The Government of the Republic of Panama approved an update to the national minimum wage through Executive Decree No. 13 of December 31, 2025, published in the Official Gazette on January 6, 2026. The new minimum wage rates will enter into force on January 16, 2026 and will apply for the 2026–2027 period.
This update forms part of Panama’s constitutional mandate to periodically review the minimum wage, taking into account economic and social conditions, cost of living, regional differences, and the characteristics of the labor market and economic activities.
Legal framework and minimum wage setting process in Panama
The determination of the minimum wage in Panama is grounded in Article 66 of the Constitution and Articles 172 to 180 of the Labor Code, which establish the State’s obligation to periodically adjust minimum wage rates.
The process is carried out based on the recommendations of the National Minimum Wage Commission, composed of representatives from workers, employers, and the State. The Commission conducts a technical analysis that considers factors such as cost of living, productivity, economic policies, and regional economic conditions.
With the entry into force of Executive Decree No. 13 of 2025, Executive Decree No. 01 of January 10, 2024 is repealed, establishing a new reference framework for minimum wage determination nationwide.
Application of the minimum wage by region
For purposes of applying the minimum wage rates, the Executive Decree divides the country into two regions:
Region 1
Includes, among others, the districts of Panama City, San Miguelito, Colón, David, Santiago, Chitré, Penonomé, Aguadulce, La Chorrera, Arraiján, Boquete, Bugaba, and Changuinola, as well as districts within the provinces of Herrera, Los Santos, and Tierras Altas.
Region 2
Comprises the remaining districts of the country not included in Region 1.
This regional distinction seeks to reflect differences in cost of living and economic conditions across various areas of Panama.
Wage-setting criteria and covered economic sectors
Minimum wage rates are established on an hourly basis and vary depending on the following criteria:
• Economic activity
• Occupation
• Size of the company (small or large enterprise)
• Geographic region
Executive Decree No. 13 of 2025 sets specific rates for a wide range of economic sectors, including, among others:
• Agriculture, livestock, fishing, and agribusiness
• Manufacturing industries
• Construction
• Wholesale and retail trade
• Hotels, restaurants, and tourism-related activities
• Transportation, storage, and logistics
• Information and communications
• Financial, real estate, and professional activities
• Education, health, entertainment, and other services
As a specific regime, domestic workers’ wages continue to be established as a monthly amount, differentiated by region.
Impact of the new minimum wage on employers
The entry into force of the new minimum wage rates requires employers and companies to review their wage structures and labor practices to ensure compliance with the applicable legal framework.
In particular, it is important to verify:
• Proper classification of the economic activity
• The applicable region based on the place of service
• Company size under the relevant legal criteria
• Alignment of employment contracts and payroll practices
Incorrect classification may result in labor contingencies and administrative sanctions.
Given the complexity of the wage structure established under Executive Decree No. 13 of 2025 and the diversity of economic activities covered, a position-by-position and operation-specific review is recommended, with the support of specialized labor and employment legal counsel, in order to ensure proper compliance and mitigate regulatory risk.
For any questions regarding the application of the updated minimum wage, its impact on your operations, or the review of labor obligations arising from this update, our team is available to provide the corresponding legal guidance.
