Puerto Rico government approves cut in working hours as its economy struggles.
Amid a severe economic crisis, the government of the US territory, Puerto Rico, has approved a voluntary reduction of working hours for government employees.
The measure follows the signing of several laws that are believed to help government reduce spending and generate revenue.
Earlier this week, Puerto Rico experienced another multimillion dollar default. It struggles to to stay afloat as it irons out the restructuring of a portion of its nearly $70 billion public debt with help from federal control board.
One new law allows government agencies to reduce an employee’s workweek if they reach a voluntary agreement to do so. Public employees would be allowed to work four days a week in exchange for receiving only 80 percent of their salary.
Another new law aims to boost revenue for a severely depleted retirement system that is in danger of running out of money in upcoming years. The law pushes public agencies to prioritize revenues for the retirement system over any other payments, expenses or disbursements. Puerto Rico has underfunded public pension obligations by more than $40 billion.
Puerto Ricans have been hit with new taxes and ongoing increases in utility bills amid a decade-long economic slump and an unemployment rate that hovers at 11 percent. More than 200,000 have left for the US mainland in recent years in search of jobs and a more affordable cost of living.
Earlier this week, Gov. Alejandro Garcia Padilla angered bondholders and some legislators after vetoing a bill that sought to create a special fund so the government could make minimum payments on the island’s debt. Garcia said the government needs the limited liquidity it has to keep providing essential services.
He also said the US territory should allow the federal control board to decide how much in resources should be set aside for debt payments. Officials expect the board will be created in upcoming months.
US President Barack Obama has signed a rescue package in June temporarily blocking creditor lawsuits from being filed until February 2017.