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NORMLEX Home > Country profiles > > Comments > All Comments

Minimum Wage-Fixing Machinery Convention, 1928 (No. 26) - Panama (RATIFICATION: 1970)

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The Committee notes the information provided by the Government, which answers the points raised in its previous direct request and has no further matters to raise in this regard.

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Articles 1 and 3 of the Convention. Minimum wage fixing machinery. The Committee notes the detailed information provided in the Government’s report and the attached documents. It notes, in particular, the adoption of Executive Decrees Nos 240 and 241 of December 2011, which fix the new minimum hourly wage rates by region, economic sector and size of the enterprise. The Committee also notes that by Executive Decree No. 464 of 14 May 2010, the minimum monthly wage for public sector employees was increased from 325 to 375 Panamanian balboas (PAB). It further notes the Government’s information that in revising minimum wage levels, the Ministry of Labour and Labour Development takes into consideration, among others, the general level of wages, cost of living, investment climate, employment situation, economic performance of relevant sectors, and the poverty level. As indicated in the technical study on the revision of the minimum wage for the period 2007–09, the basic purpose of the minimum wage policy is to maintain the purchasing power that allows workers to satisfy their basic needs when prices increase which means that there should be a direct link between the minimum wage and the basic family food basket (canasta básica familiar de alimentos). This indicator is currently calculated on the basis of 50 products of ten different food categories and is meant to reflect the needs of 3.84 persons per family.

In addition, the Committee notes the comments of the National Federation of Public Employees and Public Service Enterprise Workers (FENASEP) dated 24 August 2012 and the Government’s response dated 26 October 2012. FENASEP indicates that, over the past 20 years, the National Minimum Wage Commission has rarely agreed on the revision of the minimum wage and, as a result, it has practically been always the Government that readjusts minimum wage levels every two years. FENASEP indicates that minimum wage increases in recent years do not reflect workers’ needs, with the purchasing power being reduced by 7 per cent in the last ten years. In particular, the much publicized minimum wage increase in 2009 was overtaken in less than a year by inflation and the rising prices of basic consumer goods. In addition, FENASEP stresses that the minimum wage for public employees is no longer aligned to that applicable in the private sector, and that there have been no consultations with organizations representing public employees. FENASEP also indicates that certain categories of public employees, such as municipal employees, are excluded from minimum wage coverage.

In its reply, the Government indicates that whenever new minimum wage rates have been determined for public employees in the last 20 years, they have always applied to all public employees without distinction. It also indicates that the state budget for 2012 has not permitted the alignment of the minimum wage of public employees with that of private sector employees but this will probably be implemented under the 2013 budget. Moreover, the Government denies the allegations that its action is inconsistent with the requirements of the Convention and recalls that the Convention primarily applies to those trades in which no arrangements exist for regulation of wages by collective bargaining and wages are exceptionally low.

Article 5 and Part V of the report form. Application in practice. The Committee notes the statistical information concerning the percentage of the workforce remunerated at the minimum wage rate, the evolution of minimum wage rates, and the number of inspection visits carried out and violations of the minimum wage legislation observed in the period 2009–11. The Committee would be grateful if the Government would continue to provide up-to-date information on the effect given to the Convention in practice, including, for instance, statistical information on the evolution of minimum pay rates as compared to the evolution of indicators such as the consumer price index and the basic family food basket, as well as activity reports and studies of the National Minimum Wage Commission.

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The Committee notes the detailed information provided in the Government’s report and the attached documents. It notes, in particular, the adoption of Executive Decree No. 7 of 10 March 2006 which fixes the new minimum hourly wage rates by region, economic sector and size of the enterprise. It also notes with interest the Government’s decision to establish for the first time a minimum monthly wage for public sector employees. The Committee understands that the minimum wage for the public sector was recommended by the National Minimum Wage Commission and is currently set at 300 balboa (approximately US$305) per month. The Committee would appreciate receiving a copy of the legal text establishing the new minimum wage for the public sector and requests the Government to provide additional explanations on the institutional framework within which the new minimum wage will be periodically reviewed and adjusted taking into account that the provisions of the Labour Code, including those on minimum wage fixing, do not apply to public employees.

Article 5 of the Convention and Part V of the report form. The Committee notes the statistical information for the period 2003–06 concerning the percentage of the workforce remunerated at the minimum wage rate, the number of violations of the minimum wage legislation reported by the labour inspection services and the number of individual complaints filed with the General Labour Directorate of the Ministry of Labour. It also notes the activities of the National Minimum Wage Commission in the period 2005–06, including the technical study of January 2006 on the revision of the minimum wage. The Committee would be grateful if the Government would continue to provide up to date information on the effect given to the Convention in practice, including, for instance, statistical information on the evolution of minimum pay rates as compared to the evolution of economic indicators such as the inflation rate, relevant extracts from labour inspection reports, copies of official documents such as activity reports of the National Minimum Wage Commission, etc.

Finally, the Committee wishes to draw the Government’s attention to the conclusions of the ILO Governing Body as regards the relevance of the Convention following the recommendations of the Working Party on Policy regarding the Revision of Standards (GB.283/LILS/WP/PRS/1/2, paragraphs 19 and 40). In fact, the Governing Body has decided that Convention No. 26 is among those instruments which may no longer be fully up to date but remain relevant in certain respects. The Committee therefore suggests that the Government should consider the possibility of ratifying the Minimum Wage Fixing Convention, 1970 (No. 131), which contains certain improvements compared to older instruments on minimum wage fixing, for instance, as regards its broader scope of application, the requirement for a comprehensive minimum wage system, and the enumeration of the criteria for the determination of minimum wage levels. The Committee considers that the ratification of Convention No. 131 is all the more advisable as Panama has already set up a system of minimum wages of general application and its legislation appears to be substantially in conformity with the requirements of that Convention. The Committee requests the Government to keep the Office informed of any decision taken or envisaged in this regard.

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The Committee notes the detailed information provided in the Government’s report and Executive Decree No. 227 of 2 July 2003 which fixes the new minimum wage rates per hour, by geographical region and branch of activity.

The Committee notes that, according to the Government’s report, the system of labour statistics of the Ministry of Labour and Employment Development is undergoing a process of reorganization and that, as a result, statistical data on the number and different occupational categories covered by minimum wage regulations are not available. The Committee also notes the Government’s reference to Act No. 53 of 28 August 1975 which provides that the Ministry of Labour and Employment Development is the competent body for re-examining complaints concerning the determination of the applicable minimum wage. The Committee recalls that the Convention requires a system of supervision and sanctions to ensure that the wages actually paid are not lower than the applicable minimum wage rates. In this respect, the Committee requests the Government to continue to provide, in accordance with Article 5 of the Convention and Part V of the report form, full particulars on the application of the Convention in practice, in particular the results of the inspections carried out (violations reported, sanctions imposed, etc.), as well as reports of the activities of the National Minimum Wage Commission, official studies on socio-economic aspects relating to minimum wages, statistical data on the number of workers covered by different minimum wage rates and any other information on the operation of minimum wage fixing machinery.

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The Committee notes the detailed information provided in the Government's report. It asks the Government to continue to provide, in accordance with Article 5 of the Convention and point V of the report form, general information on the practical application of the Convention, for example: (i) the minimum wage rates that are applicable; (ii) available statistics on the number and various categories of workers covered by the minimum wage regulations; and (iii) the results of any inspections carried out (including any violations noted, sanctions imposed, etc.).