What you will learn

• Why residence and work authorization are separate in Panama.
• How the 90% labor rule affects employers and foreign workers.
• Which professions are restricted or difficult for foreigners.
• How Friendly Nations, Pensionado, Digital Nomad and MITRADEL permits differ.
• Why foreigners should not rely on unemployment benefits or a broad safety net.

Key facts

Main point

Panama looks like an open and international country, but its labor market remains one of the most protected in Latin America. For foreigners, the important issues are not only visas, but also employee quotas, closed professions, MITRADEL work permits and the near absence of a social safety net.

If you are moving to Panama with independent income, remote work for foreign clients, a pension or your own business, the country can work well. If the plan is to arrive and compete for an ordinary local job, the reality is much more restrictive.

The 90% labor rule

The foundation of Panama's labor protection system is Article 17 of the Labor Code. It requires that at least 90% of regular employees in a company be Panamanian citizens, or foreigners who meet specific long-term residence and family conditions. Foreign specialists and technical workers are subject to a separate limit of up to 15% of the workforce.

The rule applies not only to headcount, but also to payroll proportions. In practice, this means a company cannot simply hire a mostly foreign team and call it a local business. For small companies the quota can become a serious bottleneck, especially if they need several foreign specialists at the same time.

Enforcement is not theoretical. MITRADEL and immigration authorities inspect workplaces, particularly in Panama City and in sectors where foreign labor is common. Employers usually require a clean immigration file, a proper employment contract and a separate work permit before taking the risk of hiring a foreigner.

Professions closed to foreigners

Panama has more than 30 professional fields that are fully or effectively closed to foreigners unless they go through Panamanian licensing, nationality or professional association requirements. This is one of the most important points for doctors, lawyers, engineers, accountants, psychologists, journalists and other licensed professionals.

Retail trade deserves special attention because Article 289 of the Constitution reserves retail activity for Panamanian citizens. For regulated professions, a foreign diploma is rarely enough by itself. Before planning a local career, it is worth checking both the immigration rules and the professional licensing rules with a licensed Panamanian attorney.

Visas and work permits

A common mistake is to confuse residency with work authorization. In Panama, immigration status and the right to work are processed separately. A person may have legal residence and still not have the right to work for a Panamanian employer.

The Friendly Nations visa is popular because it can provide a path to residency, but it is not a shortcut around labor restrictions. The Digital Nomad Visa is useful only when the income comes from abroad. For regular local employment, the employer and employee usually need to go through MITRADEL, and the employer must still respect quotas.

Social benefits

Panama should not be viewed as a country with a broad welfare system for newly arrived foreigners. There is no unemployment benefit system comparable to what many people know from Europe or North America. The main cash transfer programs are built primarily for Panamanian citizens.

Children of foreigners can usually access public education if they have the required documents, and emergency medical assistance may be available through MINSA. But for long-term planning, foreigners should assume they need their own income, savings, private insurance and a realistic legal strategy. International organizations such as UNHCR, HIAS and IOM may support vulnerable migrant groups, but this is not the same as a general state benefit system.

Darién and refugee status

Panama became globally visible because of the Darién route, but most people who crossed the Darién were not trying to settle in Panama. The country functioned mainly as a transit corridor toward Costa Rica, Mexico and the United States.

Refugee recognition remains limited compared with the number of people who pass through the country. For many migrants, Panama is a temporary stop. For expats and relocation planners, the bigger practical issue is not refugee policy, but labor access, documentation and the cost of legal compliance.

Mulino policy

President José Raúl Mulino made migration control one of the central topics of his administration. Panama increased controls around the Darién route, coordinated more closely with the United States and implemented measures aimed at reducing irregular transit through the country.

The Venezuelan factor remains important because many migrants in the region come from Venezuela and because deportation logistics are politically and practically difficult. Even so, the 2025 numbers show that Panama's route management changed sharply under the new policy.

Takeaways for expats

• Do not assume that residence equals the right to work.
• Check whether your profession is restricted before planning a local career.
• Budget time and legal fees for MITRADEL if local employment is part of the plan.
• Do not expect unemployment benefits or a broad state safety net.
• Independent income, foreign remote work or a properly structured business are usually more realistic paths.
• If you are opening a company, check both immigration rules and commercial restrictions before spending money.

Panama can be an excellent base for people with foreign income, entrepreneurs with the right legal structure and retirees. It is less attractive for people whose plan depends on finding a standard local job after arrival.

Legal and official sources

Data reflects the 2025-2026 period. Before making employment or immigration decisions, speak with a licensed Panamanian attorney and verify the current rule with the relevant authority.

Related entities

Frequently asked questions

Does residence in Panama give foreigners the right to work?

No. Residence and work authorization are separate processes.

Can foreigners work under the Friendly Nations Visa?

For local employment, a separate MITRADEL work permit is usually still required.

Can foreigners work under the Digital Nomad Visa?

Yes, but only for foreign-source income, not for a Panamanian employer.

Does Panama have unemployment benefits?

Panama does not have a broad unemployment benefit system, so newcomers should keep their own financial reserve.

Which professions are restricted for foreigners?

Restricted areas include medicine, law, engineering, accounting, journalism, retail trade and several licensed professions.