Palau faces labor crisis as outflow of migrants, inflation cause job vacancies to surge

By: Justoria Marie Borja

(Koror, Palau) – Palau has 90 job vacancies across all industries. The government sector has the most vacancies with 60, the private sector has 12, and the semi-private and government sectors have 18. This labor shortage occurs at a time when jobs are plentiful, but the labor force has been shrinking due to a variety of factors.

A major factor is the increasing number of families and individuals moving abroad in search of better opportunities. In recent years, as the cost of living and inflation have risen sharply, many workers have left Palau in search of more stable and higher-paying jobs elsewhere. This trend has led to a depletion of the local labor force and made it difficult for the economy to recover from the impact of the COVID-19 pandemic.

Palau’s workforce has yet to fully recover from the COVID-19 pandemic. The pandemic caused a sharp economic downturn, and despite some recovery, the labor market has yet to return to pre-pandemic levels. Palau’s inflation rate, which has been historically low, has increased significantly in FY2022 and FY2023, making the situation worse. According to the Palau Economic Review, inflation averaged 13.2% in FY2022, driven by rising food and fuel prices, global supply shortages, and the war in Ukraine. Although global inflation began to ease in FY2023, the introduction of Palau’s Goods and Services Tax (PGST) caused local inflation to soar, currently at 12.4%.

The PGST is part of a major tax reform initiative introduced in fiscal year 2023, helping to restore fiscal balance and reduce deficit financing needs. However, it has also contributed to rising inflation, making it more difficult for workers to make ends meet. As a result, many have chosen to leave Palau for better opportunities in other countries.

The massive loss of employees has left both the government and private sectors struggling to fill key positions. The government sector, which traditionally offers more stable employment, has been particularly hard hit, with 60 positions vacant. The private sector has fewer vacancies but is also facing difficulties in attracting and retaining talent.

Existing job vacancies may provide relief. Filling these positions can help address issues supporting the local economy and improve essential services.

As job vacancies continue to emerge, it is critical to assess these issues. Addressing the root causes of labor shortages is essential to sustaining the country’s economic recovery and meeting social needs.

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