COUNTRIES, North America
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HRsolution » COUNTRIES » Panama

  1. Population

    Panama has approximately 4.5 million inhabitants (as of 2023). The population is ethnically diverse, with influences from Europe, Africa, and indigenous peoples.

  2. Capital

    The capital of Panama is Panama City (Spanish: Ciudad de Panamá). It is the economic, political, and cultural center of the country, with about 1.5 million residents.

  3. Economic Power

  • Panama is one of the strongest economies in Central America, mainly due to the Panama Canal, which plays a central role in international trade.
  • Key economic sectors include logistics, financial services, tourism, construction, and trade. The Colon Free Trade Zone is one of the largest in the world.
  • The country has a GDP of about 70 billion USD and has seen an annual economic growth of around 5-6% in recent years.

  1. Culture

  • Panama has a diverse culture with influences from indigenous peoples, Europeans, and Africans.
  • Spanish is the official language, spoken by most Panamanians, though indigenous languages are also spoken in certain areas.
  • Music and dance are essential parts of cultural life, with traditional festivals such as Carnival and Independence Day being particularly important.

  1. Currency

  • The official currency in Panama is the Balboa (PAB), which is pegged to the US dollar at a 1:1 ratio. In practice, the US dollar is almost exclusively used.

  1. Health Insurance and Social Security System

  • Panama has a state health insurance system managed by the Caja de Seguro Social (CSS). Both employees and employers contribute to the system.
  • There are also private health insurance options that provide additional coverage.
  • The social security system covers health insurance, pensions, unemployment, and disability insurance.

  1. Employer Costs

  • Employers must make various contributions, including social security contributions (CSS) and contributions to the Workers’ Compensation Insurance (SE).
  • Social security contributions amount to about 12.25% of the employee’s gross salary.
  • There is also an employer tax to fund educational programs, which is 1.5%.

  1. Salary and Bonuses

  • The average monthly salary varies significantly by industry and qualification, with a median salary ranging from around 700 to 1,200 USD per month.
  • Legally mandated bonuses include the 13th-month salary, which is paid in three installments: in April, August, and December.

  1. Payroll

  • The payroll in Panama includes details of the gross salary, statutory deductions (e.g., social security contributions, taxes), bonuses, and any overtime or allowances.
  • Income tax in Panama is progressive and starts from a certain minimum income.

  1. Public Holidays

    Panama has 10 public holidays each year, including:

  • New Year’s Day (January 1)
  • Good Friday (varies)
  • Labor Day (May 1)
  • Independence Day (November 3)
  • Mother’s Day (December 8)
  • Christmas Day (December 25)

  1. Working Hours

  • The regular workweek in Panama is 48 hours, typically divided into 8-hour days over 6 days a week.
  • In certain industries or employment contracts, the workweek may be shorter, such as 40 hours.

  1. Vacation

  • Employees are entitled to at least 30 days of paid annual leave after one year of continuous employment.
  • There is also paid leave for special occasions such as weddings or family bereavements.

  1. Sick Leave

  • In the case of illness, wages are typically paid for a certain period, after which the social security system (CSS) takes over.
  • Employees receive up to 66% of their regular salary through social security, depending on the illness or injury.

  1. Termination/Severance

  • Panama’s labor laws provide relatively strong protection against dismissal. Termination without valid reason often requires severance pay.
  • Severance payments depend on the length of service and can range from 1 to 3 months’ salary per year of employment.
  • The notice period varies but is usually at least 30 days.

Panama offers an attractive location for international businesses and expats due to its strategic position, economic strength, and favorable working conditions.

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