Panama could be facing one of the biggest economic challenges in recent years: the increase in the cost of living and the lack of job opportunitiesa reality that directly hits the pockets of Panamanians.
According to a study carried out by the Institute of National Studies (IDEN) of the University of Panamathe country is currently going through a socio-labor phenomenon called “impoverishment of employment“, in which, even if a person has found a job, the salary he or she receives “is increasingly distant from the real cost of living”.
Cost of living: central problem
This statement is supported by the study titled Panama in social tension: occupation, employment, salaries and cost of living at the end of the first quarter of the 21st centurywhich points out that the gap between salaries and the cost of living has grown in the cities of Panama and Colón, as well as in other urban areas of the country.
The report also indicates that, although between 2019 and 2025 the median salary grew by 4.7%the cost of living is iincreased by 16%. As a consequence, the deficit between income and cost of living went from $202 in 2019 to about $319 in 2025. The figures were shared on the eve of Labor Day, this May 1.
According to the teacher Euclides Antonio Mendezresponsible for the research and in charge of the IDEN database, “The more the distance between wages and the cost of living widens, the more employed population falls into poverty.””.
The researcher noted that, by September 2025, the date the study closed, 26% of workers in the country earned less than 600 dollars. The median salary was around $700, while the cost of living line stood at around $1,075.
However, this scenario became complicated in 2026, when the increase in gasoline by 25% and diesel by 46% It brought with it notable impacts, such as the increase in transportation costs, the increase in the price of food and other basic goods.
Future projections
According to the study, this situation could translate into an increase in the cost of living of up to nearly 1,700 dollars, which would raise the deficit of Panamanian households to approximately 485 dollars.
The IDEN also projects that The cost of living in the country could increase between 6% and 12% during 2026while the household salary deficit would be in a range of between 380 and 450 dollars.
“Economic growth does not translate into well-being for the majority of the population,” the study concludes.
Informality grows
Professor Méndez points out that, although The number of employed people currently exceeds 1.21 million peoplemuch of this recovery responds to low paying jobswith conditions of precariousness and informality.
Along the same lines, the IDEN reiterates that one of the most persistent features of the labor market in the country is the high level of informality, which currently reaches 47% at the national level and rises to 95% in the indigenous regions.
Will the middle class disappear?
The disconnection between salaries and the cost of living generates a series of effects, including an increase in poverty, which, according to the study, could increase between 3 and 6 percentage points.
For its part, the middle class faces “a process of erosion, characterized by the loss of savings capacity, the reduction of consumption and the increase in its economic vulnerability.”
The challenge for Panama not only lies in generating more jobs, but also in ensuring that these allow us to cover the real cost of living.
