Puerto Rico’s local businesses are in a crisis
As the coronavirus remains prevalent in today’s society and economy, small businesses are still facing challenges of remaining open. During the week of August 17, Manuel A. Laboy, secretary of the Department of Economic Development and Commerce, told The Weekly Journal that, given the coronavirus (COVID-19) pandemic’s impact on Puerto Rico’s economy, he estimates that 20 to 30% of the 43 thousand existing businesses in the islands will close permanently.
Keep in mind the hardest hit businesses throughout the pandemic have been from the small and medium-sized businesses with fewer than 50 employees. These businesses represent about half of the jobs generated by the private sector. These small and medium-sized businesses represent 95% of the 43,000-private business in Puerto Rico.
“The benchmark is that between 20 to 30% of existing businesses will be forced to permanently cease operations. Hence, we are trying to mitigate the impact and make them the least possible. This is a reality and it will have a serious economic impact,” Laboy stressed.
Laboy also discussed how tourism has been the most affected economic sector. Prior to COVID-19, the tourism sector generated about 77,500 jobs. As a result of COVID-19, more than 25% of the tourism workforce has been permanently unemployed.
Laboy stated, “The most affected [sector] is tourism. It is followed by retail sales and the restaurant sector, which many do not have the capacity to operate at 50%. 100,000 jobs were lost from March to May. With the reopening, 20 thousand were regained, but now with the increase in infections and the setback on opening, we expect the worst”.
Laboy continued stressing that “The hurricanes were disastrous as well, but we had a definite plan of how we were going to recover. But with the coronavirus, we do not know when it will end. It is a direct attack on health that is creating enormous pressure on the private sector. The state needs to collect its contributions to provide services and this has a dangerous knock-on effect. This is the worst we have ever faced”.
Laboy closed by stating that the $1.4 billion in CARES Act funds have not been disbursed. Furthermore, Laboy discussed the plan for a second round of federal stimuli is being negotiated in Congress and to use money from the Community Development Block Grant Program for Disaster Recovery (CDBG-DR) as a way to mitigate the impact Covid-19 has had on Puerto Rico.