Panama responded to the social challenges posed by the COVID-19 crisis through multiple actions, including with the Plan Panamá Solidario, one of broadest and longest-lived emergency income support programmes in the region, and with dedicated programmes to support food security through domestic production. Going forward, Panama will need to advance towards a stronger, more inclusive and more responsive social protection system and to overcome the impact of a long school closure period on learning outcomes. This chapter examines how the implementation of emergency programmes during the pandemic holds valuable lessons for the future of social protection in the country. They can pave the way to expanded coverage, to improved management and to the introduction of active labour market programmes.
A Multi‑dimensional Approach to the Post-COVID‑19 World for Panama
Abstract
Benchmark data
Inequality is in the higher end of the range for OECD countries, as measured by the 80/20 income share ratio. The latest available value shows Panama (15.2%) having a level of inequality comparable to the Latin America and the Caribbean (LAC) average (12.8%), significantly above the OECD average (5.4%).
The percentage of young adults who are not in employment, education or training stands at 9.2% for men but increases to 21.4% for women. Both figures are well above the OECD average (10.8% and 11.9%), but in line with the values for OECD countries in the LAC region.
Bolivia, Panama and Paraguay were among the few LAC countries to reduce extreme poverty between 2019 and 2021. In Panama, extreme poverty fell from 6.6% in 2019 to 5.7% in 2021 but increased to 6.5% in 2022 (according to estimates by the Economic Commission for Latin America and the Caribbean [ECLAC]).
Average life satisfaction is lower in Panama than in the average LAC or OECD country. In fact, it declined from 6.79 (on a scale of 10) in 2015 to 6.18 in 2020, then to 6.0 in 2022 (the latter two being below the OECD average of 6.7).
Main findings on the impact of COVID-19
The multiple lines of transmission of the crisis, from the global recession to the severe lockdown measures, have had asymmetric impacts across the population of Panama.
The slowdown in economic activity resulted in a steep rise in unemployment levels between 2019 and 2020, reaching 18.5% in 2020. With the strong rebound in GDP in 2021, unemployment has since decreased but remains above pre-pandemic levels. It stood at 11.3% in October 2021 and 9.9% in April 2022 (according to national data).
International estimates show that extreme poverty decreased from 6.6% in 2019 to 5.7% in 2021 (Figure 2.1, Panel C). Poverty, in contrast, rose from 14.6% in 2019 to 15.6% in 2021.
Poverty levels, however, would have been almost four percentage points higher in the absence of the emergency social assistance programme, Plan Panamá Solidario (World Bank, 2022[1]). The Plan is among the social assistance programmes in LAC with the highest coverage per single programme and the longest duration.
Informality as a share of non-agricultural employment increased to 47.6% in 2021. The number of informal workers decreased, driven by a fall in the number of female workers, but less so than the total non-agricultural workforce.
Panama’s education system has suffered due to the long school closures, threatening to deepen education inequalities. For instance, students aged 15 who were attending advantaged schools were more likely to have access to an effective online learning support platform, compared with those attending disadvantaged schools.
Policy responses
A new emergency social assistance programme, Plan Panamá Solidario, was launched on 27 March 2020 to help families access basic food and medicines. Eligible beneficiaries included informal workers, formal workers whose jobs were suspended because of COVID-19 and people who lost their jobs due to the COVID-19 crisis.
To ensure continuity in access to medical services, workers whose contracts were suspended and were thus benefiting from Plan Panamá Solidario remained affiliated to Panama’s social security institution (Caja de Seguro Social [CSS]).
Some income support measures for individuals, households and firms were also introduced. These included electricity subsidies for households and small- and medium-sized enterprises (SMEs); tariff reductions for imports of medical and care products; limits for maximum gross profit margins in retail businesses for all care products in high demand; and temporary suspension of payment of some services (electricity, internet, and fixed and mobile telephone).
Food security measures were introduced, including adapting the school feeding programme Estudiar sin Hambre programme to the lockdown and launching the Plan Panama Agro Solidario.
Measures to prevent eviction of individuals affected by the COVID-19 crisis were also introduced.
Strategies for the recovery
A first lesson learned from the COVID-19 crisis is the importance of implementing stronger, more inclusive and more responsive social protection systems that are able to absorb and mitigate shocks. Existing conditional cash transfer programmes in Panama have only a modest impact on poverty reduction. They should be strengthened in terms of both targeting and coverage, with a view towards including the “missing middle” (e.g. informal workers).
A strategy to expand the coverage of social security would contribute to increased social protection coverage and to the financial sustainability of the social security system. It should focus in particular on extending the coverage of independent workers which is extremely low (3.8% of own-account workers were contributing as of 2019).
The pandemic having shed light on the importance of data for better and more rapid service delivery (particularly in the social protection sphere), the post-COVID-19 recovery agenda could now catalyse efforts towards data-sharing protocols and interoperable and up-to-date social information systems. Integrating social registers of beneficiaries with other social data would facilitate a more comprehensive and holistic social protection system.
Based on Nuevo Plan Panamá Solidario, Panama could evolve from cash transfer initiatives to active labour market policies, with programmes for vocational training and incentives for employment creation. Increasing its interoperability with pre-existing programmes will be important, as will defining the target populations and the conditionalities attached in order to provide incentives for formalisation.
An integrated pension system could enhance incentives for formal employment and mitigate the pervasive impact of informality. Solving the funding issues of the CSS is another key step to improve pension sustainability in Panama.
The COVID-19 crisis could be an opportunity to accelerate transformations in education systems, with long-lasting positive effects that help close socio-economic gaps in education quality and skills. Recognising the gaps in access to digital technologies that existed before COVID-19 is critical to inform future policies aimed at generating inclusive digital education strategies.
Source: All data for OECD countries have been extracted from the OECD COVID-19 Recovery Dashboard (OECD, 2022[2]). As for the data for Panama; Panel A is from the OECD income distribution database (OECD, 2022[3]); Panel B is from ILOSTAT (ILO, n.d.[4]); Panel C from CEPALSTAT (database) (ECLAC, 2022[5]); and Panel D is from the Gallup World Poll (Gallup, 2022[6]).
As a result of the sharp contraction of the Panama economy in 2020 (the deepest in the LAC region, excluding Venezuela), households and workers were hit hard on the health and socio-economic fronts. In fact, Panama registered one of the highest rates of contagion from COVID-19 in LAC, reflecting, in part, the country’s higher testing capacity. To arrest propagation of the virus and avoid a collapse of the healthcare system, the government took cautious measures early, aimed at restricting the movement of people and imposing social distancing measures. These included the closure of borders, businesses and schools, and the suspension of economic activities, with a move to teleworking. The multiple lines of transmission of the crisis, from the global recession to the severe lockdown measures, have had asymmetric impacts across the population, particularly affecting the most vulnerable groups. Given the high rates of informality and the lack of universal mechanisms of social protection, the government’s swift response and emergency plans to contain the simultaneous health and socio-economic emergencies have been key to mitigate some of the adverse effects of the crisis on households and workers.
To stem the impact of COVID-19, Panama manoeuvred to start its national vaccination campaign just one month after the United Kingdom – the first OECD country to start vaccination. To date, around 71% of Panamanians have a complete vaccination schedule (Table 2.1, Figure 2.2). The vaccination process allowed the rapid reopening of the economy, although social impacts are likely to be felt in years to come.
Date of first COVID-19 vaccine shot
Note: The United Kingdom was the first OECD country to launch a national COVID-19 vaccination programme.
Source: WHO (2022[7]), WHO Coronavirus (COVID-19) Dashboard, https://covid19.who.int/.
Number of people with a complete vaccination schedule, per 100 people
Note: Data were last updated on 10 October 2023. The complete schedule per 100 people indicator is calculated using the last dose of the primary schedule, which means the first dose for one-dose schedules, second dose or third dose in accordance with each country’s established schedule.
Source: PAHO/WHO (2022[8]), Covid-19 Vaccination in the Americas, https://ais.paho.org/imm/IM_DosisAdmin-Vacunacion.asp.
Panama was able to boast a comparatively low unemployment rate in pre-pandemic years, at 7.1% in 2019 according to national definitions (5.8% according to ECLAC, against a LAC average of 7.9%) (Figure 2.3, Panel A). The effects of COVID-19 on the labour market were severe, as evidenced by the steep hike (over 12.7 percentage points) between 2019 and 2020, well above the increases observed in Argentina (1.7 p.p.), Chile (3.6 p.p.), Colombia (5.2 p.p.) and Costa Rica (7.9 p.p.) (Figure 2.3, Panel A). National data show unemployment increased from 7.1% in 2019 to 18.5% in 2020 (Figure 2.3, Panel B). In line with the strong rebound in GDP in 2021, the unemployment rate has since decreased but remains slightly above the pre-pandemic levels. It stood at 11.3% in October 2021 (Figure 2.3, Panel B) and 7.4% in August 2023, equivalent to 155 625 unemployed people.
