After months of butting heads, Puerto Rico and its federally appointed oversight board have agreed on the debt-ridden commonwealth’s much-needed economic reform plans, although pension reform still is in dispute.
As part of the economics deal, Gov. Ricardo Rossello and the legislature will revoke their statute that makes at-will firing tougher for private-sector employers. The government hopes that this will lead to an influx of on-island hiring, reports Reuters. In exchange for relaxing the termination laws, the board will no longer try to eliminate Christmas bonuses or reduce the number of sick days for public and private-sector workers.
The board’s fiscal plan, which it unveiled in April, would have ordered the removal of the bonuses and reduced sick days to 14 days, a program the governor adamantly criticized. The island’s currently grants 27 vacation and sick days per year for full-time employees.
The board will also work to revise plans to reverse the bankrupt island’s economy, by closing a third of the commonwealth government’s budget over six years. Rossello had rejected the original blueprint, saying the board lacked the power to order such spending reductions.
However, there was no agreement on how to deal with another massive controversy: Puerto Rico’s pension reform.
The federally appointed board’s director, Natalie Jaresco, told BondBuyer.com that it is still looking to cut the spending for public-worker retirement benefits by 10% starting in fiscal 2020, a plan Rossello also opposes. The commonwealth faces a $70 billion shortfall, and can only cover 8% of its pension obligations.Although she did not say when, Jaresco expects the board to vote on the fiscal plan’s changes “soon.”