Executive summary

Working age population

The principal risk facing the poor working population is low and unstable income because they have low paid and insecure jobs, often because of their low educational achievement.

Low and unstable income. The most important indicator of low income is the extent of poverty. The headcount measure indicates that 36.8 percent of all Panamanians are poor and 16.6 percent are extremely poor. In indigenous areas, these rates reach 98.4 percent and 90 percent, respectively, but poverty and extreme poverty are also present in other rural areas and in some urban neighborhoods.

The rates of unemployment and underemployment are good indicators of the poor capacity to generate income since labor is their main productive asset. In 2004, about 160,000 persons (12 percent of the labor force) were unemployed and 229,000 persons (18 percent) were underemployed (Table A.3.1.6). Unemployment among youth (27 percent) was about twice the national average. The highest rates of youth unemployment were in Colón (43 percent) and Panama (32 percent) provinces.⁵¹

Table A.3.1.6: Employment and Underemployment, 2003, 2004

(No. and Percentages)

	2003 No.	2004 No.	2003 %	2004 %
Economically Active Population	1,250,874	1,285,122	100.0	100.0
Employed	1,080,523	1,126,816	86.4	87.7
Full time	688,150	748,771	55.0	58.3
Part time	146,523	149,408	11.7	11.6
Underemployment	245,850	228,637	19.7	17.8
Unemployment	170,351	158,306	13.6	12.3

Source: “Panamá en Cifras 2000-04”. Dirección de Estadística y Censos, Noviembre 2005, (Cuadro 441-02), 212.
Lack of skills and education usually leads to low productivity and low paid jobs. Illiteracy in Panama is estimated at 7 percent of the working age population. Nonetheless, this national average masks large disparities. Table A.3.1.7 indicates that for the extreme poor and indigenous population illiteracy reaches 27 and 39 percent, respectively. In indigenous areas, one-third of men and more than one-half of women are illiterate.

Table A.3.1.7: Male and Female Literacy a/, 2003

	Total	Extreme Poor	All Poor	Non-poor	Urban Areas	Rural (non indigenous)	Indigenous
Total	93	73	83	97	98	89	61
Male	94	79	86	97	98	89	76
Female	92	66	80	97	98	89	46

Source: LSMS, 2003

a/ Percentage of those 15 and older who can read and write (UNESCO definition)

The extreme poor and the indigenous also lag substantially behind the non-poor in educational attainment (Table A.3.1.8). While at the national those with 25 years and more attain 8.6 years of schooling, the extreme poor and indigenous only average 3.7 and 3.1 years, a gap of 5.5 years for the indigenous population. An encouraging sign is that the education gap between these groups is smaller for younger cohorts. For example, for the 18-24 cohort the gap between the indigenous population and the national average is 4.7 and for the 12-17 cohort, 2 years.