Source: ECLAC (2023[9]), CEPALSTAT for Panel A and INEC (2022[10]), Encuesta de Propósitos Múltiples and INEC (2023[11]), Encuesta de Mercado Laboral 2023 for Panel B.
Deep-seated inequalities in the labour market remain a challenge in Panama. Youth remain the most affected by unemployment, with unemployment rates over twice the mean at the national level (INEC, 2022[10]; INEC, 2023[11]). Moreover, the share of young adults not in employment, education or training (NEET) increased from 16.7% in 2019 to 18.7% in 2020 and 19.3% in 2021 before falling to 15.1% in 2023. In the latest data year (2023), it had fallen to 9.2% for men, but over twelve percentage points higher for women, at 21.4%.
Beyond the direct effect on human health of COVID-19, the job and income losses linked to the suspension of economic activities and the global recession contributed to an increase in poverty levels. On top of the increase in unemployment in Panama, the median labour market income decreased by around 20% between 2019 and 2020, thereby affecting households and workers. International estimates show that extreme poverty decreased in Panama between 2019 and 2021, from 6.6% to 5.7% (Figure 2.4, Panel A). By comparison, extreme poverty in Colombia increased over 2 percentage points (from 12.8% in 2019 to 15% in 2021) (ECLAC, 2023[9]). Total poverty in Panama rose, however, from 14.6% in 2019 to 15.6% in 2021 (Figure 2.4, Panel B). National poverty estimates present a similar picture, albeit different levels. According to official data, extreme poverty fell by 0.5 percentage points from 10.0% to 9.5% between 2019 and 2021 and has remained stable in 2022 and 2023. Total poverty increased from 21.5% in 2019 to 22.2% in 2022 before falling by 0.5% to 21.7 in 2023 (MEF, 2024[12]). Even so, the World Bank calculates that poverty levels would have been almost four percentage points higher in the absence of Panama’s emergency social assistance programme, Plan Panamá Solidario (World Bank, 2022[1]). Garcimartin et al. (2022[13]). This further confirms the important role Panamá Solidario played in reducing general and extreme poverty, more than other pre-existing social assistance programmes.
Source: ECLAC (2023[9]), CEPALSTAT.
The crisis revealed the insufficiency of Panama’s current fragmented social protection system to shield households and workers from the socio-economic shock. In August 2019, 44.9% of workers in non-agricultural employment were informal (i.e. did not have social security or a contract) (Figure 2.5, Panel A). Of these, the majority (77%) work for firms that are informal themselves. Overall, this breakdown has not changed much between pre-pandemic and current periods (Figure 2.5, Panel C). As many in the informal sector are “own-account workers” who live day-by-day and cannot work remotely, they were particularly hard-hit by the crisis. Moreover, informality as a share of non-agricultural employment increased by almost three percentage points to 47.6% in October 2021 (Figure 2.5, Panel A). This reflects that, in absolute terms, the number of informal workers decreased, but less so than the total non-agricultural workforce. Also notable is that the number of informal female workers decreased while the number of male workers remained stable during the pandemic years, before increasing again (Figure 2.5, Panel B). This explains the increase in the share of the informal male workforce from 44.5% in August 2019 to 49.3% in October 2021 (Figure 2.5, Panel A).
Informal workers in non-agricultural employment, August 2020 to August 2023
Note: The rate of informal employment is calculated as the percentage of non-agricultural workers without social security or a contract. This includes informal workers in: i) firms in the formal sector; ii) firms in the informal sector; and iii) households. Informal employment excludes self-employed managers, administrative and professional workers, as well as bosses (patronos).
Source: INEC (2021[14]; 2023[11]), Encuesta de Mercado Laboral.
The Plan Panamá Solidario, created to temporarily fill some gaps in Panama’s social protection system during the emergency, is among the LAC social assistance programmes with the greatest coverage per single programme (Figure 2.6) and with the longest duration (having been extended until November 2023). Initially, Panamá Solidario consisted of three types of support: food baskets, as well as physical (bono solidario) and digital vouchers (vale digital) to buy food and medicines. Rolling it out required substantial inter-institutional co-ordination.1 Under the so-called New Plan Panamá Solidario (Nuevo Plan Panamá Solidario), active labour market policies have been added to ongoing distribution of digital vouchers and food baskets. Coverage of the digital voucher has been relatively wide, directly benefiting 31.3% of the population (or 1.3 million direct beneficiaries) between March 2020 and June 2021. An initial monthly voucher of USD 80 was later increased to USD 120. These high coverage levels were matched only in Bolivia through transfers under Bono Universal (34.7% or 4 million direct beneficiaries) and Bono contra el hambre (33.9% or 3.9 million direct beneficiaries) and Brazil through Auxilio Emergencial, the transfer disbursed to around 30.8% of the population (or 65 million direct beneficiaries) (Cejudo et al., 2021[15]).
Overview of main income support programmes created in LAC during COVID-19
Note: Information up to March 2021. The coverage rates have been adjusted for programmes targeting households.
Source: Authors’ calculations based on Cejudo et al. (2021[15]), Inventario y caracterización de los programas de apoyo al ingreso en América Latina y el Caribe frente a COVID-19, https://publications.iadb.org/publications/spanish/document/Inventario-y-caracterizacion-de-los-programas-de-apoyo-al-ingreso-en-America-Latina-y-el-Caribe-frente-a-COVID-19.pdf.
The high number of beneficiaries in Panama can be attributed to the relatively broad definition of the target population of Panamá Solidario. The government identified beneficiaries using pre-existing information in institutional registers of the social security administration (Caja de Seguro Social), of the tax authorities (Dirección General de Ingresos of the Ministry of Finance), of the SME support authority (Autoridad de la Micro Pequeña y Mediana Empresa [AMPYME]), the Ministry of Labour, the Ministry of Commerce and Industry, and the Electoral Tribunal (Cejudo et al., 2021[15]). This last institute was instrumental as the transfer of the digital voucher was made on the identity cards of beneficiaries living in urban areas with good access to markets. Panama’s programme is among the longest by duration, as it continued uninterruptedly since March 2020. As the government has stated that the transfer programme is meant to be strictly temporary, it is crucial to define how this emergency line of help to households should evolve in the future. Indeed, the digital voucher programme was extended repeatedly (on a quarterly basis) and the last transfers were made in November 2023.
Finally, in the social sphere, the education system in Panama was seriously impacted by long school closures, threatening to deepen education inequalities. In the 2018 OECD Programme for International Student Assessment (PISA), Panama ranked 71 out of 77 countries, demonstrating alarming comprehension deficiency in mathematics, science and reading among 15-year-old students – as well as little change since the 2009 assessment. The COVID-19 school closures risk affecting vulnerable learners the hardest and could amplify inequalities in education. Panama ranks highest amongst over 30 countries in terms of the duration of school closures (Figure 2.7). Only a few were sufficiently prepared for digital learning before the pandemic, yet all transitioned to virtual learning in a matter of days. Notably, students aged 15 who were attending advantaged schools in Panama were much more likely to have access to an effective online learning support platform, compared with those attending disadvantaged schools (Figure 2.8). Moreover, not all households were equipped with the necessary technology and not all parents were prepared to support their children with their studies (OECD et al., 2020[16]).
Number of weeks of school closures due to COVID-19, March 2020 to May 2021
Note: OECD average includes the then 37 member countries. LAC average includes Brazil, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Peru, Uruguay and Venezuela. Updated until 1 March 2021.
Source: OECD et al. (2021[17]) based on UNESCO (2021), Global monitoring of school closures due to COVID-19, https://covid19.uis.unesco.org/global-monitoring-school-closures-covid19/.
Percentage of students in schools whose principals agreed or strongly agreed that an effective online learning support platform was available, PISA 2018
Note: Values in dark tones are statistically significant. Socio‑economically disadvantaged (advantaged) schools are those in which the average socio‑economic status of students is in the bottom (top) quarter of the PISA index of ESCS (economic, social and cultural status) among all schools in the country/economy. Countries/economies are ranked in descending order of the percentage of schools with an effective online learning support platform.
Source: (OECD et al., 2020[16]) based on OECD (2018), PISA 2018 Database.
