What Happened
Panama is facing mounting pressure from high unemployment and widespread informality, a combination that is straining household budgets and weakening economic activity. Latest figures from the National Institute of Statistics and Census (INEC) place unemployment at 10.4% as of September 2025, while informal employment stands at 47.7%.
Those figures mean more than one million people are outside formal employment, leaving many households without stable wages or access to the benefits that come with salaried work. The result is reduced purchasing power for food, health care, education, housing, transportation and public services.
Why the Labor Market Matters
The warning is not only about jobs, but also about the broader effects of weak employment on the country’s social and economic stability. Formal work supports consumption, tax collection and domestic demand, while informality often leaves workers in low-paid and unstable conditions.
Panama’s labor market pressures are reflected in the drop in formal payroll income. By the end of 2024, monthly wage mass in Panama and Panama Oeste fell by $60.2 million, with reductions of $49.5 million and $10.3 million, respectively. That decline signals less money circulating through shops, services and local businesses.
Comparing September 2023 unemployment, which stood at 7.4%, with the 10.4% rate recorded in September 2025 shows a 3-point increase. In practical terms, that represents more than 66,000 formal salaries lost over the period, with a direct effect on consumption and economic momentum.
Social and Fiscal Consequences
High unemployment and informality can deepen poverty, increase vulnerability and widen inequality. When formal work shrinks, many people turn to precarious day-to-day work, limiting long-term stability for families and reducing the state’s revenue base.
The pressure is especially strong for households that depend on a single income earner. INEC data for 2024-2025 indicates that about 30% of the employed population earns less than $600 a month, a level that sits below or near the cost of living. The minimum total household spending is estimated at B/.1,579.87, a figure that often requires more than one minimum wage to cover.
That gap between income and living costs helps explain why labor conditions are becoming a central economic and social issue. Lower wages and fewer formal jobs also make it harder for families to keep up with rising food prices and other expenses.
What Comes Next
The response now falls to public policy. Restoring confidence, attracting foreign direct investment and expanding infrastructure spending are presented as key paths toward job creation. The 2026 budget includes $11 billion in investment for public infrastructure works, a program that could support employment if projects move forward effectively.
Updated labor statistics will also be important for measuring the scale of the problem and tracking whether new measures are working. For now, the data point to a labor market that is under strain and a social environment that could worsen if formal employment does not expand.
For Panama, the message is clear: without more formal jobs, the pressure on households, public finances and social stability is likely to intensify.