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Increase in Minimum Wage for Gov’t Workers to Cost $10.9M

By on September 11, 2017

Editor’s note: The following article originally appeared in the September 7 print edition of Caribbean Business.

SAN JUAN — The Puerto Rico government’s planned minimum wage increase—from $7.25 to $8.25 an hour—will benefit 6,459 public employees working in different agencies and will have an impact of $10.9 million, according to a report by the Office of Management & Budget (OMB).

The agency with the largest number of public employees who will benefit from the increase is the Education Department, where 2,595 workers are earning less than $8.25 an hour. Next on the list are: the Corrections & Rehabilitation Department with 923 employees, the State Elections Commission with 429, the Family Socioeconomic Development Administration with 427 and the Families & Children Administration with 242.

The announcement comes at a time when the government is scheduled to send severance letters to 847 public employees who allegedly were “illegally” appointed, representing nearly $15 million a year in payroll.

Chief of Staff William Villafañe (Juan J. Rodríguez/CB)

It also takes place while the federal court is considering the legal action filed by the fiscal control board to implement a furlough of two days a month for some 130,000 public employees from the executive branch and public corporations—except the estimated 13,000 police officers. The measure was scheduled to start in September and be in place through June 2018, or until $218 million in savings are achieved. The government has refused to implement the furloughs.

La Fortaleza Chief of Staff William Villafañe told Caribbean Business that the minimum wage increase in the public sector—a promise made by Gov. Ricardo Rosselló—does not have to be consulted with the board because “it’s a management measure.”

The increase was made possible by Executive Order No. 2017-026, which also states that the government will evaluate how to reach a minimum salary of $10 an hour for the public sector in the coming years. “It’s going to be implemented gradually and in a way that the government goes first, as it has done with its career employees, and so on,” Villafañe said.

Evaluating how to implement the increase—whose details have not been provided so far—is in the hands of an interagency committee, which will issue a report on the matter in April 2018.

Employees below minimum wage

The chief of staff confirmed that some of the employees benefited by the increase were below the federal minimum wage, as they were on “pay scales…. In the central government, they were at least [earning] minimum wage.”

This could have happened because the government failed to make required adjustments to the wages that are computed every 15-day period or per month, as the federal minimum wage kept increasing, said labor lawyer Ruy Delgado.

Delgado—also a former Labor secretary during former Gov. Rafael Hernández Colón’s second term—explained that if that was the case, if the government had employees whose wages fell below the federal minimum, it would have to pay them the differential because it is an ongoing debt.

“It’s not illegal. The thing is they paid less than what they had to pay and now they owe that money,” the attorney told Caribbean Business.

Delgado said employees could file a complaint before federal Judge Laura Taylor Swain, who is handling the government of Puerto Rico’s bankruptcy proceedings under Title III of the federal Promesa law. The problem is that there is a chance the legal action will be subject to a stay, as has been the case with the rest of the cases against the government as a result of the bankruptcy process.

Although Delgado acknowledged the salary increase is positive for employees, he deemed it contradictory that the government should implement such a measure when a furlough for public workers is in dispute.

“With less money in the government’s coffers, what the board is asking for makes more sense [to reduce the work schedule for public workers]…. I think they are two different things, but at the same time they fit together,” he said.

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