Caribbean & Central America - September 2020

At the beginning of August, the Panamanian government led by President Laurentino Cortizo pushed through a controversial change to the country’s labour code. The government claimed the move was aimed at protecting jobs in the face of the coronavirus (Covid-19) pandemic, but critics say it undermines workers’ rights. It comes as the government (as is the case elsewhere) is more generally grappling with job losses stemming from the pandemic.

Labour Minister Doris Zapata insisted that the new legislation, which was approved by the national assembly on 31 July and sanctioned into law on 3 August, is designed to “preserve” jobs in companies affected by the pandemic. It applies to some 20,000 firms that have reported having had to suspend contracts or cut working hours, allowing them to maintain flexible working hours until the end of the year in a temporary relaxation of the labour code. The other 70,000 firms registered with the trade & business ministry that have not reported labour issues will continue to operate under the previous legislation. 

The new legislation took effect after Zapata warned that Panama could end 2020 with an unemployment rate of between 20%-25%, up from 7.1%. She also warned that the percentage of those working in the informal sector could rise from 45% to 55%, telling a virtual forum, Panama Forum 2020, last month that it was necessary to organise a “social dialogue” to deal with the challenge, with Panama’s GDP forecast to shrink by 9% in 2020.

However, trade unions led by the powerful Sindicato Único de Trabajadores de la Construcción y Similares (Suntracs) grumble that they were not consulted and suspect an underhand attempt to introduce permanent modifications to the labour code to the detriment of workers’ rights. Suntracs secretary general, Saúl Méndez, said it would “condemn the majority of the Panamanian population to hunger, poverty, and abandonment”. Among other things, the initiative allows companies to extend the suspension of contracts until 31 December (over 260,000 employment contracts have been suspended due to the pandemic) and amend rules regarding payment and working hours. Unions have staged various protests since July and on 27 August filed a claim of unconstitutionality against the changes before the supreme court.

Meanwhile the Cortizo government hopes that the phased reopening of the economy will improve the worrying jobs situation although is clear that this remains contingent on various conditions (see sidebar), given that Panama has highest number of reported Covid-19 infections in Central America. The first phase of reopening was announced on 13 May with an updated plan presented on 25 August and taking effect on 7 September. The construction industry and related activities reopened that day along with the Panama Pacific Special Economic Area, the Colón Free Trade Zone, and other free trade zones. Restaurants will be allowed to reopen with face-to-face service from 28 September - as will retail trade (in-store) and administrative and professional services yet to open. International aviation, tourism activities, and non-essential transport (recreation and tourism) will be permitted from 12 October.

• Another complaint of unionists

Unions also complain that the ‘Panama solidarity plan’ which the government put together to address the impact of the pandemic, does not go far enough. The scheme, which the government claims has benefitted over 1.4m people, provides vouchers for basic necessities, as well as food bags for informal workers, the unemployed, and those whose jobs have been affected by the pandemic. However, unions say the assistance has failed to reach all who need it; and that the US$100 monthly handout is insufficient to cover basic costs. They have called for payments to be increased, which Cortizo has ruled out.

• Conditions

The government has said that among the conditions for the economic reopening to continue, the rate of transmission of the virus (the ‘R’ rate, the average number of people each person infects) must not exceed 1. As of 25 August (when the government announced the latest framework for economic reopening), the Pan American Health Organization (PAHO) put Panama’s R rate at 0.94.