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Fiscal Supervision Board challenges the labor reform before the Federal Court

The Fiscal Oversight Board (JSF) presented tonight the legal appeal that asks the Federal Court to annul Law 41-2022, of amendments to the state of labor law, better known as the labor reform.

This same week, the federal entity had warned that it would not make further warnings to the government regarding its refusal not to set aside the new statute. Faced with this picture, Governor Pedro Pierluisi had said that he would be willing to litigate the position of his administration.

The Board establishes that the government did not provide data and analysis that justify that the new statute will benefit Puerto Rico and generate more jobs.

“An economic analysis carried out by the Oversight Board concluded that Law 41 will have a negative effect on the Puerto Rico labor market and its economy in general, which will lead to fewer jobs, greater emigration, lower economic growth and lower tax revenues for the Commonwealth. The Law would make Puerto Rico less competitive in the US and world markets,” indicates a statement from the federal entity in charge of the island’s finances that was released minutes after the legal appeal was filed.

The new day made efforts to obtain a reaction from the governor, but so far it has not occurred.

The government argues that there can be no analysis of a law that was recently created. The government maintains, however, that Law 41-2022 will boost the island’s economy and generate more jobs.

“The Board has to recognize that there is no way to determine, at this time, what is the impact of something that has just been legislated, that is, this exercise is totally speculative. If anything, the Board and no one has been able to demonstrate that, since the labor reform was carried out, employment increased, the economy improved because that labor reform was carried out. No one has been able to prove that,” the governor said this week after the Board sent an ultimatum through a letter addressed to Omar Marrero, executive director of the Fiscal Agency and Financial Advisory Authority.

Law 41 restores some rights to workers that had been eliminated with Law 4 of 2017, in terms of vacation and sick leave, as well as the parameters to qualify for benefits such as the Christmas bonus and the extension of probationary periods.

Since it took office, the Board has been successful in challenging laws that it considers violate certified fiscal plans, including the statute that exempted municipalities from their contributions to the Vital Plan and the retirement of public employees, as well as the so-called Retirement Law Worthy, which sought to revive defined pension models in the government sector.

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