The debate around the migratory policies in a country is always very heated. A sense of patriotism generally seeks to prevent or limit in a very restrictive manner the possibility of foreign hire. Even when it is important to protect the local workforce, to what extent such patriotism affects the economy? In a country where foreign direct investment is crucial to its economy, the immigration policies in place will either attract or scare away such foreign direct investment. 

It is very well known that multinational and transnational companies that establish in Panama would rather employ local workers than bringing expatriates. Expats result in a higher operative cost to the companies. Therefore, the issue really is if there is qualified workforce in Panama able to perform to the requirements of such multinational companies. Are we, as a country, preparing workers to compete in a very competitive globalized labor market? If not, eyes should turn to policies that address such a problem.

In any case, our immigration policy is old and outdated. Moreover, it has been amended by pieces, as if trying to correct a pipeline with band-aids on its holes. There has been a lack of interest of governments on preparing a well-thought migratory policy.

For didactic reasons, current foreign hire restrictions operate as follows:

  • 90% of the total work force of an employer in Panama must be composed by one or the combination of Panamanian citizens, foreigners married to a Panamanian citizen, and/or foreigners with more than 10 years of residence in Panama (hereinafter "Local Employees"). In other words, for every 10 Local Employees, the employer is allowed to hire 1 foreign personnel.
  • This restriction applies not only to the headcount of the employer, but also to the payroll. This is, 90% of the sum of salaries paid to the work force of an employer in Panama, have to be for Local Employees.
  • The limitations for foreign employment described above, have an exception. Companies may hire foreign technical personnel, or personnel of managerial positions, that does not exceed the 15% of total headcount and payroll of Company. Even though the law establishes that the calculation is made on the percentage mentioned, the authorities have the criteria that for every 15 Local Employees, employers are allowed to hire one technical or managerial foreign employee.
  • Finally, labor legislation establishes that the minimum wage for foreigners is of USD$850.00 per month.

With the restrictions mentioned above, the government seeks to protect and give priority to local work force. Nevertheless, there are specific regimes and visas that have been enacted through time that allow employers and employees to work in Panama not subject to the foreign hire restrictions mentioned above, depending on nationality, professional degree, and others.

To better address the concerns of local society (unions, groups, associations) and the needs of foreign companies, there should be a study of the areas were Panama lacks qualified employees. Such a study would allow justifying openness of immigration to specific areas, while allowing incumbents to prepare local workers in the areas they cannot satisfy. While we keep on improvising on the immigration policies, by adding or removing amendments due to pressure of companies or society, we will not be able to grant the certainty that foreign companies seek when investing abroad.

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