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A report published by the United Nations Economic Commission for Latin America and the Caribbean reveals that Panama is providing more education to its children. The same study reveals that the economic value per year of education past 12 years has gone down. More advanced education for Panama workers allows employers to pick, choose, and pay lower salaries.

Panama Education: Great News for Panama Business and So-so News for Panama Employees

The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) tells us that Panama has increased the average number of years a child stays in school although there is wide difference between results from the cities and from the interior. That is the good news. The bad news is that since 2001 the benefit in salary for each of education past 12 years has dropped from 11.7% per year of schooling to 10.3% per year of schooling or twelve percent.

In 2001 the average education of a worker in Panama was 8.7 years and by 2007 it was 9.3 years. However, the average education for a worker in the cities is 10.5 years versus 4.3 in the comarcas, the indigenous areas of Panama.

The drop in the salary benefit of more years of education is probably because Panama has only so many jobs, even though the economy is growing, and more than enough skilled workers. Thus employers are able to get by with lower, more competitive salaries.

On one hand this is a bad deal for a Panamanian kid coming out of a couple of years of technical school. He or she will be making less per year of extra education in a world where inflation has hit Panama too. On the other hand staying competitive with other countries in salary attracts business. Panama has made substantial strides in reducing poverty because it is producing more jobs. It is the old management – labor argument transferred to Panama.

Business and Investment in Panama

Panama has the highest rate of foreign investment per capita in Latin America. Panama seems to be using these investments wisely. Panama already has a first world set of services in Panama City. Compared to the rest of Latin America Panama has the best roads, ports, airports, and telecommunications. What we see Panama doing is improving its infrastructure even more.

The Panama Canal Expansion is set to more than double capacity and to allow much larger ships to pass. Panama’s road improvement campaign is linking previously hard to reach areas to Panama City and Colon. The interoceanic highway will link Colon and Panama as well as link the Colon Free Zone to the Pan American Highway. All of these construction projects provide jobs. However, more importantly they provide the infrastructure for more business in Panama.

Despite a global economic meltdown business in Panama is still brisk. Investment in commercial real estate and leasing to Panama’s small business community is likely to reap rewards for many years to come. Come to talk to us at ABPanama regarding investment in commercial real estate in Panama. Tie into Panama’s business expansion and yearly ten percent growth rate while the rest of the world works its way out of a recession.