Panama: Companies expect hiring to slow in the second quarter 

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By Juan Francisco García

A weaker and warmer labor market in the face of the electoral scene, it is evident in ManpowerGroup’s recent study on the trend of hiring companies in Panama.

In a country with 151,625 unemployed people and an unemployment rate of 7.4%, the expectation of hiring new staff in Panama by private companies is key to reducing this figure and boosting the economy.

However, in this second quarter, many companies are cautious about hiring new staff and prefer to refrain from increasing the plan, pending the electoral process and the economic measures that the government that is elected on 5 May this year can be implemented.

This trend is shown in the employment-seeking survey by ManpowerGroup that reveals a second quarter with a weak labor market in which hiring intentions fell from 25 per cent in the first quarter of that year to 15 per cent and is 25 percentage points below the expectation recorded in the second quarter of 2023.

ManpowerGroup’s Net Employment Outlook Index is calculated by subtracting the percentage of employers who foresee staffing reductions, of whom they plan to hire more staff.

The study, which reflects the opinion of 200 Panamanian employers, reveals that 30% of companies will not make any changes to their employee plan in the second quarter, 24% points out that it will reduce the number of workers, 7% are undecided about what the situation of human resource management will be, while 39% say that the number of jobs will increase.

The Panamanian market is cautious for the second quarter of 2024, reflecting a contraction in hiring intentions compared to the previous quarter, said Alberto Alesi, Director General of ManpowerGroup for Mexico, the Caribbean and Central America.

He explained that the weakest prospects for recruitment of staff are in the communication services sector at an 11 per cent rate, there are also fewer plans to increase staff among consumer goods and services companies, i.e. among shops with a recruitment perspective of 9 per cent, which coincides with other studies by Indesa and Nielsen IQ that reveal a contraction in the consumption of goods.

Among finance and real estate companies, the prospect of hiring staff is just 6 per cent while in the energy sector it scored zero for the second quarter.

In contrast, the increased recruitment perspective of 38 per cent in life sciences and health companies including pharmaceutical companies, surgical medical equipment, health centres, among others.

Another sector with a positive outlook is manufacturing with 20 per cent net employment trends. As a reference according to the Union of Industrialists of Panama (SIP), the manufacturing sector had 149,401 workers at the end of 2023, an increase of 4.14% over 2022.

The five sectors that generate the most jobs in Panama, according to data from the National Institute of Statistics collected by the Indesa for the IAPA, are: trade with 328,506 workers, agricultural 285,020, construction 160,589, and transport with 135,829 in addition to the manufacturing industry.

The private company as a whole generates 761 thousand jobs, 601 thousand people are self-employed, 330,000 are part of the government’s payroll and 241,000 are in domestic service, employers among others.

The ManpowerGroup study reports that companies engaged in information technology activity register an intention to hire staff of 18% in the second quarter, in addition to transport, logistics and automotive companies that have a perspective of 15%.

The report further details that among employers of large companies with more than 250 employees, the recruitment trend is higher at 45 per cent.

These organizations are the only ones reporting growth in the last quarter, increasing 25 percentage points from the first quarter of 2024 and an increase of 30 percentage points from the second quarter of 2023.

By region, the most active labour markets are expected in Metro North (33%) Center (22%) and Metro South (17%). While in the west, that is between Chiriquí and Bocas del Toro, the intention to hire is only 5%.

International overview

In Latin America and the Caribbean, the greatest intentions to hire staff in the second quarter of the year are recorded in Costa Rica (32%), followed by Mexico with 27% and Guatemala with 26%.

The most negative scenario is reported in Argentina with 1%, followed by Chile with 10% and Panama with 15%. Puerto Rico also appears with 14%.

In Peru, the indicator is 19%, in Brazil 18% and in Colombia 15% like Panama.

The World’s Net Average Employment Perspective Index for the months April to June stood at 22%.

The study notes that the highest outlook in the world was in India with 36%, followed by the United States with 34% and China with 32%.

In the midst of the labour scenario, most countries will have lower economic growth this year, which may have an impact on recruitment. 

This article has been translated from the original which first appeared in Prensa