Income support measures for households and workers
The social assistance programme Plan Panamá Solidario
Launched on 27 March 2020 (Executive Decree No. 400), the Panamá Solidario programme initially included the distribution of food baskets (for the rural and most isolated areas of the country), physical vouchers (for suburban areas with relatively good access to markets), and digital vouchers paid on ID cards (for urban areas with good access to markets). Both types of vouchers could be used to purchase of food and medicines. Eligible beneficiaries included informal workers, formal workers whose jobs were suspended because of COVID-19 and people who lost their jobs due to the economic consequences of the COVID-19 crisis, reflecting that Panama does not have an unemployment insurance scheme.2 The initial voucher value of USD 80 per month was increased to USD 100 in July 2020 and to USD 120 in February 2021.
In July 2021, Panamá Solidario was redesigned. Under the Nuevo Plan Panamá Solidario, beneficiaries had to complete 24 hours of monthly community social service or receive a 10-hour training at the National Institute of Vocational Training and Training for Human Development (INADEH) to continue receive the digital voucher (vale digital). This excluded workers with suspended contracts, individuals with disabilities, individuals aged >70 and pregnant women. Beneficiaries must update their status each month on the platform (www.panamasolidario.gob.pa) and select whether they wish to do community social service or receive training at INADEH.
Since January 2022, the new Plan Panamá Solidario was initially extended to June 2022, and then further extended until the last payments took place in November 2023. The new Plan Panamá Solidario was extended in December 2022, and was further extended to April, then July, September and October 2023. In December 2022, the programme was enhanced with the addition of an employment programme (Programa de Empleo Solidario) managed by the Ministry of Labour (MITRADEL), with the technical and administrative support of the Ministry of Social Development (MIDES). The government initially assigned USD 27 million to the programme and expects to benefit about 30 000 citizens (of the 463 517 active beneficiaries of Panamá Solidario as of January 2022), equivalent to distributing USD 900 per newly hired worker. The new employment programme mainly aims to lower the unemployment rate in Panama. It was supposed to start in March 2022, but was finally launched in May 2022.
The Plan Panamá Solidario started with an initial assignment of USD 50 million in March 2020 and had reached a total value of USD 1 632 million as of end January 2022.3 Over 2020-21, the digital voucher benefited around 1.3 million citizens for a total value of USD 1 557 million (and 14 471 697 disbursements).4
Other income support measures
Continuity of medical services for suspended workers. To ensure their continued medical assistance, suspended workers were able to continue to access the medical services offered by the Caja de Seguro Social (CSS) during the time of suspension (see Executive Decree 81 of March 20, 2020).
Tariff reductions and limits for maximum gross profit margin. Tariffs on imports of medical and care products were lifted in March 2020. In addition, maximum gross profit margin was fixed (at the national level) at 23% in all retail businesses for all care products in high demand. On 23 March 2021, the government extended the tariff reduction on hygiene products and medical supplies for another six months.
Electricity subsidies for households and SMEs. An Extraordinary Electricity Subsidy was introduced in April 2020, equivalent to a discount of 50% for those who consume up to 300 kWh per month and 30% to those who consume between 301 kWh and 1 000 kWh per month. It was extended multiple times and ended in January 2023. This Extraordinary Electricity Subsidy was added to the subsidy paid since 2017 to consumers of up to 300 kWh per month through the Fondo de Estabilización Tarifaria (FET). To finance this subsidy, the government transferred USD 394 million to the FET as of end 2022 (MEF, 2023[18]).
Measures to prevent eviction of individuals affected by the COVID-19 crisis. Any process of eviction of individuals whose income has been affected by the pandemic was considered illegal during the state of emergency (see Executive Decree 145 of 1 May 2020, modified by Executive Decree 314 of 7 August 2020). Rents and surcharges for late payments were frozen until two months after the lifting of the state of emergency. As of Executive Decree 411 of 31 December 2020, tenants who had resumed their activities/work would no longer be eligible for the protection.
Temporary suspension of payment for some services. Law 152 allowed the temporal suspension of the payments (without interest) of electricity, internet, and fixed and mobile telephone bills for four months starting from 1 March 2020. The measures applied to the retired, to workers with a monthly salary inferior to USD 2 000, to the unemployed, and to workers with suspended or reduced contracts, as well as own-account workers, and owners of bars, restaurants and other small businesses affected by the COVID-19 crisis. The payment of these bills was pro-rated over a period of three years.5
Food security measures
Adaptation of programme Estudiar sin Hambre. The existing school meals programme Estudiar sin Hambre was adapted during the lockdown to ensure continuity of the service provided to pre-primary and primary students in disadvantaged rural areas during school closures. Part of the Plan Colmena, the programme has two basic components: provision of nutritious and balanced meals to students; and support to national farmers by purchasing their produce for the food preparation.
Plan Panama Agro Solidario. This programme was implemented to support the agriculture sector during the COVID-19 crisis. A first component, the Programme Agro Solidario, provides low interest rate loans to farmers; a second component, the Programme Agro Vida, aims to provide productive inputs to farmers.
The COVID-19 pandemic exacerbated some pre-existing challenges in Panama and highlighted the urgency of overcoming the social vulnerability trap (OECD et al., 2019[19]). The crisis has proved that the existing mechanisms for social protection are inadequate given the high rates of informality and has demonstrated the varied levels of resilience to economic shock of different socio-economic groups.
With a view to reducing inequalities and effectively tackling poverty, in November 2020 the government launched a participatory process as part of the Bicentennial Pact “Closing Gaps” (Pacto del Bicentenario “Cerrando Brechas”). This process proposes an innovative, bottom-up approach and new solutions to tackle deep-seated disparities at national and regional levels. This initiative has led to the achievement of 187 national agreements as part of a consultation process with citizens and a further assessment and validation by regional experts. In December 2021, a High-Level Commission for the Follow-up of the Bicentennial Pact Agreements (Comisión de Alto Nivel para el Seguimiento de los Acuerdos del Pacto Bicentenario) was created to oversee implementation of the agreements.
Implementing stronger, more inclusive and more responsive social protection systems
By shining a spotlight on growing disparities, COVID-19 led to a greater emphasis on equity as an objective for national and regional development. A first lesson learned from the pandemic is the importance of making the social protection system, including both contributory and non-contributory schemes, stronger, more inclusive and more responsive in times of crisis.
The COVID-19 crisis highlighted the importance of having data that are inclusive, current and relevant for rapid and effective response to shocks. The impact of existing conditional cash transfer programmes in Panama (Red de Oportunidades, 120 a los 65, Ángel Guardián, Bono Alimentario and Pase-U) on poverty reduction is relatively modest: they reduce poverty by 3.3 percentage points (p.p.) and extreme poverty by 4.5 p.p. This is partly due to low coverage and high leakage, with the exception of Pase-U (Garcimartín, Freire and Astudillo, 2021[20]). Moreover, the registry of beneficiaries and the proxy means test (PMT) currently used to determine eligibility are outdated. This means that simply improving targeting of the transfers, using the current targeting instrument, could potentially hinder further the poverty reduction capacity of current programmes. The current PMT (designed in 2015) was adopted as the single method to identify beneficiaries across conditional cash transfer programmes in Panama. However, a high proportion of the beneficiaries that are erroneously included (“leaked”) would be ineligible according to the existing PMT – despite being classified as poor according to the measurement using the current national monetary poverty line (Garcimartín, Freire and Astudillo, 2021[20]).
The Ministry of Social Development (MIDES) is currently implementing a revised version of the proxy instrument that more closely correlates eligibility to receive transfers with monetary poverty. Accelerating its implementation is vital to support the people most in need as a consequence of the COVID‑19 crisis.
Similarly, the COVID-19 crisis has given new impetus to the digital transformation of government and highlighted the importance of data as a strategic asset for improving public service delivery. Thanks to the strong central leadership of the Agency for Government Innovation (AIG), the COVID-19 crisis has yielded additional momentum for the digital transformation of the public sector. This also triggered cross-cutting digitalisation efforts, including new digital services offered by multiple ministries, digitalisation of the Business Register of AMPYME and development of the mobile app Protégete Panama to track exposures to COVID-19 cases. Implementation of payment of the digital voucher of Panamá Solidario through ID cards has also proven the innovation capacity of AIG and its ability to move towards a service design and delivery culture driven by citizens’ needs.
