Price increases forecast after whimsical and partisan wage boost

THE GOVERNMENT decision to substantially raise the minimum wage during the run up to the election, has been listed as whimsical and unsustainable by business associations.

They see the measure as triggering price increases across the board rather than bringing prosperity to Panamanian families

The president of the Panamanian Association of Business Executives , Fernando Aramburu Porras, although " An increase seems a solution, but actually translates to a vicious circle. The solution to the cost of living is rising productivity”
According to Aramburú Porras, reports La Prensa the measure " is whimsical ." "Splitring the economy into many sectors brings distortions that lend themselves to corruption and conflict between employer and employee."
José Luis Ford president of the Chamber of Commerce, Industries and Agriculture, endorses the viewpoint and says "Only by increasing productivity and improving the quality of work,will wages increase”
According to Ford , the rise "represents a social burden on businesses of 44% , leading to an increase in operating costs of these and consequently have an inflationary effect on costs of products and services offered."
The decision, issued Tuesday, December 31 by a decree of the Ministry of Labor and Workforce Development, has three main effects that change the way you handled the minimum wage in the country. It is a complicated formula with many tricks and turns, giving unequal increase to pay packets
The decree adds 19 new districts to wage Zone 1, which includes the major urban centers of the country and has higher payments to workers.
These are the districts of Taboga , San Carlos , Chepo , Guararé , Los Santos, Pedasi, Dolega, San Félix , Baru , Boqueron , Portobelo , Donoso , Santa Isabel , Santa Maria , Parita , Pesé, Atalaya, Changuinola and Chiriqui Grande.
This means that workers in these areas will experience an immediate pay raise by just a change of classification, regardless of employers these districts ability to pay.
Without an increase linked to increased productivity, employers could face the difficult decision to cut payrolls.
The decision also raises the minimum wage in Zone 2. The minimum wage system is based on a crosstab. On one side are the various general categories of employment in the country and the other, the two regions.
The salary will only be $642 for employees in different zones and does not apply to all workers in the first region.
Additionally, new employment or job categories have been created, which in the opinion of Aramburú Porras divides the economy into sectors and generates more market distortions.
Several groups have also indicated partisan political overtones to the highs. According to the deputy Luis Eduardo Quirós Panameñista, “Behind the new setting there is also a bill to hit political adversaries."
The argument is based on some of the biggest jumps in salary that affect entrepreneurs the Martinelli administration has in the past, labeled as opposition groups, like the liquor distilleries of the Varela family.
In the aviation market, the cabin crew earned a salary of $2.36 per hour or $453.12 per month. They will now see their salary increased to $3.85 per hour or $739.20 , up 63.13 %.
Supermarkets, where President Martinelli gains his capital, also saw an increase in salary, although not as substantial as in other segments.
Grocery workers earned under the old regime $2.08 per hour or $399.36 a month. Under the new framework it will be $ 2.35 per hour or $451.20, an increase of only 12.9 %, less than the average.
Porras criticized the categories assumed by the Government. "This lets the President and the Minister [Alma Cortés] play God. The more power we give the government to intervene in the economy, the more inefficient is the result."

"Unfortunately , employers and workers sectors failed to  agree at the negotiating table and the Executive set the adjustment to the minimum wage, which has services to be a partisan political decision during this electoral period," Ford said .