Repealing Law 80 will not create the jobs that Puerto Rico needs, but that was the move Governor Ricardo Rosselló Nevares chose in order to reach an agreement with the Oversight Board, since they understand that it will be less harmful for workers, and will provide more resources to the government than engaging in a litigation with the federal entity.
This was admitted yesterday by the Secretary of Public Affairs and Public Policy, Ramon L. Rosario Cortés, who believes that eliminating the statute, will be less harmful to the economy and to the people than the loss of income that means eliminating the Christmas bonus and the seven-day reduction to vacation and sick leave.
Rosario Cortés, who is in charge of drafting the bill to repeal Law 80, spoke with El Nuevo Día about the token that, so far, has served as a truce between the Board and the government.
"We expect that (the bill to repeal Law 80) to be filed during this week or early next week. The measure includes what was discussed with the Board," he said.
"The governor, in a balance of the situation, had to analyze or we would end up in court - the board does not approve the budget with public employees Christmas bonus and I end up litigating - or I reach an agreement that allows the Christmas bonus and the reduction of paid leaves out of the discussion, and I take other important funds for economic development," said Rosario Cortés, referring to the funds that municipalities and the University of Puerto Rico (UPR) will receive.
The first lawsuit
While Law 80 - whose fate in the Legislature remains to be seen - would prevent a struggle between Rosselló Nevares and the Board, the government of Puerto Rico faced yesterday the first lawsuit related to the new fiscal plan certified by the Board and to the budgetary process.
Assured Guaranty and Financial Guaranty Insurance Company returned to court requesting Judge Laura Taylor Swain to declare that the newly certified fiscal plan does not comply with PROMESA provisions.
"The governor did not want to repeal Law 80. In the negotiation, the governor chose (to protect) what affected the most and that was for the most vulnerable ones, eliminating the Christmas bonus for public and private sectors employees. The governor said 'no' to that from day one and to that, the Board, within that scenario, put Law 80 as what they were going to retain," Rosario Cortés said.
Law 80 and the fiscal plan
For the Board, Law 80 is crucial because, according to economists who advise the federal entity, it is a change of paradigm that would help the economy grow and a growing economy is the key to reach an agreement with bondholders in Court.
According to the certified fiscal plan, the labor reform (including the elimination of the Christmas bonus and measures toincrease the labor force) would contribute by 1 percent to the gross product after its implementation.
El Nuevo Día learnt that the Board put on the table the most drastic token of this strategy to be added to the other structural reforms. Rosselló Nevares proposal was endorsed by the Board, but in a divided manner.
How, according to the fiscal plan, does eliminating Law 80 have more impact on the economy than breaking the electric power monopoly?
"The impact of the electric reform in the short and medium term is really to maintain prices because now you see a kilowatt hour of 20 cents, but it is fictitious because we are not paying debt," Rosario Cortés said.
"That famous stay that allows us not to pay debt under PROMESA, that is going to end, that is why we have to make the transformation," Rosario Cortés insisted.
According to the lawyer, who previously headed the Labor team for the firm Cancio, Nadal, Rivera & Díaz, the elimination of Law 80 must be seen in the context of the other reforms being contemplated.
"We have to make sure that we make changes at the level of transformation from the consolidation of agencies, the energy reform, educational reform, health, because this cushion we have had will not last forever," said Rosario Cortés.
On the other hand, according to the lawyer, Law 80 would affect fewer people while giving employers flexibility to create jobs.
Rosario Cortés uses arguments from the Department of Labor and Human Resources (DTRH, Spanish Acronym) and the Court Administration.
From 2015 and until last April, the Office of Mediation and Adjudication (OMA) and the Bureau of Labor Statistics, the two administrative areas that handle complaints under Law 80, dealt with 8,529 cases.
Some of these cases could have ended up in court, but this is unknown. Nor do we know how many of these claims resulted in workers' compensation and how many correspond to an individual or a group of affected workers.
What we do know is that between fiscal years 2010 and 2016, the courts of Puerto Rico received 675 cases for unjust dismissals, although understanding that many of the claims for unjust dismissal are based on federal courts.
Based on data linked to local forums, the number of cases registered through Law 80 in the last eight years would represent only 1 percent of the labor force in Puerto Rico.
If that is the case, it could be said that Law 80 would not affect a large number of workers who are dismissed, but neither would it be an obstacle for employers.
However, according to Rosario Cortés, one of the challenges of the statute for employers - which in turn was made more flexible with the first labor reform a year ago - is the time it takes to litigate.
As an example, the lawyer said that cases he filed while working for the private sector still remain active in court.
What will happen if, after a year, the private sector that previously advocated eliminating Law 80 does not create the thousands of jobs estimated in the fiscal plan?
"Law 80 cannot be seen on its own. It has to be considered along with all the other things and reforms that are being done to improve the economy. It would not be fair to see it that way only," said Rosario Cortés.
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