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Panama - Compensation & Benefit Legislation

CAPITAL

Panama

 

CLIMATE

Tropical maritime climate; hot, humid, and cloudy with a prolonged rainy season (May to January), and a short dry season (January to May).

 

LANGUAGES

Spanish (official), and English 14%.

 

LEGAL SYSTEM

Panama’s legal system is based on civil law system with judicial review of legislative acts in the Supreme Court of Justice. Panama accepts compulsory ICJ jurisdiction, with reservations.

 

CURRENCY

Panamanian Balboa (1 USD = 1.00 PAB – Fixed exchange rate).

US dollar (USD).

 

PANAMA - COST-OF-LIVING

ERI's Relocation Assessor is a recommended source for cost-of-living data.

 

PANAMA - EMBASSY/CONSULATES

U.S. Embassy at Panama City

P.O. Box 6959

Panama 5, Panama

Unit 0945, APO AA 34002

Panama City, Panama

Telephone: [507] 207-7000

Fax: [507] 227-1964

http://usembassy.state.gov/panama/

 

Embassy of the Republic of Panama at Washington D.C.

2862 McGill Terrace N.W.

Washington D.C. 20008

Telephone: (202) 483-1407

 

PANAMA - HOLIDAYS

 

PANAMA – LEAVE

Maternity Leave: 14 weeks – 100% of pay (paid by social security).

 

PANAMA - MINIMUM AGE

The Labor Code prohibits the employment of children under 14 years of age with some exceptions, and also prohibits the employment of children under age 15 if the child has not completed primary school.

 

The Labor Code provides that children between the ages of 14 and 16 may work 6-hour a day shifts that do not exceed 36 hours a week.

 

(Section 6.d. Acceptable Conditions of Work, Panama – Report of Human Rights Practices, 2001, U.S. Department of State.)

 

PANAMA - MINIMUM REMUNERATION

The Labor Code establishes minimum wage rates for specific regions and for most categories of labor. The minimum wage ranges from $0.80 per hour to $1.50 per hour, depending on the region and sector.

 

(Section 6.e. Acceptable Conditions of Work, Panama – Report of Human Rights Practices, 2001, U.S. Department of State.)

 

PANAMA - REMUNERATION

ERI's Geographic and Salary Assessors are recommended sources for international remuneration covering 189 countries.

 

PANAMA - REPORT OF HUMAN RIGHTS PRACTICES (2001, U.S. DEPARTMENT OF STATE)

Section 6 Worker Rights

 

a. The Right of Association

 

Private sector workers have the right to form and join unions of their choice, subject to the union's registration by the Government. A 1995 labor code reform package significantly increased workers' ability to establish unions. It streamlined the accreditation and registration process for unions, and established the minimum size of unions at 40 workers. If the Government does not respond to an application within 15 days, the union automatically gains recognition and is accorded all rights and privileges under the law. The package also addressed a longstanding concern of the International Labor Organization (ILO) by allowing labor leaders to keep their union positions if fired from their jobs.

 

Approximately 10 percent of the total employed labor force is organized. There are over 250 active unions, grouped under 48 federations and 7 confederations representing approximately 80,000 members in the private sector. Neither the Government nor political parties outwardly control or finance unions; however, the Government and political parties do exercise political, ideological, or financial influence over some unions. The labor sector traditionally supports the PRD.

 

In 1999 the Supreme Court ruled that an article of the Labor Code that obligated private sector strikers to submit to binding arbitration after a given period was unconstitutional. There were some strikes and protests during the year, especially in the banana and construction industries. None of the strikes led to widespread violence.

 

The 1994 Civil Service Law permits most government workers to form public employee associations and federations and establishes their right to represent members in collective bargaining with their respective agencies. It also provides a small core of civil servants with the right to strike, bargain collectively, and evade summary dismissal, except for those in areas vital to public welfare and security, such as the police and health workers. However, the law has proven insufficient to protect the country's 150,000 public workers, because only a small percentage are members of the civil service and therefore enjoy job security. While the right to strike applies to some 10,000 civil servants, it does not apply to the approximately 140,000 other government workers. Public workers are not allowed to form unions. The ILO's Committee of Experts has observed for some years that the prohibition of public servants' associations is inconsistent with the country's obligations under ILO Convention 87, but no changes have been made.

 

The law governing the autonomous Panama Canal Authority prohibits the right to strike for its 10,000 employees, but does allow unions to organize and to bargain collectively.

 

Union organizations at every level may and do affiliate with international bodies.

