Panama Employment
As a result of declining birth rates and stabilizing mortality
rates, Panama's overall population growth rate fell from an annual
average of 2.6 percent between 1965 and 1980 to 2.2 percent between
1980 and 1985 (see
table 2, Appendix A). The working-age population
(15 years and over) increased from 1,011,700 in 1978 to 1,256,800
in 1985, at a rate of approximately 4 percent a year. From 1970
through 1984, the rate of job creation was less than half the
growth rate of GDP. Analysts have estimated that the economy would
have to grow indefinitely by 7.5 percent a year to absorb new
entrants into the labor market--a level almost impossible to
sustain and far above Panama's average annual growth rates in the
past.
Panama's experience suggested that a government's ability to
improve the employment situation through direct intervention in the
labor market is severely limited. In the 1960s, an average of
13,000 new jobs were created each year. During the recession in the
1970s, unemployment rose dramatically. In late 1977, the government
sought to reverse the deteriorating employment situation with an
emergency jobs program. As a result, 28,000 new jobs were created
within a year--20,000 of which were in the public sector. The
employment program drained government resources, however, and in
1980 it was terminated. Only 11,000 jobs were created annually
between 1979 and 1982.
In 1985 the sectoral distribution of the labor force reflected
shifts that had taken place since the 1960s (see
table 15, Appendix
A). The services sector, led by financial services, continued to
grow and accounted for 57.4 percent of the total labor force in
1985. Agriculture (including forestry and fishing) consistently
experienced a relative decline, but still furnished 26.5 percent of
the jobs. Industry's share of the labor force grew slightly between
1965 and 1980, but dropped to 16.1 percent in 1985.
The public-sector share of total employment rose slightly from
11 percent in 1963 to 13.1 percent in 1970. With the expansion of
the public sector in the 1970s under Torrijos and the Emergency
Employment Program in 1977, that share peaked at 25.1 percent in
1979. In 1982 the public sector still accounted for 25 percent of
total employment.
Data as of December 1987
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