What Happened
President José Raúl Mulino defended the growth of Panama’s state payroll, saying the increase reflects the country’s expanding needs and the reopening of public services, not unnecessary hiring. He rejected accusations that his government is creating “botellas,” the local term for fictitious or useless posts.
Mulino said the payroll tied to public services must be separated from administrative staffing, pointing to investment in schools, hospitals, health centers and security as the main drivers of new hiring. He cited the opening and remodeling of more than 53 schools, the activation of 1,500 school cafeterias and the reactivation of hospitals and health centers.
The president argued that public employment will keep rising as Panama grows and as the state responds to higher demand in education, health and security. He said the government is reviewing staffing across institutions to reduce excess personnel where it is not needed.
Economists Push Back
Economists Ernesto Bazán and Carlos Araúz questioned whether the payroll increase can be justified. Bazán warned that a larger public payroll worsens the fiscal deficit and puts pressure on public finances at a time when debt already limits spending capacity.
He argued that shortages of medicines, medical appointments and hospital beds are not solved by expanding payrolls. In his view, the state should focus on discipline, efficiency and spending cuts rather than adding more workers to the government’s books.
Araúz also said the payroll growth clashes with repeated calls for austerity. He argued that without real controls, productivity studies and modernized processes, hiring more people only preserves inefficiency instead of fixing it.
The Debate Over ‘Botellas’
The discussion also revived scrutiny over the long-running problem of fictitious or unproductive posts in the public sector. Bazán recalled that both Mulino and Social Security officials have acknowledged the existence of such positions in past administrations.
He asked how many of those posts have actually been eliminated. Mulino did not give a number, but said the government is reviewing institutional payrolls to reduce the inflated staffing inherited in some areas of the public sector.
Araúz argued that the state cannot solve bureaucratic problems by hiring more workers. He said the deeper issue is a culture that depends too heavily on government employment and avoids the political cost of structural reform.
What This Means
The debate highlights a central tension in Panama’s fiscal policy: how to expand public services without allowing payroll growth to weaken the budget. Supporters of the government’s approach say more teachers, doctors and police officers are necessary to meet public demand. Critics say the state must first prove that new hiring improves service delivery and does not deepen deficit spending.
Both economists called for tighter spending discipline, stronger oversight and modernization of the state. Bazán said restoring confidence will require austerity and lower operating costs, while Araúz said the answer lies in automation, efficiency and training workers for private-sector needs.