Protests have been going on for around two months in Panama over Pension reform, leading to concerns. According to multiple sources including the British Broadcasting Corporation, pension reform initiative Law 462, promulgated by the government on March 18, resulted in outrage among many and protests among thousands in Panama. The Jose Raul Mulino government has declared a state of emergency in the main banana-producing region Bocas Del Tor and several hundred protesters were arrested. While the government says the reform is needed to address the generous pension scheme, the protesters demand the cancelation of it. But it remains unclear whether and how the pension reforms, protests and related concerns in Panama will be resolved on reasonable grounds.
The controversial pension reform, which merged two earlier systems — the Exclusive DB (Defined Benefit) Subsystem for individuals age 36 or older and a “mixed” program for younger people and new joiners — into the Unified Capitalization System, made several changes including increasing employer contributions, phasing out a Defined Benefit pension program and creating a new Single Solidarity Fund (FUS). Pertinently saying, Panama incorporated a private pillar of the pension system in 2008 but the latest reforms have been denounced for expanding the private pillar and opening the door to a full privatization of the pension system. The reform can bring several positive outcomes including helping create vast pools of pension savings and providing higher returns on the pension investment but there are various concerns including increased employer contribution that can be problematic for many and the potential mismanagement in the FUS.
There are several other reasons that are also responsible for and have complicated the latest escalation of protests in Panama, along with the pension reforms that have the potential for financial stability in the pension system but cut benefits. The signing of the Memorandum of Understanding by the government with the United States, the re-opening of the First Quantum’s ‘Cobre’ mine and the lack of trust in the government has also contributed to the protests, where protesters set up roadblocks in the western Bocas del Toro province and often clashed with police in the protests, which was initially started in April when teachers and other education unions came out. Pertinently saying, the MOU gives US military vessels free passage and allows US soldiers to train on Panamanian soil.
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Pertinently saying, there is no indication from the Mulino government, which has been facing several protests in the last several months, to address the concerns of the protesters, even if, positively saying, there were several positive actions, increasing the chance of further protests. While the concerns of the workers at a Chiquita Brands banana plantation, a US-based company, who were fired and who escalated the protests were resolved through negotiations, the National Assembly later approved a new labor regime that restored benefits for banana workers. But the government has merely put emphasis on the force — leading to the violation of the rights of many protesters.
Reforming a generous pension system can be financially beneficial for Panama. But the concerns of the protesters that are reasonable are desired to be addressed. Pertinently saying, privatized pension systems in Latin America have resulted in less coverage of the population, lower pension amounts and higher gender inequality. Though there was a sort of private pillar earlier, only 15 percent of the economically active population were members of the earlier scheme in Panama. But creating force on the protesters will not lead to good outcomes, rather it can increase the chance of further instability.
The government needs to hold talks with the protesters, who have a lack of trust in it and perceive that the reforms primarily benefit business interests, and heed their concerns, especially reasonable concerns. The lack of public consultation led to the perception of the neglect of citizen’s proposals. But arbitrary arrests and torture need to be addressed. The detainment of labor leaders including those who organized and participated in the ongoing protests, also needs to be addressed.
Amir M Sayem
Chief Editor
Dhaka Opinion Magazine
