Puerto Rico Oks voluntary reduction in working hours

Puerto Rico's governor on Wednesday approved a voluntary reduction of working hours for government employees after signing several laws to help reduce spending and generate revenue amid a severe economic crisis.

The move follows another multimillion-dollar default this week by the U.S. territory, which is struggling to stay afloat as it prepares to restructure a portion of its nearly $70 billion public debt with help from a 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.

The measures are unlikely to have a significant impact, said Vicente Feliciano, an economist and business consultant in San Juan.

"As long as the reduction in hours is voluntary, the impact is minimum," he said. "How many people are going to favor that kind of arrangement?"

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 U.S. mainland in recent years in search of jobs and a more affordable cost of living.

Feliciano also warned that the measure aimed at boosting the public retirement system only postpones the inevitable.

"Eventually, there'll be a debt restructuring and it will probably include cuts to the current retirees," he said. "There's a conflict between retirees and bondholders for the same pot of money."

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 U.S. 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.

Meanwhile, a rescue package signed by U.S. President Barack Obama in June temporarily blocks creditor lawsuits from being filed until February 2017.

Puerto Rico Oks voluntary reduction in working hours