credit ratings agencies. Strengthening the CSS without privatising it was also a key demand of protesters during the 2022 protest wave.

During the legislative process, critics such as trade unions pushed back against proposals to increase the retirement age in order to save money, and reiterated demands that the CSS remain in public administration. 

The new legislation maintains the existing retirement ages of 62 and 57 for men and women respectively, and it reaffirms that the CSS is non-privatisable. Under the approved bill, employers’ contributions will gradually rise from 4.25% to 7.25% while workers’ contributions will remain the same. It also forms new bodies such as a directorate for oversight and institutional responsibility and the insured persons’ observatory, as well as introducing transparency and compliance standards, as part of efforts to improve efficiency. 

In addition, it stipulates that actuarial reports will be commissioned periodically to assess the sustainability of the pensions system, while retaining a government commitment to contribute US$966m a year to cover the IVM’s annual deficit. The bill also aims to strengthen coordination between the CSS and the health ministry (Minsa), as well as mandating that IT systems should be updated, with accessible digital platforms to be introduced for beneficiaries as well as the incorporation of telemedicine.

Despite the fact that the law meets demands to retain the existing retirement age and public administration of the CSS, unions such as Asoprof and the powerful construction workers’ union, Sindicato Único Nacional de Trabajadores de la Construcción y Similares (Suntracs), have staged protests and engaged in strike action in the wake of it being passed. Union leaders have promised to continue their protests, while Mulino has said that there will be no changes made to the new law, saying that “a decision has been made”.

Continued anger over the CSS reform has also been worsened by outrage over recent security agreements signed with the US (see our sister publications, the Latin American Weekly Report and Latin American Security & Strategic Review for more discussion of this) as well as Mulino’s decision to authorise copper exports from the country’s largest mine, Cobre Panamá, which was shut down in 2023 following massive protests over a new contract. There is mounting speculation that Mulino is negotiating with owner First Quantum Minerals, which also announced at the end of March that it was dropping arbitration proceedings against Panama, to restart operations at the mine which represented around 5% of Panama’s GDP.