Puerto Rican Government Launches Controversial Round of Layoffs

SAN JUAN – The Puerto Rican government announced Friday

the dismissal of 7,816 public employees, the first batch of up to
30,000 layoffs that Gov. Luis Fortuño says are essential to
trimming an annual budget deficit of $3.2 billion.

Carlos Garcia, president of the Governmental Bank for

Development, held a press conference to provide the specifics of
the plan.

“Today is a day of great responsibilities in which the hard

consequences of the past are coming home to roost,” he began,
seeking to place the blame for the layoffs on Fortuño’s
predecessor, Anibal Acevedo Vila.

Garcia said that 6,797 of the people losing their jobs are temporary workers, while 809 of them
are career civil servants.

The massive layoffs are necessary because only 2,585 public employees accepted an incentive
package to voluntarily resign, the bank chief said.

He acknowledged that the government’s initiative “will affect flesh-and-blood people,” but
insisted that this was the most balanced formula for dealing with what he defined as “the deepest
recession in Puerto Rican history.”

For his part, Labor Secretary Miguel Romero announced that his department is prepared to offer
all the aid at its command to those who lose their jobs in the layoffs.

He also recalled that those who voluntarily accepted the layoff incentive package will have the
right to a six-month private medical plan, a training scholarship worth $5,000 and another sum of
$2,500 for relocation.

The Puerto Rican government’s payroll costs increased an average of 6 percent annually over the
last 10 years, compared with a 1 percent growth in revenues.

The latest report by the Department of Labor and Human Resources says that Puerto Rico’s
unemployment rate stands at 14.7 percent, its highest level since the shutdown of the island’s
government in May 2006, when the rate briefly soared to 19.8 percent.

Puerto Rico is now in its fourth year of recession and the economy of the U.S. commonwealth is
expect to remain sluggish for the remainder of 2009.

Fortuño’s economic program sailed through the Puerto Rican legislature, where the governor’s
pro-statehood New Progressive Party, or PNP, has big majorities in both houses.

Besides the public-sector layoffs, his plan calls for a temporary hike in income taxes on
corporations and affluent individuals, increased sales taxes on wine, beer and cigarettes and
extensive outsourcing of government functions.

With Puerto Rico’s main opposition force, the Popular Democratic Party, still reeling from the
rout it suffered at the polls last November as the scandal-plagued Acevedo Vila lost his bid for a
second four-year term, labor unions have taken the lead in opposing Fortuño’s austerity plan.
EFE