 

b. The Right to Organize and Bargain Collectively

 

The Labor Code provides most workers, including all private sector workers, with the right to organize and bargain collectively, and unions exercise it widely. The law protects union workers from antiunion discrimination and requires employers to reinstate workers fired for union activities. The Ministry of Labor has mechanisms to resolve complaints against antiunion employers. The Civil Service Law allows most public employees to organize and bargain collectively and grants some of them a limited right to strike; however, 130,000 public sector workers do not have the right to bargain collectively or to strike. The Labor Code establishes a conciliation board in the Ministry of Labor to resolve labor complaints and provides a procedure for arbitration.

 

Employers commonly hire temporary workers to circumvent onerous labor code requirements for permanent workers. Temporary workers are excluded from social security benefits, job security, and vacation time. Labor law requires companies to submit copies of all labor contracts for permanent workers to the Labor Ministry for review to ensure compliance and requires the Labor Ministry to conduct periodic inspections of the work force. The Labor Ministry may levy fines against companies not in compliance with the law. However, these measures have proven ineffective in practice. According to union sources, the practice of blank contracts is becoming more widespread.

 

Over the past 6 years, the Government has issued cabinet decrees restricting labor activity in export processing zones (EPZ's). Existing EPZ legislation provides for collective bargaining with "representatives of employees" but makes no specific mention of trade unions. It requires mandatory arbitration of disputes; and it allows for the participation of an unrepresentative worker delegate in the tripartite (government, labor, and industry) arbitration commission. A strike may be considered legal only after 36 workdays of conciliation are exhausted; if this requirement is not met, striking workers may be fined or fired. A 1998 ILO ruling noted that this regulation does not mention arbitration or specify procedures to resolve disputes in the courts, and that the Government should amend the EPZ labor regulations to conform with international norms; however, the Government has not made any changes in response to the ruling. Minimum wage provisions do not apply in the EPZ's.

 

c. Prohibition of Forced or Compulsory Labor

 

The Labor Code prohibits forced or compulsory labor by adults and children; however, trafficking in women for forced labor and sexual exploitation is a problem (see Section 6.f.).

 

d. Status of Child Labor Practices and Minimum Age for Employment

 

The Labor Code prohibits the employment of children under 14 years of age with some exceptions, and also prohibits the employment of children under age 15 if the child has not completed primary school. However, a Government report published in 2000 estimated that 27,000 children between the ages of 12 and 14 work. Children under age 16 legally cannot work overtime, and those under age 18 cannot work at night. Children between the ages of 12 and 15 may perform light farm or domestic work, with the authorization of the Labor Ministry, as long as it does not interfere with their schooling. The Labor Code provides that children between the ages of 14 and 16 may work 6-hour a day shifts that do not exceed 36 hours a week. The Ministry of Labor enforces these provisions in response to complaints and may order the termination of unauthorized employment. The Government acknowledges that it is unable to enforce some child labor provisions in rural areas, owing to insufficient staff.

 

The ILO Permanent Committee Against Child Labor asserts that 11 percent of all children between the ages of 10 and 17 are working or actively are seeking employment. Most of these children, both rural and urban, are believed to be working at their parent's insistence. Some of these children may be providing a substantial part of their family income.

 

Child labor violations occur most frequently in rural areas, during the harvest of sugar cane, coffee, bananas, and tomatoes. Farm owners usually pay according to the amount harvested, leading many laborers to bring their young children to the fields to help with the work. In many small rural communities, the entire able-bodied population participates in a harvest, and parents are not willing to leave their children behind unattended. Many children also are involved extensively in subsistence agriculture producing coffee and sugar; they work with their families or are employed by independent plantations.

 

The problem of child labor in agricultural areas appears to fall most heavily on indigenous families, who often are forced to migrate out of their isolated reserves in search of paid work (see Section 5). These frequent migrations not only interrupt schooling, but also leave the family vulnerable to sometimes unscrupulous contractors. The Government claims that it is unable to enforce child labor provisions in rural areas due to insufficient staff, such as in the coffee and banana plantations near the border with Costa Rica, where government resources are especially scarce. However, the lack of enforcement also can be attributed to widely held beliefs that indigenous people are accustomed to poverty and hard work. In September the Minister of Labor suggested that child labor in the sugar cane fields was a "cultural tradition among the indigenous" and that children cutting sugar cane received more food during harvest time; these comments led to a series of critical newspaper editorials. Children in banana plantations also face difficult conditions (see Section 6.e.).

