Thursday, October 22, 2020

Gov. Vázquez suspends order that raised minimum wage in construction

By on October 1, 2020

Gov. Wanda Vázquez (Courtesy)

New executive order maintains requirement of Puerto Rican cement use, prior labor agreements

SAN JUAN – Gov. Wanda Vázquez Garced has issued Executive Order 2020-075 to temporarily suspend Executive Order 2018-033, which raised construction workers’ minimum wage, and put in effect laws that require the use of cement produced in Puerto Rico and to require the use of labor agreements in construction projects funded with public funds.

The temporary suspension applies to the order issued by former Gov. Ricardo Rosselló Nevares to increase the minimum wage to $15 for construction workers paid with public funds.

“The difficult situation that the construction industry has experienced has been further aggravated as a result of the closure and distancing measures taken in response to the emergency decreed by COVID-19. Although the careful and staggered opening of different economic sectors has allowed construction projects to resume, the total halt, which was necessary to implement for approximately two months, has had a serious effect on this industry. As a consequence, it is imperative to rethink the recent measures that have been adopted concerning the construction industry and evaluate their effects, advantages and disadvantages so that future decisions are based on the reality of the industry in these times of COVID- 19 and aimed at the sustainability of this important sector,” the governor said in a news release issued by her office, La Fortaleza.

The release says that “multiple sectors have indicated the urgent need to conduct a detailed evaluation of the impact that the measures contained in [Rossello’s] executive order have had on the economy in general and on the construction industry, including in those construction projects not financed with public funds.”

Among the arguments presented by the “different public and private entities,” La Fortaleza said, is that the order “has meant an increase in costs in construction projects. This, together with the increase in costs that has been experienced” in the acquisition of construction industry goods and services, “warrants an in-depth evaluation of the desirability of keeping EO-2018-033 in effect.”

The provisions of the new order will be applied prospectively.
“Therefore, construction projects financed totally or partially with funds from the Government of Puerto Rico, its agencies, instrumentalities, and public corporations that begin or are published after the date this Executive Order is issued, will not be governed by the provisions of EO-2018-033. However, the contracts or agreements signed, including subsequent amendments, pursuant to the provisions of EO-2018-033 will continue in force, according to the agreed terms and conditions,” the release reads.

The governor’s office explained that during the suspension period, a task force composed of the Department of Labor and Human Resources, the Department of Economic Development and Commerce, the Department of Housing, the Central Office for Recovery, Reconstruction and Resilience (COR3), the Infrastructure Financing Authority, the State Insurance Fund Corp. and “members of the private sector, in conjunction with any other agency they deem pertinent and the private sector, will carry out the corresponding studies and evaluations, so that it can issue a recommendation on the potential repeal or amendment of EO-2018-033.”

The task force will also be considering whether to recommend repealing or amending regulations related to the implementation of OE-2018-033, including the Interpretative Guidelines issued by the [Labor Department] in its Circular Letter No. 2018-001. This working group will be led by the [Labor] secretary and must issue the corresponding recommendations on or before November 30, 2020,” according to the release.

“The construction industry is one of the main sources of employment in Puerto Rico, especially for working-class people who have been most affected by the economic and fiscal crisis of the past years and by the measures taken to combat COVID-19. Therefore, it is the ministerial duty of the government to ensure the well-being and stability of both construction workers and the industry itself,” Vázquez added.

Contractor support

The Puerto Rico Chapter of the Associated General Contractors of America (AGCPR), the leading association of the construction industry, welcomed the decision. 

“The implementation of EO 2020-075 is a positive step for the construction industry and the objective of maximizing the potential of federal reconstruction funds and create as many jobs as possible,” AGCPR President Umberto Donato said in a release Thursday. “Since day one, the construction industry asked for the suspension of EO 2018-033 for the negative impact it would have on Puerto Rico’s overall economy and the capacity of the construction industry to become a motor or economic development.”  

AGCPR President Umberto Donato (File)

The association said that in the months following Rosselló’s order, “the warnings became real; thus, limiting the capacity of creating sustainable construction jobs. At present the industry has a little over 20,000 employees, which is similar to the numbers before hurricane María in 2017, when employment had reached a very low point.”  

AGCPR and the construction industry recommended that the commonwealth government adopt federal EO 13658, which sets the minimum wage at $10.80 an hour for 2020, while the working group completes the evaluation of local market conditions and reaches an agreement regarding minimum wage in construction. 

“We are aware and convinced that the construction industry, as well as other sectors of the economy, need to adjust minimum wage rates and that modifications should come as a result of an agreement after an analysis of local economic conditions. We hope that the working group created for this task will be able to act quickly to adopt initiatives that promote economic activity and the creation of safe and sustainable jobs,” Donato added.