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(Published in Workers World May 25, 2006.)

Puerto Rico labor fights mass layoffs

120,000 public employees return to work

By Tom Soto
San Juan, Puerto Rico

Some 120,000 public employees returned to their jobs in Puerto Rico May 15 after being laid off for two weeks. On May 13, after experiencing the impact of large and often militant worker protests, and the loss of several hundred million dollars from Puerto Rico’s economy, the Legislature and Gov. Anibal Acevedo Vilá had come to an agreement on securing a new loan to cover the current budget deficit of $750 million. Repayment of the loan will come from a consumer sales tax that has not yet been approved.

Earlier, on May 12, tens of thousands of public employees and their supporters marched to the Legislature, demanding reinstatement and opposing the unfair imposition of a consumer sales tax. The Legislature and the governor consider this tax a “solution” to Puerto Rico’s ongoing fiscal and debt crisis. (See related WW article published on May 4.)

Unions at the march included the Puerto Rican Workers Council, the Workers Federation of Puerto Rico AFL-CIO, the Federation of Teachers of Puerto Rico, the Puerto Rican Workers Union, the General Workers Union, the Teamsters Union, and dozens of others representing public employees and the labor movement generally.

Starting at 6 a.m. on May 11, contingents of workers wearing union T-shirts and carrying colorful flags and banners took over the “Dos Hermanos” (“Two Brothers”) bridge in the Condado area of San Juan, an exclusive hotel-dominated tourist area. At the same time, Teamsters Local 901 and the United Front of Truck Drivers parked their huge transport trucks in the middle of the streets in front of Puerto Rico’s Convention Center complex.

The demonstration was impressive. As the front of the march neared the Legislature, the end of the march, consisting of the transport trucks, was still leaving the gathering site.

Though the labor movement pulled off this big demonstration, it is divided as to how to confront an impending 7-percent consumer sales tax and the layoffs the government plans when it gets down to “cutting spending.”

Some unions, such as the Federation of Teachers of Puerto Rico, the Electrical Industry Workers Union, the Teamsters, the Brotherhood of Exempt and Non-Educational Employees and others, oppose imposing any sales tax on the working class. They have instead advanced the programmatic demand that banks and corporations be taxed.

On the other hand, the Workers Federation of Puerto Rico AFL-CIO, the AFSCME affiliate United Public Servants, the Puerto Rican Workers Council and their allies, who constitute a large block of organized labor, are conciliatory and ready to accept an across-the-board consumer sales tax.

Government ordered layoffs

On May 1 the central government of Puerto Rico laid off 95,000 public employees, partially closing 45 government agencies and shutting down the public school system, which disrupted the education of 560,000 students. Fifteen of Puerto Rico’s 78 municipalities also partially shut down, resulting in layoffs for 25,000 municipal workers.

That’s 10 percent of the labor force laid off in one stroke. This is the equivalent of laying off 15 million workers in the United States.

Unprecedented in Puerto Rico’s history, the mass layoffs ushered in a sudden economic downturn and uncertainty, as 1.4 million workers and their families pondered what was going on with the economy and what was going to happen next.

The Puerto Rico Chamber of Commerce and Exports reported that in the first seven days of the layoffs, consumer retail sales across Puerto Rico were down 24 percent, amounting to a loss of $120 million as compared to consumer sales last year in the same period. Losses due to lost sales for small merchants were reported as even worse.

Many private businesses began to lay off part-time employees. By the second week of this crisis, losses were projected totaling close to $300 million.

Since the crisis exploded on May 1, when Gov. Acevedo Vilá of the Popular Democratic Party invoked the layoffs, workers have protested daily, demanding that the government reinstate the public employees. Union delegations have been constantly lobbying members of the Legislature - which is dominated by the pro-statehood New Progressive Party - to approve legislation authorizing borrowing to cover the current budget deficit and return public employees to their jobs. The current fiscal year ends on June 30.

Unions have set up a 24-hour-a-day encampment before the Legislature. Individual unions, student groups, religious orders, women’s organizations, anti-poverty groups, associations of the elderly and gay groups have all participated in protests in front of the Legislature and in front of the governor’s mansion. Some have gone to Puerto Rico’s financial district, pointing to the banks and corporations as the real culprits.

