The labor law in Panama, good or bad ?

The current labor laws sound good to an employee. They work eleven months, receive pay for thirteen months. If they work for a private company they also receive a liquidation, a lump sum payment when they leave the job. That payment varies depending upon whether they left voluntarily or were terminated. They have the hammer of liquidation making it expensive for employers to terminated them. The cost of termination makes people too secure in their jobs and the quality of work suffers. Employees also have social security which pays for medical care for them, their parents and family as long as they are working. To them it sounds very good. To an employer it is not so appetizing. Employer, big or small, is burdened by monthly paperwork and contingent liabilities.
In reality this is a landline employees do not see. The real cost of wages is about 40% more than what the worker receives. Unless you are an exceptional, skilled employee it is far better for an employer to contract for 90 days and terminate an employee before obligations incur. It encourages churn, something bad for workers and for business.
The sum of the total equation is a dilemma, for Panama to move forward it needs better labor laws to encourage more investment in employees. That would drive up the price of labor, which in turn would eliminate the only thing that keeps costs lower here. Higher labor costs would reduce investment, reduce immigration and not make those families who have the real power here very happy. It is time for some labor law reform here and perhaps elsewhere too.

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