Alfonso Ramos
Activist, researcher and professor at the University of Panama. Master in Population, Society and Development and specialisation in Local Government.
Alixenia López
Project Coordinator of the Konrad-Adenauer Foundation ADELA Panama.
Event
Alfonso Ramos will speak about the socio-economic and cultural impact of the Corona pandemic. He will also analyse how inequality in Panama before the pandemic affects post-pandemic policies and discuss possible alternatives.
Latin America and the pandemic
More than two months have passed since the World Health Organisation (WHO) declared the Covid-19 virus a pandemic. In Panama, the first case occurred on the 9th of March this year, and the government issued a quarantine order on the 25th of March. Isolation and "social distancing" were subsequently used as measures to contain the pandemic. After all, the central challenge in the fight against the virus lies above all in the ease with which it spreads.
However, due to isolation, the economy has also reached a virtual impasse. It was therefore a chain reaction in which the health crisis also led to a humanitarian and economic crisis. This view is also supported by current economic forecasts. Between 1997 and 2006, for example, the growth of the world economy averaged 3.4% per year. Between 2011 and 2018 it was 2.8 per cent and in 2019 it was 2.5 percent. In contrast, the world economy is expected to grow by 1.0 per cent in 2020, although it should be noted that many regions will nevertheless be in recession. Latin America is one of the regions particularly hard hit. In April 2020, the Economic Commission for Latin America and the Caribbean (ECLAC) published a report entitled "Latin America and the Caribbean facing the Covid-19 pandemic". The authors predict that growth in Latin America will be significantly lower than the 1.3 percent originally predicted. Due to the pandemic and the resulting effects, a recession of at least 1.8 percent is likely.
Several factors are decisive for this. On the one hand, supply in Latin America is being decimated, as the pandemic has led to a disruption of production chains. On the other hand, demand has also fallen sharply, as a large part of the labour force has lost its jobs temporarily or permanently.
This is also due to the fact that the Latin American economy depends mainly on exports of raw materials and the service sector, especially tourism. However, precisely these sectors that have particularly been affected by the pandemic, as commodity prices have fallen sharply and trade and tourism have come to a standstill. Finally, Latin America is also affected by the coronation-induced withdrawal of China, one of the region's most important economic partners. Together, these factors are having serious economic consequences for countries in the region.
Impact of Covid-19 on inequality in Panama
Even before the pandemic, Panama was one of the ten most unequal countries in the world. Because of the pandemic, this issue is now more present than ever.
The gravity of the situation is underlined by the following figures:
22% of Panama's population lives in poverty. Broken down by region, poverty prevails in the metropolitan area of the country (20 percent), in the interior of the country (up to 60 percent), and in the indigenous areas ("comarcas") almost 90 percent of the population is considered poor.
In principle, economic inequality arises when the economic and political structures of a society allow a small minority to take possession of the vast majority of assets. From this economic inequality, other forms of inequality often arise, such as political inequality, gender inequality, educational inequality or technological inequality. However, the origin of inequality in Panama is also due to the country's special situation. From colonial rule by the Spanish to dependence on the United States and even today, as an independent country, Panama's territorial situation creates asymmetries. Development has always been focused on the region from Panama City to Colon, which is important for trade, and has led to a unilateral orientation of the country. Meanwhile, this transit zone hosts not only the Panama Canal as the most important trade zone, but also the financial sector, a large part of the service sector, as well as international air traffic and generates more than 70 percent of the gross domestic product (GDP). Panama's economy is almost entirely centred on the service sector, while agriculture and industry have been neglected.
This has further accelerated economic inequality. Currently, 40 percent of Panamanian employees earn less than 600 dollars a month. In addition, more than 600,000 workers are engaged in undeclared work, although almost 100,000 of them work in an officially registered company. For employees, this means that they have hardly any rights under labour law and are largely dependent on their employers. This situation has also deteriorated further due to the pandemic. One of the reasons for this is that the country's industry and agriculture cannot compensate for the decline in trade. Therefore, in the course of the pandemic, the employment contracts of more than 200,000 employees have been terminated. Many of these people will not be able to return to their jobs, and those who are able to return to work will have to expect worse conditions in the future.