The need to rapidly identify beneficiaries of Panamá Solidario also led to an unprecedented use of existing databases and the sharing of data across institutions, highlighting the importance of promoting further system interoperability. In 2019, the OECD Digital Government Review of Panama found certain aspects of the government data value cycle6 to be well administered, with strong indications from the survey of public sector institutions that the infrastructure associated with storing and managing data was a strength. A healthy culture of organisations publishing their open data either through the national open government data website (Datos Abiertos de Panamá) or through their own institutional websites was also noted. Of 49 organisations that responded to that question, 25 were publishing open datasets, with 8 doing so through the national website.
However, there was less awareness of the importance of data sharing and re-use for promoting policy making, service delivery and performance monitoring either within or outside the government. Law No. 33 of 25 April 2013, creating the National Authority for Transparency and Access to Information (ANTAI), made the provision for an information officer and associated team to exist within each public institution with responsibility for proactive transparency, open data and information requests. In reality, these roles were not often in place. Law No. 83 of 9 November 2012 set the expectation for the interoperability of databases and the sharing of data among diverse organisations. These provisions have not been strongly enforced, apart from the platforms of the National Health Electronic Management (Gestión Electrónica de Salud Nacional, GESNA), the National Agro-commercial Integrated System (Sistema Integrado Agrocomercial Nacional, SIAN) and the National Intelligent System to Monitor Alerts (Sistema Inteligente Nacional de Monitoreo de Alertas, SINMA) (OECD, 2019[21]).
With COVID‑19 having shed light on the importance of these systems for better and more rapid service delivery, particularly in the social protection sphere, the post-COVID-19 recovery agenda could catalyse further efforts towards data-sharing protocols across interoperable and up-to-date information systems (Beazley, Barca and Bergthaller, 2021[22]). For instance, since the adoption of Resolution Nº 285 of 2017, the Unique Social Protection File (Ficha Única de Protección Social) has become the main instrument for evaluating citizens’ rights to receive the conditional cash transfer programmes, verified through administrative data and local visits. These beneficiaries are then inserted in the National Register of Beneficiaries (Registro Nacional de Beneficiarios, RENAB), implemented since its approval in 2016. In Panama, however, this register covers only a small part of the population and is used only for cash transfer programmes, whereas other LAC countries (e.g. Argentina, Chile, Colombia, Costa Rica, Peru and Uruguay) have registers with much high coverage (over 70% of the population) and are used for multiple social services beyond cash transfers (e.g. subsidies and social programmes). Chile has made considerable progress towards increasing levels of interoperability by having a social information system and a social household register (register of recipients). This brings together the databases of diverse state services, social programmes and initiatives with a continuous and, in many cases, online exchange. Integrating social registers of beneficiaries with other social data would allow a more holistic vision of social protection policies and services in Panama (Berner and Van Hemelryck, 2020[23]).
The COVID-19 crisis both exposed the limitations of existing social protection systems and revealed potential policy options to address them. An important policy change that was implemented during the crisis was the shift from targeting only the poorest populations to also including the ‘missing middle’ – i.e. mainly informal workers who were often not previously receiving any social protection benefits (Bilo et al., 2021[24]), as in the case of Panamá Solidario. At the operational level, the COVID-19 crisis has promoted greater inter-institutional co-operation and exchange of data, facilitating an unprecedented use of pre-existing databases to provide additional support to existing beneficiaries and to identify new beneficiaries (Beazley, Barca and Bergthaller, 2021[22]). In Panama, the administration, co-ordination and execution of Panamá Solidario was carried out by an Inter-ministerial Commission. The Ministry of Agriculture Development (MIDA) was responsible for the purchase and distribution of food baskets; the Ministry of the Presidency, in co-ordination with the Ministry of Social Development (MIDES), was responsible for identifying the beneficiaries of physical vouchers (bono solidario); and the Authority for Government Innovation (AIG) was responsible for identifying and assigning digital vouchers (Vale Digital), in co-ordination with the Ministry of Economy and Finance (MEF) and the Electoral Tribunal.
The OECD Development Centre, in collaboration with the governments of Panama and Paraguay, organised the international workshop titled “Towards Social Protection Systems with Universal Coverage: Independent Workers” (21 November 2023). The event gathered public sector officials, private sector representatives and academics from both countries, as well as international experts (reaching nearly 100 attendees) to discuss topical issues in the social protection coverage of independent workers and draw lessons for the social protection agenda in Paraguay and Panama.
Notably, the workshop featured contributions from officials of the Ministry of Labour and Social Security and the Ministry of Economy and Finance of Paraguay, the Ministry of Economy and Finance of Panama, the Ministry of Social Development of Uruguay, and the Social Security Fund of Costa Rica. These participants shared their valuable experiences in integrating independent workers into contributory schemes of social protection. Additionally, the event was enriched by the perspectives of experts from international organisations such as the International Development Bank (IDB), the International Labour Organization (ILO), the Economic Commission for Latin America and the Caribbean (ECLAC), and the Iberoamerican Social Security Organisation (OISS).
The workshop served as a platform for policy dialogue, enabling participants to exchange insights on confronting similar challenges and to discuss the implementation of policy strategies to address these issues effectively. Key themes and ideas discussed during the workshop encompassed:
A paradigm shift in social protection to embrace evolving work forms: The world of work is undergoing profound transformations, highlighted by the rise of teleworking, digital nomadism and flexible working hours – all changes accelerated by the COVID-19 crisis. This evolution challenges the paradigms in use in social protection, necessitating a departure from traditional models to accommodate the diversity of modern employment practices. Particularly in LAC, where informal work is widespread, this shift marks a critical move towards developing more inclusive and adaptable social protection systems. By recognising and responding to the dynamics of the labour market, a new paradigm should aim to ensure comprehensive coverage and support for all workers, reflecting a significant evolution in the conceptualisation and implementation of social protection policies.
Adapted social protection mechanisms. LAC countries are called to design social protection mechanisms that are better tailored to the characteristics of their labour markets, where informal work is widespread. Design should also acknowledge that informality does not necessarily equate with poverty, recognising that many in this sector have capacity to contribute.
Challenges posed by new forms of work. The emergence of digital platform-based work brings challenges to traditional social protection mechanisms, necessitating adaptations to accommodate these modern employment models.
Transitional measures towards formal labour markets. Implementing simplified regimes for informal workers must be seen as a transitional measure that aims to progress towards incorporating independent workers into the general contributory regime of social security.
The need for social dialogue and consensus. Social dialogue is necessary to build consensus and ensure a more inclusive and comprehensive approach to social security.
Demographic challenges. Adapting social protection policies to demographic changes is crucial in this evolving landscape. The transformation of the demographic pyramid carries important implications for fiscal balance and public expenditure.
Going forward, the emergency social assistance programme Panamá Solidario could catalyse pending reforms. It could, for instance, evolve towards more targeted support and greater interoperability with other pre-existing programmes. The Social Vulnerability File (Ficha de Vulnerabilidad Social), which collects detailed information on the beneficiaries of Panamá Solidario and their households, is already being shared between the MIDES and the MITRADEL to identify beneficiaries of the programme Empleo Solidario. This represents a good step towards integrating different initiatives, beyond monetary transfers. Given the lack of unemployment insurance in Panama, introducing a vocational training programme (offered by INADEH) together with a subsidy offered to firms for hiring the beneficiaries of Panamá Solidario, represents a first step to establishing active labour market policies to incentivise employment creation, promote labour formalisation, and encourage productive development by providing upskilling and training courses. The shift from a focus on employment protection towards hiring incentives follows a global trend that has been increasing with the re-opening of the economy in 2021 and the progress in vaccination. This measure is extremely timely given the need to decrease the unemployment level in Panama to pre-pandemic levels. Empleo Solidario is currently targeting only small and medium enterprises. Given the limited fiscal space, going forward these subsidies could (as done in Australia, Chile and Uruguay) also include provisions to benefit specific disadvantaged or vulnerable groups that were particularly hit by the COVID-19 crisis, including young workers, women or persons with disabilities (ECLAC/ILO, 2021[25]).
Finally, to increase incentives for formal employment and mitigate the pervasive impact of informality, it is important to consider the design of an integrated pension system in a post-COVID‑19 recovery strategy. While pension coverage in Panama is higher than the LAC regional average of 65%, it remains far from universal. Overall, around 46.9% of the population aged 65 or more receive a contributory pension, while another 32.5% receive a non-contributory pension, leaving a coverage gap of around 20% (Figure 2.9). A first step to promoting labour formalisation could include integrating the 120 a los 65 non-contributory pension programme and the contributory pension system into a single scheme. The special cash transfer programme 120 a los 65 targets the elderly who do not have enough contributory pension savings to qualify for retirement or a contributory pension. However, this system discourages workers who regularly shift from formal to informal jobs from favouring formal jobs and savings (OECD, 2018[26]). By integrating the two systems, all contributions would be recognised towards a future pension benefit, thereby making formal employment more attractive.