External debt and capitalist loans

The current crisis was let out of the bag when Wall Street bond holders - mostly banks, investment houses and money managers - represented by Moody’s Investor Services and Standard & Poor’s threatened to lower the rating classification of government bonds.

These bond holders demanded that the Puerto Rico government carry out “austerity measures” like cutting spending and securing new revenue sources, thus ensuring interest payments on Puerto Rico’s external debt, which is close to $45 billion.

Puerto Rico has the biggest per capita debt in all of Latin America. Servicing the total government debt currently requires a yearly outlay of $3 billion and this amount is growing.

Lowering the rating of Puerto Rico’s government bonds would decrease their value on the capitalist bond market and increase the interest rates charged for any future loans made by the government through bond offerings.

What this boils down to is that a bigger portion of the value of what workers in Puerto Rico produce will now be extracted from them to pay for the loans made by the bourgeoisie through its political parties. The workers will have to pay a higher interest rate when the capitalist government borrows money. Overall, it is an inflationary measure, a wholesale expropriation of the purchasing power of the masses.

On May 8, in the middle of this crisis, Moody’s Investor Services did just that, with Standard & Poor’s positioned to do the same in the coming weeks. Moody’s announced that due to the “Commonwealth’s strained financial condition, and ongoing political conflict and lack of agreement regarding the measures necessary to end the government’s multi-year trend of financial deterioration,” it was downgrading Puerto Rico’s government bonds to one notch above junk-bond status.

The announcement sent shock waves throughout Puerto Rican society, further fueling an already pessimistic atmosphere and deepening the crisis even further.

To satisfy Wall Street’s demands, legislators from the two bourgeois parties - the Popular Democratic Party and the pro-statehood New Progressive Party - have been imposing austerity measures. These include cutting public services, forcing the early retirement of public employees, increasing the rates charged for electricity, water, highway tolls, public transportation, increasing tuition at the public universities, etc. But the key issue remains imposing a consumer sales tax that would guarantee debt-service payments.

Teachers and Electrical workers unions: ‘Let the rich pay’

The most vocal and consistent opponents of the layoffs and against the consumer sales tax have been the Federation of Teachers of Puerto Rico, the Electrical Industry Workers Union, the Teamsters, the Brotherhood of Exempt and Non- Educational Employees and their allies.

On May 5, which in Puerto Rico was Teachers Day, some 5,000 teachers converged on the steps of the Legislature demanding immediate reinstatement. The teachers proposed a 5-percent tax on the net earnings of corporations making more than $10 million, and another 4 percent on all corporations’ gross income.

Using the pressure of thousands of teachers who were practically occupying the south side of the Legislature, a delegation of six union leaders entered the besieged Legislature and actually met with José Aponte, president of the House of Representatives, and made this proposal. Later the teachers and the union leaders marched militantly to Gov. Acevedo Vilá’s mansion, sitting down with the governor and making the same proposal.

The fact that these meetings took place at all is remarkable. It shows how nervous the bourgeois politicians are about the labor movement becoming radicalized and militant, given the current crisis.

Workers developing independent voice

Putting forth the important slogan of “let the rich pay” and proposing a specific legislative measure before the politicians, coupled with the mobilization of thousands of workers and the publicity the proposal has received, has begun to give the working class an independent voice in this current phase of the struggle, where the bourgeoisie is seeking to resolve the capitalist monetary crisis on the backs of the working class.

Banco Popular, the largest bank in Puerto Rico, has been put on the defensive. During every workers’ protest in the financial district, large numbers of Puerto Rico’s riot police have surrounded the bank’s offices. On May 7 Banco Popular took out a full-page ad in Puerto Rico’s largest newspaper that read in part, “We don’t understand why we are being singled out as being responsible for the crisis.”

The economic and political crisis has put all the contending class forces of Puerto Rican society into motion, each one advocating in its own interests. In light of the tumultuous events of the last two weeks, it is no wonder that when the Federation of Teachers and their supporters launched a campaign to “Stop the Profits of the Big Corporations and Banks,” picketing the Pan American pier and delaying the departure of a luxury cruise ship for five hours, the capitalist establishment began to worry.

What had been projected by the bourgeois politicians and media as a narrow fiscal crisis based on a budget deficit has been exposed as full crisis of capitalism.□

The author's email address is: commentstomassoto@yahoo.ca



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