The worldwide economic downturn is hitting the Virgin Islands too, causing a marked increase in initial jobless claims since the last quarter of 2008, Labor Commissioner Albert Bryan told the Senate Finance Committee during budget hearings Wednesday in Frederiksted.
"Average claims for the first and second quarters of ’09 are at 445 in comparison to ’08 which was at 283," Bryan said. "Compounding this problem is the apparent lack of job openings in the workplace, which are actually down 50 percent from 2007."
As a result, the V.I. Labor Department’s rapid response activities to help quickly enroll groups of displaced workers from Hovensa, Stanford Financial Group and other companies shedding employees. The rapid response services have been provided to over 2,667 dislocated workers since January, he said.
Increased unemployment claims have depleted Unemployment Insurance funds.
"The dramatic increase in claims has taken a toll on our trust fund which has dropped from approximately $11 million to approximately $1.5 million within the past six month," Bryan said. "At this rate, funds will be depleted by the end of August."
To prevent this, Bryan said Labor has applied for a federal loan to its Unemployment Insurance trust fund under the terms of the U.S. Social Security Act, stepped up delinquency collection efforts and challenged a decision by the U.S. Department of Labor making the Virgin Islands ineligible for an extra seven weeks of Unemployment Insurance funding passed by Congress last fall. Regardless of these measures, very soon the territory’s workers must start paying more to keep the system solvent.
"We will have to revisit our Unemployment Insurance tax rate structure and anticipate the reinstatement of taxes by January," he said.
Labor is asking for $6.3 million from the general fund to operate locally funded programs and $2.2 million from the Government Insurance Fund for Workers Compensation and Occupational Safety and Health programs, for a total local appropriation of $8.5 million – virtually unchanged from last year. With federal funding of $8 million, Labor projects a 2010 total budget of $16.5 million.
Among other functions, Labor oversees labor relations, wrongful termination and employee dispute hearings and appeals, workplace safety and health, the Workers Compensation program, Unemployment Insurance, job training programs and the Bureau of Labor Statistics. They will also be enforcing the July 24 increase in the minimum wage to $7.25 per hour and helping employees who have been underpaid recapture those wages.
"Our statistics indicate that approximately 5,000 workers in the Virgin Islands were making less than $7.25 per hour prior to July 24," Bryan said. "In addition to … wage and hour investigations, we are also appealing to those 5,000 affected workers to check their pay rate and to report any disparity in their wages to the Division of Labor Relations."
No votes were taken at the information gathering budget hearing. Present were Sens. Craig Barshinger, Terrence "Positive" Nelson, Sammuel Sanes, Nereida "Nellie" O’Reilly, Patrick Sprauve, Usie Richards and Wayne James.
