What is the average salary in Panama in 2023?

The average salary in Panama is 25,400 PAB (Panamanian Balboa) per year, which is approximately 25,509 USD as per the exchange rates of April 2023. This is less than developed countries like the United States, South Korea, and the UK. 

Due to its fast-growing economy and proximity to North America, Panama has become an outsourcing hotspot.

If you’re looking to engage the services of a Panamanian team, you’ll need to know the numbers and trends of the job market first.

In this article, we’ll highlight the average salary of Panama, including statistics, salary comparisons, and average annual increments. We’ll also explore the top three benefits of outsourcing to Panama. 

Table of Contents

Let’s dive in. 

Average salary in Panama: Statistics and trends

According to Salary Explorer, the average basic salary in Panama is 25,400 PAB annually or 2,120 PAB per month. 

A Panamanian employee earns an average minimum wage of 3 PAB per hour. Employees who receive an hourly wage are usually entitled to overtime pay, whereas salaried employees typically receive a fixed salary.

However, the average salaries alone won’t give you an accurate picture of Panamanian salary rates. You’ll also have to consider:

• Occupation.
• Education level.
• Years of experience.
• And more.

Moreover, average salaries in various locations may also differ. 

For example, the salary for a social service specialist may be different in Panama City than it is in Santiago. 

So examining Panama’s national average salary from various perspectives will give you a better idea of what to pay your Panamanian employees.

Let’s explore the different aspects of Panama’s salaries.

Note: The salary estimates in this article are only guidelines obtained from anonymous employees through salary surveys. Specific salaries may vary based on factors such as education, experience, job title, etc.

A. Median salary in Panama

The median salary in Panama is 22,560 PAB per year. This means that half (50%) of the population earn less than 22,560 PAB, and the other half earn more than 22,560 PAB. 

In other words, the median represents the middle salary value. 

B. Salary range in Panama

Salaries in Panama typically range from 6,480 PAB (lowest average) to 113,520 PAB (highest average). 

Note: The figures here represent the average minimum and maximum salary. However, the actual maximum salary may be higher, and the actual minimum salary may be lower. 

C. Average salary by experience

In Panama, an employee’s experience level is the most important factor in determining their salary. People with more years of experience have a higher salary. 

According to a 2023 report by the salary assessor site, Salaryexplorer.com:

• Employees with between two to five years of experience earn 32% more than juniors or inexperienced employees. 
• Professionals with more than five to 10 years of experience have a 36% higher salary than those with less than five years of experience.
• Employees with 10 to 15 years years of experience earn 21% more than those with just two to five years of experience. 
• Employees with 15 to 20 years of experience have a 14% higher salary than those with less than 15 years of experience. 
• In general, professionals with 20 or more years of experience earn 9% more. 

In Panama, an employee’s salary typically doubles every 10 years. 

D. Average salary by education

According to salary survey data from SalaryExplorer.com, education levels play an important role in salaries in Panama. 

So how much more should you expect to pay an employee with a college degree?

According to 2022 compensation data for Panama:

• Employees with a certificate or diploma have an average salary 17% higher than those with a high school diploma. 
• Professionals with a Bachelor’s Degree earn 24% more than those with a certificate or diploma. 
• Professionals with a Master’s Degree have a 29% higher salary than those with only a Bachelor’s Degree. 
• Ph.D. holders earn 23% more than professionals with a Master’s Degree despite doing the same job. 

E. Average salary for popular professions

Here are the average salaries in Panama for common occupations: 

Source: Salaryexplorer.com

Average annual increments

Salary increments in Panama vary depending on several factors. 

Although average annual salary increments usually refer to a 12 calendar month period, most employees’ salaries aren’t reviewed exactly every 12 months. But in general, the yearly average income increase in Panama is 4%.

Let’s delve deeper into the two main factors affecting average annual increments:

1. Average annual increments by industry

Here are the average annual increments by the industry for 2022:

Source: Salaryexplorer.com

Companies in more successful industries tend to provide higher and more frequent salary raises to their employees in Panama. The economic situation of the country also plays a critical role.

2. Average annual increments by experience

Here are the average annual increments depending on years of experience:

Source: Salaryexplorer.com

It’s important to note that an employee’s performance and contribution to the organization’s success are important factors contributing to these annual increment rankings.

Next, let’s explore why you should consider outsourcing to Panama. 

4 major benefits of outsourcing to Panama

Outsourcing some or all of your non-core operations can provide an opportunity for you to focus on other activities such as business development. 

And there are several advantages of outsourcing to Panama specifically. 

For example, if you outsource manufacturing services to Panama, you can easily export the goods. The country has direct access to the Pacific Ocean, Caribbean Sea, and the Panama Canal. 

Let’s look at some other notable benefits:

1. Favorable location

Panama and the United States are located near each other and within the same time zone. 

Many American companies prefer nearshoring to service providers within the same time zone as them, rather than to popular outsourcing destinations in South America, Asia, or South Africa. 

Nearshoring is better for communication and collaboration since your employees in both locations communicate in real-time.

It’s also easier to travel to nearshoring destinations. For example, if your company is New York based and outsources services to a team in Panama City, you can hop on a relatively short five-hour flight to visit your outsourced service providers. 

2. Experienced employees

The Panamanian workforce is highly educated with reasonable salary expectations. Moreover, employee turnover is relatively low, reducing training costs and ensuring high service levels.

Compared to other developed countries in Europe and North America, you can hire skilled employees at a much more affordable rate. Panama’s average salary for full-time employees is much lower than the US (USD 56,310) and many European countries.

The cost of living is also much lower, so employees are able to survive with the lower Panamanian salary. For example, a cost of living comparison indicates that consumer prices are 41.64% lower in Panama City than in San Francisco.

3. Bilingual professionals

If you’re based in the United States, your business can benefit from access to Panama’s pool of bilingual professionals. The US has the second-highest concentration of Spanish speakers globally, after Mexico. 

Like most countries in Latin America, most people in Panama are fluent in both English and Spanish. This makes it a popular outsourcing choice for companies whose clientele are based in The US. 

4. Significant technological growth

Recently, countries in Central America like Panama and Costa Rica have experienced notable technological growth. 

In Panama, most big cities and even small towns have paid high-speed Internet and free government Wi-Fi around schools and town plazas. This technological advancement was accelerated by the rapid digitization during the pandemic. 

Additionally, Panama has an outstanding ICT infrastructure. Large-bandwidth networks provide the country with high-capacity international connectivity via six submarine fiber-optic cables. 

Final thoughts

A robust IT and telecoms infrastructure, excellent language skills, and affordability of the Panamanian workforce make this country an attractive outsourcing destination. 

However, your outsourcing needs will vary depending on the nature and needs of your business. 

You can use the information in this article to learn more about Panama and its average salary to make an informed decision about whether it’s the right fit for your business.