Foreigner-Hiring Restrictions

Author:Mr Nelson E. Sales

The debate around the migratory policies in a country is always very heated. A sense of patriotism generally seeks to prevent or limit in a very restrictive manner the possibility of foreign hire. Even when it is important to protect the local workforce, to what extent such patriotism affects the economy? In a country where foreign direct investment is crucial to its economy, the immigration policies in place will either attract or scare away such foreign direct investment.

It is very well known that multinational and transnational companies that establish in Panama would rather employ local workers than bringing expatriates. Expats result in a higher operative cost to the companies. Therefore, the issue really is if there is qualified workforce in Panama able to perform to the requirements of such multinational companies. Are we, as a country, preparing workers to compete in a very competitive globalized labor market? If not, eyes should turn to policies that address such a problem.

In any case, our immigration policy is old and outdated. Moreover, it has been amended by pieces, as if trying to correct a pipeline with band-aids on its holes. There has been a lack of interest of governments on preparing a well-thought migratory policy.

For didactic reasons, current foreign hire restrictions operate as follows:

90% of the total work force of an employer in Panama must be composed by one or the combination of Panamanian citizens, foreigners married to a Panamanian citizen, and/or foreigners with more than 10 years of residence in Panama (hereinafter "Local Employees"). In other words, for every 10 Local Employees, the employer is allowed to hire 1 foreign personnel. This restriction applies not only to the headcount of the employer, but also to the payroll. This is, 90% of the sum of salaries paid to the work force of an employer in Panama, have to be for Local Employees. The limitations for foreign...

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