Share of population aged 65+ receiving a contributory or a non-contributory pension benefit, 2018
Note: In the case of Argentina, the value reflected in the indicator corresponds to the total of contributory and non-contributory pensions as it is not possible to make this distinction from the household survey data.
Source: IDB (2022[27]), The Labor Markets and Social Security Information System (SIMS), www.iadb.org/en/sector/social-investment/sims/home.
Solving the funding issues of the Caja de Seguro Social (CSS) is another key step to improve the pension system. Following the re-negotiation of the copper-mining contract with Minera Panama, the government announced that 70% of revenue will be used to supplement the underfunded pension system. More specifically, under the new contract, the Treasury would receive a minimum of USD 375 million in annual revenue from royalties and corporate income tax and will devote 50% of this revenue (USD 187.5 million) to the Programme of Invalidity, Old Age and Death (Invalidez, Vejez y Muerte, [IVM]) of the CSS. A further 20% (USD 75 million) would be used to ensure that no recipient receives a pension of less than USD 350 per month (expecting to benefit around 110 675 people currently on low pensions). The rest of the money would be used to fund local government spending and social investments in areas near the copper mine in the province of Colón (Presidency of Panama, 2022[28]; EIU, 2022[29]). With the repeal of the concession to Minera Panamá, long-term funding of the CSS remains a major issue.
Affiliation and contribution to social security are mandatory for independent workers according to Panamanian legislation. Affiliation is mandatory since 2005, with the exclusion of workers over 35 years old in 2007 as they would not have time to accumulate sufficient contributions for a suitable pension from the defined contribution system. Contributions to the pension system are compulsory and these workers can also request voluntary affiliation to the social insurance health system.
In practice, effective coverage of independent workers is extremely low. As of 2019 (when an actuarial evaluation was carried out by the ILO), only 3.8% of own-account workers were contributing to the CSS (ILO, 2019[30]). This result from a series of normative and administrative barriers. Mandatory contributions only concern workers earning over USD 9 600 per year. As this is 25% above the average minimum wage in Panama, it excludes a large share of own-account workers from mandatory participation. Moreover, independent workers’ contributions need to cover both the employee and the employer shares of contributions (CSS, 2020[31]). In addition, voluntary affiliation to the health system requires preliminary medical check-ups, the cost of which is partly borne by the affiliate. This can significantly delay coverage, although delays have recently been reduced from up to one year to 4 to 6 months.
Panama should put in place a strategy to expand social security coverage. This is key not only to ensure universal social protection, but also as a means of increasing contributions to the CSS, thereby alleviating pressures of the pension regime. Indeed, recent good economic performance in Panama has not translated into significant increases in the rate of formality or that of social security coverage, which puts the financial sustainability of the pension system at risk (ILO, 2019[30]). An expansion strategy should appropriately address the specificities of independent workers, especially those with contributory capacity, even when their monthly earnings are below the current statutory minima for mandatory affiliation. Costa Rica offers an interesting case study of a contribution-based system that has endeavoured to incorporate independent workers in a permanent regime (Box 2.3).
The Costa Rican Social Security system (managed by Caja Costarricense de Seguro Social, CCSS) balances compulsory savings with voluntary options, ensuring broad coverage and financial protection for all citizens. It is funded through a tripartite contribution system under which employees, employers and the state contribute based on labour income. Costa Rica’s multi-tiered social security system encompasses mandatory social insurance (first pillar) for health and basic pensions, funded by workers, employers, and the state. The second pillar offers mandatory supplementary pensions, enhancing retirement benefits. The third pillar allows voluntary contributions to private retirement plans, providing additional financial security for old age. At the base, a “zero” pillar ensures a safety net for low-income individuals through a non-contributory regime, offering basic healthcare and social assistance support regardless of their contribution history.
Independent workers in Costa Rica contribute to health and pension systems based on declared income, ensuring access to comprehensive medical services and pension benefits. They must register with the CCSS, report earnings and fulfil monthly contributions. Additionally, they can opt into voluntary pension plans, enhancing their retirement security beyond mandatory social insurance provisions.
Independent workers do not pay the employer share of contributions. Instead, contributions by independent workers are complemented by a State contribution that is larger for those on lower incomes and progressively smaller for independent workers in higher incomes. While total contributions to health and pension systems amount to 24.34% for salaried workers, independent workers contribute between 6.89% (for the lowest income bracket) to 18.95% (for the highest) of their contribution base. The State assumes, correspondingly, 14.7% to 2.64% of the contribution base depending on total labour income (CCSS, n.d.[32]).
Another remarkable feature of the coverage extension in Costa Rica is the use of so-called collective registration agreements. These agreements, signed between the CCSS and independent workers organised in co-operatives and associations, were put in place in the 1970s as a way for such organisations to manage registration and contribution collection from their members (Durán-Valverde et al., 2013[33]).
In 2018, the CCSS implemented a comprehensive National Strategy for the Transition to the Formal Economy (MTSS, 2018[34]) with the aim of integrating more independent and informal workers into the formal economic sector. Developed through extensive social dialogue involving government entities, workers’ organisations, and employers’ organisations, this strategy focuses on several key areas. These include: enhancing vocational training for workers transitioning from the informal to the formal sector; increasing social security coverage for underrepresented groups’ simplifying administrative procedures to facilitate formalisation; and adjusting the tax system to accommodate the needs of informal economy companies.
In 2023, Costa Rica approved a law (Ley de Trabajador Independiente N°10.363) aiming to streamline the integration of independent workers into the formal economy and the social security system. This law introduces a definition of independent worker, establishing clear criteria for their classification, and establishes a legal framework for independent workers regarding social security contributions. Also, it sets new statutes of limitations for debts incurred by independent workers due to non-payment or underpayment of contributions, addressing both non-affiliation and underreporting of income. The law also set a four-year period for the CCSS to determine and enforce contributory obligations for these workers, with a ten-year period applicable in cases of non-registration or fraudulent declarations (Legislative Assembly of Costa Rica, 2023[35]).
Inflation, food security and the structural issues behind vulnerability in Panama
As Panama is highly reliant on imports of oil and food, price increases deriving from Russia’s invasion of Ukraine may put additional pressure on households' real incomes and savings (Gill and Nagle, 2022[36]). It is estimated that a 1% rise in inflation increases the share of low-income households by around 7% while reducing the share of high-income households by only 1% (Nuguer and Powell, 2020[37]). Consequently, inflation could also exacerbate inequality, aggravating already existing social tensions in one of the most unequal regions in the world (Jaramillo and Taliercio O’Brien, 2022[38]).
Three main channels exist through which inflation has particularly hard impacts on the poorest. First, as poor households have poor access to financial products and assets other than cash, they have less ability to protect themselves from price increases. Richer households, in contrast, hold a larger share of their wealth in financial assets, such as interest-bearing accounts that can protect their assets against inflation. Second, non-indexed salaries, as well as pensions and social benefits, tend to make up a larger share of the income of poor households. These respond more slowly to price volatility than the non-wage income of richer households (Ha, Kose and Ohnsorge, 2019[39]; Nuguer and Powell, 2020[37]). These two channels only take into account the average rate of inflation.
The composition of each household's consumption basket relative to patterns of price spikes is the third channel of transmission of inflation (Gill and Nagle, 2022[36]; Garcimartín and Astudillo, 2019[40]). Spending on food and drinks constitutes a larger portion of lower-income households’ expenditure in Panama (50.1% of the expenditure of the poorest decile vs. 20.5% for the richer decile) (Garcimartín and Astudillo, 2019[40]). Lower-income households are therefore the most vulnerable to current food price increases, which are at historic highs, as is the Food Price Index (FFPI) of the UN Food and Agriculture Organization (FAO, 2022[41]). In the case of Panama, the dollarised economy has contributed to a historically lower level of inflation than in other LAC countries (Figure 2.10) (Garcimartín and Astudillo, 2019[40]). Nonetheless, between January and April 2022, the year-to-date average of year-on-year inflation was 1.17 p.p. higher for the extremely poor than for the overall population (in comparison, the average price increase for extremely poor households in LAC was 3.6 p.p. higher than the nationally representative household) (Figure 2.10).
