Saturday, June 4, 2011

Focus on the Jobs

To the casual observer, it might seem mind-boggling to see a 14 yr old drive a Ford 350 van to pick up merchandise for his father's convenience store (colmados, as they're called in Puerto Rico). This adolescent, who needless to say is too young to possess a driver's license, helps out at his family business because they're short-staffed. In Puerto Rico, where the unemployment rate is now very close to 17%, you would assume that finding hired help should be cakewalk. This is clearly not the case, and there are two reasons for this disconnect. One, most businesses on the island simply aren't hiring. Second, for most minimum wage jobs, it's actually not easy to find and retain employees.

The labor participation rate is at an estimated 40.6%, meaning that less than half of the people on the island work, and yet this does not seem to be a worrisome issue for government officials. Perhaps the reason why nobody has proclaimed a state of emergency in the lack of jobs, is that the last time the labor participation rate hit above 50% was back in 1950. One way in which countries around the world have helped increase employment and create jobs in the long-run is by attracting foreign investment, as well as investing in its own education system. The Puerto Rican government has dropped the ball in both regards. This is perfectly exemplified in the case of El Fideicomiso de Ciencia y TecnologĂ­a (the Puerto Rico Science, Technology and Research Trust), a quasi-government entity whose objective is to foment a knowledge-based economy on the island.

The greatest obstacle for the PRSTRT has been, ironically, the government itself. As it turns out, the public officials who sit on the board of directors have not been attending meetings and fulfilling their fiduciary roles. This has resulted in the stalling of projects, many of which are expected to create jobs in the long-run and lead to the creation of start-up companies. Politics has often served as a hindrance to economic growth. Another reason why there aren't enough jobs created is due to the government's failure to reform the island's sclerotic labor laws. Businesses often find it very difficult to fire employees without paying an "indemnity" ("mesada" as it is called on the island). This results in much greater hesitation, for the employer, to hire full-time employees. In addition, as the economic outlook for the island is less than optimistic, companies are even more unlikely to invest.

The unemployment situation on the island warrants much greater focus on the government's part. Governor Fortuño, while campaigning for governor back in 2008, once pledged to "generate" 100,000 jobs. The numbers are quite fuzzy, but the fact of the matter is that the unemployment rate has crept up since he took office. Just a few weeks ago, Pfizer announced it will eliminate 1500 jobs in Puerto Rico. According to the Puerto Rico Labor Department, from March 2010 to March 2011, 37,000 jobs have been lost on the island. Based on the current employment statistics, the amount of jobs created has obviously not exceeded the amount that have been eliminated. It is said that of the estimated 1.057 million who work on the island, each is supporting nearly 4 people. The numbers clearly speak for themselves, this is an economic situation which is utterly unsustainable. Little wonder why President Obama's upcoming June 14th visit is said to focus primarily on the island's economy.


Kofla Olivieri said...

President Obama is struggling to create jobs in the mainland, as I am sure his trip to Puerto Rico is simply just a photo-op. I personally believe most politicians, especially in the island, are only preocupied on getting re-elected than creating jobs.

Luis E. said...

Just like most things on the island the problem is bureaucracy. Its very hard to do business in the Puerto Rico.


Do you have an email address?
Id like to send you a couple questions via email.



adriana said...

Thanks Kofla and Luis for your comments.

Luis- you can e-mail me at

Roberta said...

Most enlightening. Thank you.