 

Urban supermarkets employ an estimated 1,500 children who bag groceries for tips. Despite the requirements of the Labor Code, some of the children are as young as age 9, and many of them work late hours. Some supermarket managers claim that the children actually are not employed by their firm, despite the fact that "baggers" conform to schedules, wear uniforms, and must comply with company codes of conduct. The Government has demonstrated little interest in reducing the general problem of urban child labor, and has been unwilling to challenge the larger supermarket chains, where large numbers of children work. Urban child labor problems also include children working as street vendors or performers, washing cars, and running errands for businesses or local criminal groups.

 

The law prohibits forced or bonded labor by children, and the Government generally enforces this provision (see Section 6.c.).

 

e. Acceptable Conditions of Work

 

The Labor Code establishes minimum wage rates for specific regions and for most categories of labor. The minimum wage ranges from $0.80 per hour to $1.50 per hour, depending on the region and sector. This wage is not sufficient to provide a decent standard of living for a worker and family. Most workers formally employed in urban areas earn the minimum wage or more. However, because unemployment is relatively high at an estimated 13.3 percent, an estimated 39 percent of the population work in the large informal sector and earns far below the minimum wage. This is particularly the case in most rural areas, where unskilled laborers earn $3 to $6 per day, without benefits; the Government does not enforce labor laws in most rural areas. Despite ILO protest, public sector workers do not fall under the Labor Code and do not always receive the minimum wage.

 

The Labor Code establishes a standard workweek of 48 hours and provides for at least one 24-hour rest period weekly.

 

The Ministry of Labor is responsible for enforcing health and safety standards and generally does so. The standards are fairly broad and generally emphasize safety over long-term health hazards, according to organized labor sources. Inspectors from both the Labor Ministry and the occupational health section in the Social Security Administration conduct periodic inspections of hazardous employment sites and respond to complaints. Both agencies suffer from budget constraints and experience difficulty attracting qualified personnel and resources. Construction workers and their employers are notoriously lax about conforming to basic safety measures, usually resulting in several deaths a year. In rural areas, the most severe lack of oversight in basic safety measures occurs in the banana industry, where poisoning by chemical agents is a recurrent issue. Workers have complained of sterility and more recently of adverse skin conditions as a result of exposure to the chemicals. In several plantations, indigenous workers were not provided with shelters, sanitary or cooking facilities, or fresh water; they also did not have machetes or gloves for their work. Complaints of health problems also continued in the cement and milling industries.

 

The law protects from dismissal workers who file requests for health and safety inspections. Workers also have the right to remove themselves from situations that present an immediate health or safety hazard without jeopardizing their employment. They generally are not allowed to do so if the threat is not immediate, but may request a health and safety inspection to determine the extent and nature of the hazard.

 

f. Trafficking in Persons

 

The Penal Code prohibits trafficking in women and children; however, trafficking remains a problem. The country is primarily a transit point for aliens seeking to reach the United States, some of whom are trafficked into indentured servitude. There also were reports of women being trafficked to Israel for purposes of prostitution. The country is also a destination for women and girls trafficked from Colombia and the Dominican Republic. The Code provides for prison sentences of 2 to 4 years for the promotion or facilitation of the entry to or exit from the country of a person for the purposes of prostitution. In some circumstances, the penalty is increased to 6 years. Prosecutions are rare. The authorities held several persons in custody for trafficking; they remained in prison awaiting trial at year's end. Corruption, legal technicalities, and lack of resources contribute to the Government's inability to combat the problem fully. Traffickers frequently bribe or evade local law enforcement officials.

 

Trafficking in women for sexual purposes occurs in the country, but the extent of the practice is unknown.

 

An estimated 30,000 aliens transit the country annually, generally posing as tourists. The majority of aliens transiting Panama originate in Ecuador and Peru, but a significant and increasing number come from India and China. Their travel is facilitated by a network of alien smugglers, travel agents, hotels, and safe houses. Anecdotal evidence indicates that illegal aliens transiting through the country are subject to frequent hardship. They commonly are deprived of adequate food and shelter. Chinese aliens are particularly vulnerable to poor treatment, and ultimately those trafficked for the purpose of forced labor are coerced into working off their debt, which may be as high as $30,000, as indentured servants. The Government does not conduct educational campaigns to warn of the dangers of trafficking, and there are no programs to aid victims.

 

PANAMA - SOCIAL SECURITY

Social Security Office of International Programs:

 

http://www.ssa.gov/SSA_Home.html

 

PANAMA - STANDARD WORKWEEK

The Labor Code establishes a standard workweek of 48 hours and provides for at least one 24-hour rest period weekly.

 

(Section 6.e. Acceptable Conditions of Work, Panama – Report of Human Rights Practices, 2001, U.S. Department of State.)