Economy Politics Country 2025-11-24T10:40:10+00:00

SMEs Warn of Labor Shock: Minimum Wage Hike Could Leave 110,000 Unemployed

The president of Panama's SME association, Franklin Martínez, warned that a sharp increase in the minimum wage could lead to the loss of up to 110,000 jobs and the closure of thousands of businesses. He emphasized that negotiations on the minimum wage must take into account the realities of the small business sector.


SMEs Warn of Labor Shock: Minimum Wage Hike Could Leave 110,000 Unemployed

Productivity cannot be decreed by law. 'One employee per company is enough to break the balance,' he warned. SMEs once again left out of negotiations The leader criticized that, as has happened for more than two decades, the most affected sector is once again left out of the negotiation. 'Discussing the minimum wage without SMEs makes no sense. Any operational increase hits us right in the heart,' he explained. Productivity versus decrees The businessman insisted that the minimum wage must respond to inflation and productivity, not to 'unfounded aspirations.' 'You earn what you produce. It's debating about us without us,' he demanded, pointing out that those summoned do not represent the micro, small, and medium-sized enterprise sector, where any adjustment really hits. A sector that has not recovered Martínez reviewed the 'lacerating' path the sector has taken: 18 months of pandemic, a national one-month closure in 2022, October and November protests, a very long electoral period in 2024, growing debt and eroded capital. 'We are in a survival economy. If inflation went up by 2%, that is the responsible figure to talk about an increase,' he stated. He recalled that the minimum wage is designed for workers without technical or professional training, and reiterated that the sustainable path is education and training, not imposing figures unrelated to the economic reality. The risk: layoffs, informality, and closures According to Martínez, 70% of the country moves thanks to SMEs, which today employ an average of 2.8 workers each. A sharp adjustment could reduce that figure and push fragile businesses to close their doors. 'Many will opt to lay off workers, others to move into informality. It's an inevitable scenario if the real impact is not measured,' he said. The discussion on the minimum wage formally began this week. By law, the new adjustment must be defined in January, with or without consensus between workers and employers. Historically, in the absence of agreements, the Executive branch ends up setting the rate by decree. Martínez warns that this year the script could be repeated.