Year-on-year monthly variation of CPI, January-April 2022
Note: CPI = consumer price indexes. Year-to-date average of year-on-year growth of national CPI vs. growth in extreme poverty lines 2022. Extreme poverty lines are based on the cost of a basic food basket that covers basic food needs and provides the minimum caloric requirement of the members of a reference household. The Chilean extreme poverty line also includes a share of non-food basic goods and services. For Colombia and Peru, the food and non-alcoholic beverages division of their CPI was used. For Panama, the data cover only the districts of Panama and San Miguelito.
Source: OECD et al. (2023[42]) based on data from national statistic offices on CPIs and poverty lines.
While food insecurity could increase due to inflation, a series of factors that contributed to mitigating the impact of the COVID-19 crisis on undernutrition could provide useful lessons to guide future interventions. Indeed, the number of undernourished people has been decreasing continuously in Panama in the last decade and, despite the COVID-19 crisis, remained around 0.2 million between 2018/20 and 2019/21 (3-year average). The prevalence of undernourishment has also been decreasing in the past decade and increased only slightly (from 5.4% to 5.8%) between 2018/20 and 2019/21. In comparison, the prevalence of undernourishment increased from 7.1% to 7.7% in LAC (FAO, 2022[43]). Likewise, the share of people in Panama unable to afford a healthy diet increased from 18% to 18.2% between 2019 and 2020 (equivalent to 0.8 million people according to FAO estimates), while it went from 21.3% to 22.5% in LAC, and from 25.6% to 27.8% in Central America (FAO, IFAD, UNICEF, WFP, WHO, 2022[44]). These figures may be explained by increases in local production during the pandemic, but also by government efforts to tackle both food demand and supply. Total cereal production increased in Panama – with yields reaching an all-time high in 2020 – on the back of the positive trend observed in the past decade, especially since 2017 (FAO, 2022[43]). Moreover, during the pandemic, the government tackled food insecurity by focusing not only on food demand, through cash and in-kind transfers (e.g. the digital voucher, food baskets provided by Panamá Solidario and meals for disadvantaged students of the programme Estudiar sin Hambre) as in most LAC countries. It also explicitly targeted the specific needs of rural populations and focused on food supply. The Ministry of Agriculture Development (MIDA) was responsible for the purchase of food from national farmers to promote local production and its distribution through the food baskets (in co-ordination with local governments). The MIDA also managed the Plan Panama Agro Solidario, which is recognised among the few programmes in LAC having ensured food security and social and economic ‘double inclusion’ of rural communities during COVID-19 (Rolon et al., 2022[45]).7
The Plan Panamá Agro Solidario is one of the few programmes developed in LAC during COVID‑19 that was able to develop coherent and complementary social protection and agriculture policies, thereby addressing the socio-economic impact of COVID-19 on farmers. This plan comprised two programmes focused on small producers. First, the Programa Agro Solidario offered loans up to USD 100 000 at zero interest to small and medium-sized producers. The loans were administered through the Agriculture Development Bank for the periods 2020/21 and 2021/22 (BDA, n.d.[46]). Second, the Programa Agro Vida offered productive inputs to family farmers including the distribution of tools, seeds, basic grains and technical assistance (Presidency of Panama, 2020[47]). This programme stands out as a good practice for its combination of benefits to ensure small producers’ socio-economic inclusion while also articulating the programme with the Plan Colmena, Panama’s poverty reduction strategy (Rolon et al., 2022[45]). Indeed, only subsistence farmers living in the areas prioritised by the Plan Colmena are eligible for Agro Vida. These programmes also offer important lessons on the importance of institutionalised linkages between social protection and economic inclusion programmes to ensure that the needs and vulnerabilities of rural populations are addressed in a holistic manner (Burattini, 2022[48]).
In the current context of overlapping global challenges and economic deceleration, the government of Panama should also put in place reforms to tackle pre-existing structural channels through which poor households are more vulnerable to inflation. Promoting access to financial products and increasing labour formalisation would protect the value of poor households' assets and shield them through social protection systems (Ha, Kose and Ohnsorge, 2019[39]). Targeted cash transfers for the most poor and vulnerable could also represent a way to mitigate inflation that is more effective than price controls, which also benefit richer households. In the long term, an inclusive recovery agenda in Panama should put people at the centre, focus on well-being outcomes and emphasise the distribution of outcomes across the population. Among others, efforts should concentrate on i) gender and territorial imbalances and ii) the need to build better skills and formal jobs.
In Panama, in particular, the labour market can be a lever to help increase equity and find a path towards inclusive growth. Existing in-depth analyses have shown that Panama’s dual labour market has been both the cause and consequence of large inequalities. In broad terms, successful economic growth prior to the pandemic was based on a model that drove labour market inequality. The productive tradeable service sector offers formal jobs for a few skilled workers while many low-skilled Panamanians are self-employed or informally employed in small, low productive and non-tradeable service sectors or agriculture firms (OECD, 2018[26]).
Promoting better skills and more formal jobs in Panama requires an integrated package of socio-economic policies. As outlined in previous analyses conducted by the OECD, it is imperative not only to create better conditions for productive development but also to increase access to and quality of secondary and technical education. These measures should be complemented with stronger active labour market policies, with the effective participation of the private sector. The skills and formalisation strategy should generate greater incentives for employers to formalise workers, for example by partially subsidising the social contributions of low-income workers and establishing a simplified scheme to determine minimum wages.
The importance of inclusive digital education in the post-COVID-19 era
The COVID-19 crisis also shed light on the importance of internet and information and communication technologies (ICT) access and use, which present an opportunity for greater social inclusion, but only if well-managed. To ensure digitalisation does not amplify inequalities, it is key to provide not only ICT access, facilities, equipment, and content but also the foundational, cognitive, and digital skills that enable workers, students, and consumers to benefit equally. In the sphere of education, it is not enough to ensure that all students have access to ICT infrastructure. To reduce inequalities, investments must also address teacher training in adopting digital devices as part of their practice and strengthen the cognitive and digital skills that allow students to make the most of advantages offered by the digital transformation.
The COVID-19 crisis could be an opportunity to implement policy responses that accelerate transformations in education systems, with long-lasting positive effects that help close socio-economic gaps in education quality and skills. To inform future policies aimed at generating inclusive education strategies, however, it is important to recognise the pre-existing gaps in access to digital technologies. In particular, a first lesson from the COVID-19 crisis is the importance of further investments in infrastructure to ensure that all students have access to internet and ICT. Indeed, as schools closed to stop virus propagation, not all students in Panama were equipped to undertake virtual classes (Figure 2.11). In 2018, 40% of students aged 15+ did not have a computer at home, 32% did not have an internet connection, and 71% did not have access to an education software (Figure 2.11, Panel A). These students must have faced serious difficulties in accessing classes during the initial lockdown period. In August 2020, as part of the Plan Educativo Solidario, the government set up educational platforms Ester and Office 365/Teams and provided free internet connection to students.
A second lesson is that closing gaps in education also means guaranteeing equal access to ICT across socio-economic groups, to avoid creating winners and losers from the ongoing digital transformation. In 2018, wide inequalities existed in access to digital technologies at home by socio-cultural status, with a difference of 63 percentage points in access to laptops between students in the lowest quartile and students in the highest (Figure 2.11, Panel B). As such, socio-economically disadvantaged students were already in an unfavourable education position before the crisis. As these students found the greatest difficulties in following classes during school closures, it is also important that education and social protection policies continue to focus on providing targeted support to them and their families. This is critical to avoid school dropouts, mitigate learning losses and bridge the education gap caused by the COVID-19 crisis (Aroob Iqbal et al., 2020[49]; Basto-Aguirre, Cerutti and Nieto, 2021[50]).
From a learning perspective, lower-income students with poorer access to digital technologies have less opportunities not only to make the most of digital education, but also to develop the digital skills and knowledge needed for succeeding in the future of work. By providing computer and internet access, schools can help bridge the gap between students with and without ICT access at home (OECD et al., 2020[16]).
In a context of changing skills needs due to the digital transformation of economies, both digital and problem-solving skills are central to equip students with the skills to perform in the labour market. Panamanian students’ scores in the 2018 PISA test, however, show important deficiencies, especially in terms of mathematics and science (Figure 2.11, Panel C) – which may have increased further as a consequence of the crisis. Tackling these problems in educational outcomes is key. An agreement between Microsoft and the Instituto Técnico Superior Especializado (ITSE) (signed in 2021) aims to form Panamanians in data analysis, IT management, advanced software development and artificial intelligence, among other technical areas. By improving the offer of quality technical education and equipping Panamanians with the skills needed in the future of jobs, this agreement promises to increase the employability of the workforce and complements the recently established EMMA special regime,8 which seeks to attract high-tech manufacturing companies to the country.
