The 30% of the micro, small and medium enterprises (MSMEs) in Panamaá plans to cut its payroll this year to adjust to the new post-Covid-19 market conditions. It should be noted that this group of companies represents the 70% of the productive sector and more than 90% of employment.

A survey conducted by the National Competitiveness Center for 430 MSMEs in Panama, showed that 30.2% will decrease employment during 2021, 52% will maintain it and only 17.8% said that it will increase it.

The report also details that the sectors that will continue with a negative employment trend for 2021 are: industry with -11.5%; construction with -8.9%; commerce with -16.7% and services with -13.6%. While, 31.9% of old companies believe that their employment will decrease in 2021 compared to 29% of new companies.

The crisis caused by covid-19 has also caused a drop in income in many of the companies in Panamato. 86% of the companies surveyeds estimate that they have seen their sales reduced in 2020 compared to 2019, while 8.1% managed to maintain them and 5.9% increased them.

As for the economic and financial indicators of companies, the document revealed that 81.6% of the companies saw their billing level reduced. Another negative indicator was profitability, wheno 79.9% of companies had a negative impact. In addition, 79.1% of the companies said they had negative figures in the level of liquidity and 76.5% indicated that they had paralyzed their investments.

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Regarding the sales expectations for the first and second semester of 2021 the situation improves significantly in all strata, presenting a positive balance.

In the first semester, 29.6% of the companies consider that their sales will increase, a figure that increases to 55.5% for the second semester; while they only foresee that their sales will decrease 26.7% of the companies in the first semester and 13.1% in the second semester. ‘

For the former president of National Economist College, Olmedo Estrada, the recovery of this business sector will be much slower since they still do not have the capital available to invest and reactivate their operations.

He added that another factor that influences it is consumption, which does not have the same dynamics that is required for the economy to gradually recover.

“The companies are operating, but they are not making the same profitTherefore, they foresee that as the vaccination program advances, the economy will be able to recover, “he said.

Throughout the pandemic, Panama has managed millionaire loans with multilateral organizations such as the International Monetary Fund (IMF) or the Inter-American Development Bank (IDB) to face the consequences of covid-19.

The Government of Panama signed with the IDB a loan for the sum of 300 million dollars to support MSMEs affected by the pandemic, however, members of the industry assure that this support has not reached everyone.

René Quevedo, an employer and expert in job placement, pointed out that these figures confirm the uncertain employment scenario of 2021, marked by the imminence of a third wave of COVID-19 infections and the permanent one threat of new mobility restrictions, which are already causing an increase in unemployment.

“The results of the survey are consistent with the projections made by those who estimate that by 2021 the Mitradel would be processing some 200,000 new employment contracts, 68,000 more than the 132,000 processed in 2020, when 289 thousand jobs were lost, and practically half of the 378 thousand contracts processed by the entity in 2019, the year in which 52,040 new jobs were generated, all informal, “he said.

He added that the outlook improves for the second semester, assuming that all mobility restrictions are eliminated and liquidity is injected into the production system, particularly MSMEs.

“It is imperative to get the Panamanian economy up and running, where 70% of jobs are face-to-face. So as long as there are quarantines and curfewsa, unemployment will continue to rise. Covid-19 will ruin many more people than those who are going to get sick, “Quevedo said.

In 2020 the country lost 289 thousand jobs, 15% of its workers, which in an economy that generates an average of 45 thousand jobs per year (2014-2019), will take more than 6 years to replace.

The pandemic accentuated the contraction that began in 2013, when private wage earners accounted for 53% of all jobs, to fall to 33% in 2020, a reduction of 20 points in 7 years. We are facing the worst episode of destruction of private formal employment and a drop in consumption in the history of the country. The recovery of both will be a gradual process.

UNDP points out that between May 2019 and September 2020, approximately one million MSMEs were definitively closed.

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