labor market: panama vs. costa rica joyce kwan nicoll zapata
TRANSCRIPT
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Labor Market:Panama vs. Costa Rica
Joyce Kwan
Nicoll Zapata
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Costa Rica
Capital: San Jose
Population: 4,133,884
Language: Spanish (official), English
Ethnic groups: white (including mestizo) 94%, black 3%, Amerindian 1%, Chinese 1%, other 1%
Reference from www.cia.gov
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Panama
Capital: Panama
Population: 3,242,173
Language: Spanish (official), English 14%
Ethnic group: mestizo (mixed Amerindian and white) 70%, Amerindian and mixed (West Indian) 14%, white 10%, Amerindian 6%
Reference from www.cia.gov
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Economic Overview
Costa Rica
GDP: $55.95 billion
Labor force: 1.9 million
note: this official estimate excludes Nicaraguans living in Costa Rica
Unemployment rate: 5.5%
Panama
GDP: $29.14 billion
Labor force: 1.5 million note: shortage of skilled
labor, but an oversupply of unskilled labor
Unemployment rate: 7.2%
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Economic Overview
Currency: Costa Rican colon (CRC)
Exchange Rate: Costa Rican colones per US dollar 519.53 (2007) 511.3 (2006) 477.79 (2005) 437.91 (2004) 398.66 (2003)
Currency: balboa (PAB); US dollar (USD)
Exchange Rate: 1 balboas per US
dollar
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Economic Environment: Costa Rica
Costa Rica's basically stable economy depends on Tourism
Ecotourism Agriculture electronics exports
Immigration from Nicaragua 1990’s: Immigration Boom 6% of the population of Costa Rica
300,000-500,000 Nicaraguans estimated (legally and illegally)
Increasing concern for the governmentSocial welfare system
Mostly unskilled labor
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Costa Rica: Inflation
Inflation rate (consumer prices): 9.3% 2nd highest in Latin America lack of maintenance and new investment in
infrastructure over 740,000 (18%) people below the poverty line just over 227,000 (5.5%) unemployed
Reducing inflation remains a difficult problem rising import prices labor market rigidities fiscal deficits.
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Economic Environment: Panama
Service sector accounts for about 80% of economic activity Operating the Panama Canal Banking Colon Free Zone Tourism
Economic growth expected through Panama Canal expansion project (2007-2014) Double Canal’s capacity Economic activity in Panama
Canal’s infrastructureLogistics and financing of international shipping
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Economic Environment: Panama
U.S. is Panama’s largest trading partner U.S.
exports 39.8% imports 27%
Costs Rica exports 4.5% imports 4.7%
In December 2006 Panama negotiated a free trade agreement with the U.S. Tariffs and barriers on trading goods and services Trade between the U.S. Promote economic growth
Fully dollarized economy since 1904. Explains low inflation
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Inflation Rates
0.0%
1.0%
2.0%
3.0%
4.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007
Panama
United States
Rise in Inflation rate due to the increase of petroleum prices
Recovery of the international economy due to 9/11 influenced an increase in
inflation
Economic Environment: Panama
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Labor Market Sectors
Costa Rica
PanamaAgriculture
15%
Industry18%
Services67%
Services64%
Industry22%
Agriculture14%
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Costa Rica: Employment Unemployment has dropped & new
jobs are created construction boom increase in exportation increase in foreign investment increased consumption motivated
by an overall 9.3 percent increase in salaries.
Lowest unemployment in all of Latin America and the Caribbean 6% (2006) 4.8% (July 2007)
Women unemployment in Costa Rica 8.2% (2006)6.8% (2007) Disadvantage: making up 55% of
the country’s unemployment Overall higher level of education
than men Average salary paid to women is
26% lower.
0200400600800
100012001400160018002000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Total
Men
Women
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Panama: Employment Situation
Capital intensive sectors have led GDP growth in Panama Shortage of skilled workers
Inequality between men and women in the labor market
Agriculture and manufacturing lack competitive advantages to sustain large-scale workforces
Panama - GDP
0.0%
2.0%
4.0%6.0%
8.0%
10.0%
2000 2001 2002 2003 2004 2005 2006 2007
Employment by Gender
0%
20%
40%
60%
80%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Men
Women
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Costa Rica vs. Panama
Unemployment
0.0%
5.0%
10.0%
15.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007
Panama
Costa Rica
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Costa Rica: Hourly WagesCategory Minimum Hourly
Wage (Per Hour)
Non skilled workers
$1.85
Semi skilled workers
$1.95
High school level technicians
$2.10
Specialized workers
$2.30
College technicians
$2.80
Bachelor’s degree $3.45
Advance degree $4.15
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Panama: Hourly Wages
Sector Minimum Hourly Wage (Per Hour)
Agriculture 2.60 Balboa/hr
Manufacturing 2.20 Balboa/hr
Construction 1.90 Balboa/hr
Utilities 4.90 Balboa/hr
Hotels and Restaurants
1.40 Balboa/hr
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CAFTA
Country Date
El Salvador March 1, 2006
HondurasNicaragua
April 1, 2006
Guatemala July 1, 2006
Dominican Republic
March 1, 2007
Costa Rica October 1, 2008
Panama Pending
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Potential Benefits of CAFTA for Costa Rica
Companies from around the worlddirect investment to the region creating jobs
Country Investor Investing Job creation
El Salvador Brazilian shoe manufacturer
$3.5 million 400 during the 1st year
El Salvador Saturn, GM
$2 million in auto components
500
Nicaragua International Textile Group
100 million 8,750
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Thank You