Boosting women’s digital education and self-confidence in digital skills is also important to allow them to succeed and be included as equals in the digital transformation. Policies should combat the social norms that contribute to the gender-based digital divide, for instance, with campaigns conveying women’s aptitude for science, technology, engineering and mathematics (STEM) and ICT-related occupations (OECD et al., 2020[16]).
Note: For Panel C, low proficiency is defined as below level 2, identified as the baseline proficiency level in PISA 2022
Source: OECD (2023[51]) https://doi.org/10.1787/53f23881-en, PISA 2022 Database (2023[52]) https://www.oecd.org/pisa/data/2022database/; ECLAC/UNESCO (2020[53]), La educación en tiempos de la pandemia de COVID-19 for Panel B, https://repositorio.cepal.org/bitstream/handle/11362/45904/1/S2000510_es.pdf.
References
[49] Aroob Iqbal, S. et al. (2020), We should avoid flattening the curve in education - Possible scenarios for learning loss during the school lockdowns, Education for Global Development Blog, The World Bank Group, Washington, DC, https://blogs.worldbank.org/en/education/we-should-avoid-flattening-curve-education-possible-scenarios-learning-loss-during-school.
[50] Basto-Aguirre, N., P. Cerutti and S. Nieto (2021), COVID-19 can widen educational gaps in Latin America: some lessons for urgent policy action, Vox Lacea, https://vox.lacea.org/?q=blog/covid19_widen_educational_gaps.
[46] BDA (n.d.), Programa Panama Agro Solidario, Banco de Desarrollo Agropecuario, Panama, https://www.bda.gob.pa/panama-agrosolidario/.
[23] Berner, H. and T. Van Hemelryck (2020), Sistemas de información social y registros de destinatarios de la protección social no contributiva en América Latina: avances y desafíos frente al COVID-19, Documentos de Proyectos (LC/TS.2020/140), Comisión Económica para América Latina y el Caribe (CEPAL), Santiago, https://repositorio.cepal.org/bitstream/handle/11362/46452/4/S2000801_es.pdf.
[24] Bilo, C. et al. (eds.) (2021), How countries in the global South have used social protection to attenuate the impact of the COVID-19 crisis?, Policy in Focus, International Policy Centre for Inclusive Growth (IPC-IG), Brasília, https://ipcig.org/publication/30008?language_content_entity=en.
[22] Bilo, C. et al. (eds.) (2021), How might the lessons from the response to COVID-19 influence future social protection policy and delivery?, Policy in Focus, International Policy Centre for Inclusive Growth (IPC-IG), Brasília, https://ipcig.org/publication/30008?language_content_entity=en.
[48] Burattini, B. (2022), Social protection response to COVID-19 in rural Latin America and the Caribbean, Social Protection (blog), Food and Agriculture Organization Regional Office for Latin America and the Caribbean (FAO RLC) and the International Policy Centre for Inclusive Growth (IPC-IG), https://socialprotection.org/discover/blog/social-protection-response-covid-19-rural-latin-america-and-caribbean.
[32] CCSS (n.d.), “¿Cuál es el porcentaje de cotización para el seguro voluntario o trabajador independiente y cómo se determina el ingreso de referencia?”, Caja Costarricense del Seguro Social, https://www.ccss.sa.cr/preguntas-frecuentes (accessed on 8 March 2024).
[15] Cejudo, G. et al. (2021), “Inventario y caracterización de los programas de apoyo al ingreso en América Latina y el Caribe frente a COVID-19”, Nota Tecnica N. IDB-TN-02334, Noviembre 2021, Inter-American Development Bank, Washington, DC, https://publications.iadb.org/publications/spanish/document/Inventario-y-caracterizacion-de-los-programas-de-apoyo-al-ingreso-en-America-Latina-y-el-Caribe-frente-a-COVID-19.pdf.
[31] CSS (2020), Reglamento General de Afiliación e Inscripción, Caja de Seguro Social, Panama, https://w3.css.gob.pa/wp-content/wdocs/REGLAMENTO%20GENERAL%20DE%20AFILIACION%20E%20INSCRIPCION%20actualizado.pdf.
[33] Durán-Valverde, F. et al. (2013), “Innovations in extending social insurance: Experiences from Brazil, Cape Verde, Colombia, Costa Rica”, ESS Document, No. 42, International Labour Organization, Geneva, https://researchrepository.ilo.org/esploro/outputs/encyclopediaEntry/Innovations-in-extending-social-insurance-coverage/995219470102676.
[9] ECLAC (2023), CEPALSTAT (database), UN Economic Commission for Latin America and the Caribbean, Santiago, https://statistics.cepal.org/portal/cepalstat/dashboard.html.
[5] ECLAC (2022), CEPALSTAT (database), UN Economic Commission for Latin America and the Caribbean, Santiago, https://statistics.cepal.org/portal/cepalstat/index.html?lang=es.
[25] ECLAC/ILO (2021), Políticas de protección de la relación laboral y de subsidios a la contratación durante la pandemia de COVID-19, Coyuntura Laboral en América Latina y el Caribe, Nº 25 (LC/TS.2021/163), UN Economic Commission for Latin America and the Caribbean/International Labour Organization, Santiago, https://repositorio.cepal.org/bitstream/handle/11362/47510/3/S2100695_es.pdf.
[53] ECLAC/UNESCO (2020), La educación en tiempos de la pandemia de COVID-19, Agosto 2020, Informe COVID-19, UN Economic Commission for Latin America and the Caribbean/UNESCO, https://repositorio.cepal.org/bitstream/handle/11362/45904/1/S2000510_es.pdf.
[29] EIU (2022), Panama mining taxes to supplement underfunded pensions, 4 April, Economist Intelligence Unit, http://country.eiu.com/article.aspx?articleid=292025012&Country=Panama&topic=Economy.
[41] FAO (2022), New UN Food Outlook report: World’s most vulnerable are paying more for less food, Food and Agriculture Organization of the United Nations, Rome, https://www.fao.org/newsroom/detail/new-un-food-outlook-report-world-s-most-vulnerable-are-paying-more-for-less-food/en.
[43] FAO (2022), Selected Indicators: Panama, Food and Agriculture Organisation of the United Nations, Rome, https://www.fao.org/faostat/en/#country/166.
[44] FAO, IFAD, UNICEF, WFP, WHO (2022), The State of Food Security and Nutrition in the World 2022: Repurposing food and agricultural policies to make healthy diets more affordable, Food and Agriculture Organization of the United Nations, Rome, https://doi.org/10.4060/cc0639en.
[6] Gallup (2022), Gallup World Poll, http://www.gallup.com.
[40] Garcimartín, C. and J. Astudillo (2019), Inflación y distribución del ingreso en Panamá, Technical Note, Inter-American Development Bank, Washington, DC, https://publications.iadb.org/publications/spanish/document/Inflaci%C3%B3n_y_distribuci%C3%B3n_del_ingreso_en_Panam%C3%A1_es_es.pdf.
[13] Garcimartín, C., J. Astudillo and R. Rodríguez (2022), Pobreza y desigualdad en Panamá tras dos años de pandemia: el papel de Panamá Solidario y los programas de transferencias monetarias condicionadas, Inter-American Development Bank, Washington, DC, https://doi.org/10.18235/0004443.
[20] Garcimartín, C., C. Freire and J. Astudillo (2021), Impacto social de la pandemia del Covid-19 en Panamá y análisis de eficiencia de los programas de transferencias monetarias, Inter-American Development Bank, https://doi.org/10.18235/0003367.
[36] Gill, I. and P. Nagle (2022), Inflation could wreak havoc on the world’s poor, The World Bank, Washington, DC, https://blogs.worldbank.org/voices/inflation-could-wreak-havoc-worlds-poor.
[39] Ha, J., A. Kose and F. Ohnsorge (2019), Inflation in Emerging and Developing Economies: Evolution, Drivers, and Policies, World Bank, Washington, DC, https://doi.org/10.1596/978-1-4648-1375-7.
[27] IDB (2022), The Labor Markets and Social Security Information System (The SIMS), Inter-American Development Bank, Washington, DC, https://www.iadb.org/en/sector/social-investment/sims/home.
[30] ILO (2019), Valuación actuarial del sistema panameño de pensiones, International Labour Organization, Geneva, https://w3.css.gob.pa/wp-content/uploads/2020/12/INFORME-OIT.pdf (accessed on 8 March 2024).
[4] ILO (n.d.), “ILOSTAT (database)”, International Labour Organization, https://ilostat.ilo.org (accessed on 1 june 2023).
