Secretary of the Department of Economic Development and Commerce (DDEC by its Spanish acronym) Manuel A. Laboy, affirmed that the government of Puerto Rico is implementing a series of measures to retain and create high-level jobs, to deter this sector of the labor participation market from emigrating in the hopes of better career opportunities.
Earlier this year, the U.S. Census Bureau reported that Puerto Rico’s population declined by 4 percent since Hurricane Maria made landfall in 2017, devastating virtually every sector of the island. Nearly 130,000 people migrated—primarily to the continental United States—because their homes were destroyed, their jobs were closed or they sought the professional fulfillment that they otherwise deemed impossible to achieve on the island, among other reasons.
THE WEEKLY JOURNAL talked with several people in the labor force about how they regarded employment and career growth opportunities on the island, and the consensus was a perception that the only jobs available were part-time, seasonal and/or paid minimum wage, despite requirements such as previous work experience and an academic degree.
To address this concern, your correspondent conversed with Laboy, who discussed in detail the different programs that are already in place to incentivize business establishments that will, in turn, generate higher-paying jobs and professional positions. The secretary outlined what the government deems as “strategic sectors,” which are the focus of these programs.
“To us, strategic sectors are those that fuel productivity: production of added value; creativity, innovation and technology—which are also tied to exportation and in some cases to the replacement of imports. If you promote those strategic sectors, the rest of the sectors will benefit directly and indirectly because it increases people’s capacity to spend. Thus, you also increase consumption,” he said.
Other strategic sectors include the life sciences industry, which encompasses biochemistry, pharmaceuticals and neuroscience; manufacturing; aerospace engineering; arts, music and entertainment, including eSports and fantasy leagues; startups and tech companies; the blue economy, associated with the ocean and renewable resources; the export of services, such as call centers and consulting services; and tourism, which the secretary highlighted as one of the most important areas.
One of the government’s strategies to boost these sectors takes the shape of the Special Economic Development Fund (SEDF) of the Puerto Rico Industrial Development Co. (Pridco), which is included under the Puerto Rico Agricultural Incentives Act of 2018, but is “migrating toward the Incentives Code,” Laboy indicated. It is also included in the Economic Incentives Act of 2008, which was amended in 2017 so that 10 percent of the money in the SEDF would be used to market special incentives that promote investment in several industries.
“With that law, we encourage several key industries through that special fund. For example, we promote everything that is both local and foreign manufacturing. There, we promote everything from medical devices, aerospace, technology, biopharma, to biotechnology, food and beverage manufacturing, electronics—all of that falls under that special fund,” he asserted.
These funds may also apply to projects that already receive the tax incentives established in the Act to Promote the Export of Services of 2012.
According to Laboy, from Jan. 2017 to July 2019, the government has been able to “commit” nearly 25,000 new direct, full-time jobs in the aforementioned sectors, thanks to the SDEF. The secretary added that in that timeframe, the government assured a “commitment” of $1.3 billion in capital investments and roughly $1 billion worth of payroll with these incentives.
“The commitment is that those jobs will be created over time and then once they are created, the disbursement of incentives will be managed; it works through reimbursement,” he explained.
Another measure used to retain professionals is the DDEC’s Work Development Program, which manages funds from the Workforce Innovation and Opportunity Act (WIOA) established by the U.S. Congress.
The secretary said the WIOA funding allocation for the current year is almost $118 million, which are available to endorse professional training in the workplace, apprenticeships, training for the workforce population or people who want to return to the labor participation market.
The secretary also highlighted an initiative contained in the Incentives Code that aims to attract professionals of difficult recruitment. Although the term “difficult requirement” has not been fully defined—a thorough definition will be included in the Incentives Code after reaching consensus—it generally applies to positions that require sophisticated and often uncommon level of expertise, such as software developers, financial analysts and engineering department directors, among others.
The law, Laboy stressed, provides that persons whose annual salaries exceed $100,000, including marginal benefits, will only pay for income taxes per the first $100,000 earned, with the rest being exempt.
“If a person receives a salary of $125,000, the first $100,000 will be taxed by the Internal Revenue Code and the corresponding brackets, and then the next $25,000 will be 100 percent exempt from income taxes,” he said as an example.
As for Puerto Rico’s youth, Laboy pointed to the Youth Development Program, which manages several incentives. One of these, called Juvempleo, receives $1 million from the SEDF to promote work experiences, with particular emphasis on the strategic sectors. Under Juvempleo, employers must hire a young adult that meets with certain criteria for 580 hours and the latter receives their payroll from the program’s funds.
“We want this to work in strategic sectors because it exposes [youth] to a work environment that is precisely going to foster interest for them to develop professionally in areas that will give them greater access to better salaries, and encourage them to develop according to that experience,” Laboy affirmed. He added that some of these young adults are matched with startups that are working with Parallel18, a startup assistance program established under the Puerto Rico Science, Technology and Research Trust.
For more information on these programs, visit www.ddec.pr.gov.
Editor's note: A shortened version of this story was published on the October 23 print edition of The Weekly Journal.