Periodic adjustment to the Minimum Wage in Panama
Article 66 of the Political Constitution of the Republic of Panama establishes that the minimum wage must be adjusted periodically, so that the worker can cover the normal needs of his family, improve his standard of living, according to the conditions specific to each region and each economic activity, as well as the method for setting the minimum wage by profession or trade. For its part, article 174 of the Labor Code establishes that the minimum wage must be set periodically, at least every two years, based on the recommendation of the National Minimum Wage Commission.
Things being this way, we have that recently, Executive Decree No. 1 of January 10, 2024, was promulgated in the Official Gazette, by means of which the new minimum wage rates that would govern throughout the national territory are set, as of January 16, 2024. The rates set in the aforementioned standard will be mandatory for the next two years, that is, until December 31, 2025, the date on which the National Minimum Wage Commission made up of representatives of the business sector, the worker sector and the government sector must review the current minimum wage rates, in accordance with the provisions of article 174 of the Labor Code.
Therefore, every employer must take into account that every two (2) years there will be an increase in its operating expenses, which will depend on the percentage by which the National Minimum Wage Commission determines that the minimum wage should be increased. In this order of ideas, we have that by means of Executive Decree No. 1 of January 10, 2024, the minimum wage was increased in the following percentages, namely: 4.5% small companies, 6.0% large companies and 7.0% banana companies.
To determine whether the employer is considered a small or large company, the table by economic activity and region included in Executive Decree No. 1 of January 10, 2024, must be examined. Likewise, the Ministry of Labor and Labor Development has enabled the following link to verify the minimum wage that must be paid according to the economic activity and region: https://apps.mitradel.gob.pa/SalarioMinimo/
In this order of ideas we have that, Region 1 includes the districts of Panama, Colon, San Miguelito, David, Santiago, Chitre, Aguadulce, Penonome, Bocas del Toro, La Chorrera, Arraijan, Capira, Chame, Anton, Nata, Las Tablas, Bugaba, Boquete, Taboga, San Carlos, Chepo, Guarare, Los Santos, Pedasi, Dolega, San Félix, Baru, Boqueron, Portobelo, Donoso, Santa Isabel, Santa Maria, Parita, Pese, Atalaya, Changuinola, Chiriqui Grande, Almirante, Tierras Altas, and Omar Torrijos Herrera, while in Region 2, the rest of the country’s districts are included.
Finally, domestic workers must receive a salary increase of B/.25.00 per month, so in Region 1 it will be B/.340.00 per month, while in Region 2 it will be B/.315.00 per month.