[11] INEC (2023), “Encuesta de Mercado Laboral, Agosto de 2023”, Estadísticas del Trabajo, Instituto Nacional de Estadística y Censo, Panamá, https://www.inec.gob.pa/publicaciones/Default3.aspx?ID_PUBLICACION=1209&ID_CATEGORIA=5&ID_SUBCATEGORIA=38 (accessed on 12 April 2024).
[10] INEC (2022), Encuesta de Propósitos Múltiples, Abril 2022, Instituto Nacional de Estadística y Censo, Panamá, https://www.inec.gob.pa/publicaciones/Default3.aspx?ID_PUBLICACION=1153&ID_CATEGORIA=5&ID_SUBCATEGORIA=38.
[14] INEC (2021), Encuesta de Mercado Laboral, Agosto 2019 y Octubre 2021, Instituto Nacional de Estadística y Censo, Panamá, https://www.inec.gob.pa/publicaciones/Default3.aspx?ID_PUBLICACION=1105&ID_CATEGORIA=5&ID_SUBCATEGORIA=38.
[38] Jaramillo, C. and R. Taliercio O’Brien (2022), Inflation, a rising threat to the poor and vulnerable in Latin America and the Caribbean, World Bank, Washington, DC, https://blogs.worldbank.org/latinamerica/inflation-rising-threat-poor-and-vulnerable-latin-america-and-caribbean.
[35] Legislative Assembly of Costa Rica (2023), Ley de trabajador independiente N° 10363, Legislative Assembly of Costa Rica, San José.
[12] MEF (2024), Pobreza y distribución del ingreso de los hogares: Encuesta de Hogares Años 2022 y 2023, Ministerio de Economia y Finanzas de Panamá, Panamá, https://www.mef.gob.pa/wp-content/uploads/2024/10/Pobreza-y-distribucion-del-ingreso-de-los-hogares-Anos-2022-y-2023.pdf.
[18] MEF (2023), Balance fiscal del Gobierno Central y del Sector Público No Financiero, Ministerio de Economía y Finanzas, República de Panamá, Panamá, https://www.mef.gob.pa/wp-content/uploads/2023/08/balance-fiscal-preliminar-a-diciembre-2022.pdf.
[34] MTSS (2018), Estrategia Nacional para la Transición a la Economía Formal. Implementación de la Recomendación 205 de la OIT en Costa Rica, Ministerio de Trabajo y Seguridad Social de Costa Rica, San José, https://www.mtss.go.cr/elministerio/despacho/Acuerdos/economia_informal.pdf.
[37] Nuguer, V. and A. Powell (2020), Inclusion in Times of Covid-19, Inter-American Development Bank, Washington, DC, https://doi.org/10.18235/0002529.
[52] OECD (2023), PISA 2022 Database (database), https://www.oecd.org/pisa/data/2022database/.
[51] OECD (2023), PISA 2022 Results (Volume I): The State of Learning and Equity in Education, OECD Publishing, Paris, https://doi.org/10.1787/53f23881-en.
[2] OECD (2022), OECD COVID-19 Recovery Dashboard, OECD Publishing, Paris, https://www.oecd.org/coronavirus/en/recovery-dashboard (accessed on 15 February 2022).
[3] OECD (2022), Statistical database, OECD Publishing, Paris, https://stats.oecd.org/Index.aspx?DataSetCode=MATERIAL_RESOURCES.
[21] OECD (2019), Digital Government Review of Panama: Enhancing the Digital Transformation of the Public Sector, OECD Digital Government Studies, OECD Publishing, Paris, https://doi.org/10.1787/615a4180-en.
[26] OECD (2018), Multi-dimensional Review of Panama: Volume 2: In-depth Analysis and Recommendations, OECD Development Pathways, OECD Publishing, Paris, https://doi.org/10.1787/9789264302549-en.
[42] OECD et al. (2023), Latin American Economic Outlook 2023: Investing in Sustainable Development, OECD Publishing, Paris, https://doi.org/10.1787/3d5554fc-en.
[17] OECD et al. (2021), Latin American Economic Outlook 2021: Working Together for a Better Recovery, OECD Publishing, Paris, https://doi.org/10.1787/5fedabe5-en.
[16] OECD et al. (2020), Latin American Economic Outlook 2020: Digital Transformation for Building Back Better, OECD Publishing, Paris, https://doi.org/10.1787/e6e864fb-en.
[19] OECD et al. (2019), Latin American Economic Outlook 2019: Development in Transition, OECD Publishing, Paris, https://doi.org/10.1787/g2g9ff18-en.
[8] PAHO/WHO (2022), Covid-19 Vaccination in the Americas, last updated 22/07/2022, Pan American Health Organization and World Health Organization, https://ais.paho.org/imm/IM_DosisAdmin-Vacunacion.asp.
[28] Presidency of Panama (2022), Cortizo anuncia que el 50 % de ingresos mínimos anuales por la extracción de cobre serán para el I.V.M. de la CSS, https://www.presidencia.gob.pa/Noticias/Cortizo-anuncia-que-el-50-de-ingresos-minimos-anuales-por-la-extraccion-de-cobre-seran-para-el-I-V-M-de-la-CSS.
[47] Presidency of Panama (2020), Ejecutivo anuncia Plan Agro Solidario para garantizar seguridad alimentaria, Presidency of Panama, https://www.presidencia.gob.pa/Noticias/Ejecutivo-anuncia-Plan-Agro-Solidario-para-garantizar-seguridad-alimentaria.
[45] Rolon, C. et al. (2022), “Social protection response to COVID-19 in rural LAC: Social and economic double inclusion”, Policy Research Brief, No. 82, International Policy Centre for Inclusive Growth, Brasília, https://ipcig.org/publication/31129?language_content_entity=en.
[54] van Ooijen, C., B. Ubaldi and B. Welby (2019), A data-driven public sector: Enabling the strategic use of data for productive, inclusive and trustworthy governance, https://doi.org/10.1787/09ab162c-en.
[7] WHO (2022), WHO Coronavirus (COVID-19) Dashboard, World Health Organisation, Geneva, https://covid19.who.int/.
[1] World Bank (2022), Latin America and the Caribbean, Macro Poverty Outlook: Country-by-country analysis and projections for the developing world, April 2022, International Bank for Reconstruction and Development / The World Bank, Washington, DC, http://www.worldbank.org/en/publication/macro-poverty-outlook.
← 1. Overall, the programme reflects an important inter-institutional co-ordination effort. Administration, co‑ordination and execution of the Plan were carried out by an Inter-ministerial Commission that included the Ministry of the Presidency (who presides it); the Ministry of Health (MINSA); the Ministry of Finance (MEF); the Ministry of Agriculture Development (MIDA); the Ministry of Social Development (MIDES); the Ministry of Labour (MITRADEL); and local governments, represented by the National Decentralisation Secretary. The MIDA was responsible for the purchase and distribution of food baskets; the Ministry of the Presidency, in co-ordination with the MIDES, was responsible for identifying the beneficiaries of physical vouchers (Bono Solidario); the Authority for Government Innovation (AIG) was responsible for identifying and assigning the digital voucher, in co-ordination with the MEF and the Electoral Tribunal (see Executive Decree 400 of 27 March 2020, which creates the Panamá Solidario programme).
← 2. Public servants and retired people are not eligible.
← 4. www.mides.gob.pa/2022/02/17/ministra-del-mides-presenta-informe-de-rendicion-de-cuentas-sobre-el-vale-digital/?csrt=3914000195305328409.
← 6. The Government Data Value Cycle refers to the four phases of data in government from its initial collection and generation, through its storing, securing and processing, on to the sharing, curating and publishing of that data and then finally into its use and re-use. For more information, see (van Ooijen, Ubaldi and Welby, 2019[54]), A data-driven public sector: Enabling the strategic use of data for productive, inclusive and trustworthy governance, https://doi.org/10.1787/09ab162c-en.
← 7. Other programmes promoting social and economic “double inclusion” of rural communities during COVID‑19 include Argentina’s Programa de Asistencia Crítica y Directa para la Agricultura Familiar, Campesina e Indígena (PACyD), Belize’s Contingency Emergenc Response Component (CERC) and Mexico’s Bienpesca. See Rolon et al. (2022[45]) for a more detailed analysis.
← 8. The Special regime for multinational enterprises for service provision linked to manufacturing (Régimen Especial de Empresas Multinacionales para la Prestación de Servicios Relacionados con la Manufactura [EMMA]) provides fiscal, migration and labour benefits for multinational enterprises who establish a regional headquarters in Panama in activities linked to manufacturing services.