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Lawmakers close ranks against Puerto Rico fiscal board’s proposed labor reform

By on April 25, 2018

SAN JUAN – Members of the Puerto Rico House of Representatives belonging to the three caucuses assured there was no political climate in the Legislative Assembly to pass the labor reform proposal for the private sector presented Wednesday by the island’s fiscal oversight board, which would reduce worker benefits.

The fiscal board presented its first draft legislative piece since its creation by the Promesa law about two years ago. The Labor Reform Draft Bill 2018 contains many of the measures Gov.Ricardo Rosselló had announced as his own, before subsequently withdrawing them.

The House of Representatives in session. (Yoel Parrilla / CB)

Without exception, the measures considered by the Legislature must be filed and endorsed by one or more legislators, including those presented by the administration or those submitted at the request of a group or individual, explained New Progressive Party (NPP) majority Rep. José Enrique “Quiquito” Meléndez.

While answering questions from Caribbean Business, Meléndez said the fiscal board cannot force a lawmaker to co-author the bill for it to reach either legislative chamber, “nor can voting for or against the measure be forced,” he added.

“When we were discussing the possibility of a labor reform [proposed by the governor] just a few weeks ago, there was no climate. I don’t see there is any climate for this,” Meléndez told CB.

The lawmaker called attention to the fact that the panel created by Congress establishes in its fiscal plan that the Legislative Assembly will approve any of its impositions, but said “the legislative bodies don’t operate like that.”

“The problem with this proposal is I don’t see how it can be saved because, simply, with my vote it won’t be passed, and I can’t see how they can force us. There’s no way they can force it to be approved,” Meléndez stressed.

The board indicates that the bill must be passed in both the House and Senate before May 31. However, Popular Democratic Party (PDP) Minority Leader Rafael “Tatito” Hernández assured that no lawmaker would vote in favor of a measure that would reduce worker benefits.

“The Legislature will not give way to it [the labor reform]. It’s simply going to remain a filed measure,” Hernández said. “You can establish it now that the Legislative Assembly, on May 31, won’t do it.”

Meléndez said the fiscal board will seek ways to “blackmail” the Legislature with the possibility that the government’s budget, which should come into effect July 1, will suffer greater cuts if the labor reform is not passed.

“That’s nothing but extortion, and trying to execute a coup d’état, because they don’t have the elected power to execute anything. It puts us in front of Congress; this is going to provoke a conflict that’s going to need congressional intervention,” the lawmaker said.

For his part, independent Rep. Denis Márquez exclaimed that “the Legislative Assembly has the obligation to forcefully reject this threat from the board” and stressed that the only “dignified and effective” response was a direct confrontation with the entity.

According to the board’s draft bill, “There is reasonable basis to conclude that imposing mandatory fringe benefits” impacts wages, reduces hirings and disrupts employment, but no study or analysis is cited to defend the conclusions.

Fiscal board sends draft labor reform bill to Puerto Rico government

With that statement of intent, the panel established by federal law would make way for a 25-cent increase in the minimum wage for workers older than 25. However, an increase to $8.25 would be conditioned to the labor-force participation rate exceeding 55%. The participation rate in Puerto Rico is currently 40%.

As Rosselló had suggested and defended before withdrawing his proposal a month ago, the board’s draft bill proposes the elimination of the Christmas Bonus starting in 2019, and reduces the accrual of vacation and sick leave to seven days a year each.

Meanwhile, enactment of the bill would result in the repeal of the Unjustified Dismissal Act as of 2019, whereby “a legal standard is established allowing the employee or the employer to terminate at will, without incurring is [sic] civil liability, any employment contract of indefinite duration.”

According to the draft bill’s article on severability: “It is the express and unequivocal will of this Legislative Assembly that the courts enforce its provisions and that this law be applied as widely as possible, even if some of its parts are declared ineffective, null, invalid, prejudicial or unconstitutional, or even if its application to any person or circumstances is declared ineffective, invalid or unconstitutional. The Legislative Assembly would have approved this law regardless of the severability determination that a court may issue.”

Several other lawmakers such as Reps. Gabriel Rodríguez, Joel Franqui and Félix Lassalle had already expressed that they would not favor a new labor reform.

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