Protests have been going on for around two months in Panama over Pension reform, leading to concerns. According to multiple sources including the BBC and CNN, pension reform initiative Law 462, promulgated by the government on March 18, resulted in outrage among many and protests among thousands in the capital city. The Raul Mulina 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 person reform, the Unified Capitalization System that 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 — 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 Around fifteen percent of the “economically active” population are members. The reform can bring several positive outcomes including helping create vast pools of pension savings and providing higher returns on the pension investment, benefits are less likely to be so. Increased employer contribution can be problematic for many and there can be 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 cut benefits and favor private pension funds. 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 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 government of Raul Mulina, 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. The government has merely put emphasis on the force — leading to the violation of the rights of 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 is a sort of private pillar in earlier, only 15 percent of the “economically active” population were members of the earlier scheme in Panama. But creating force on the protesters may 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 heed their concerns, especially reasonable concerns. The lack of public consultation led to the perception of the neglect of citizen’s proposals, along with the perception that the reforms primarily benefit business interests. 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
