In May the administration of Gov. Aníbal Acevedo Vilá organized a two-week layoff of 95,000 public employees on the grounds that it had run out of funds. The shutdown of schools and other government agencies, a de facto lockout, was a warning to working people of severe “belt-tightening” ahead.

The government and both colonial parties—the pro-Commonwealth Popular Democratic Party (PPD), which controls the governor’s office, and the pro-statehood New Progressive Party (PNP), which dominates Congress—have used the $740 million budget deficit as a club to impose a sales tax. The U.S. bond rating agency Moody’s gave them a hand by downgrading Puerto Rican government bonds to junk status.

Both parties have wrangled over the exact amount of the tax, each posturing as acting out of concern for workers. PPD leaders, claiming to be worried about having enough funds to pay public employees, said a 7 percent tax would be “a victory for the Puerto Rican people.” PNP officials proposed a tax of “only” 5.5 percent “so as not to harm irreparably our working class,” as House of Representatives president José Aponte put it. The dispute has gone to the island’s Supreme Court for resolution.

The government lockout surprised many of the leaders of Puerto Rico’s unions, who acted as if the administration was bluffing when it threatened mass layoffs. The unions organized protests, including one on May 1, calling for more taxes on corporations.

Starting on July 1, Puerto Rico’s water and sanitation authority raised residential water service rates by 38 percent. The agency said it was seeking to become “self-sufficient” and no longer dependent on government subsidies.

U.S. colonial rule in Puerto Rico has meant a deteriorating water system. In a telling acknowledgment of these conditions, the water utility said the rate increase would help improve delivery for some of the 70,000 households with “deficient” service. Deficient was defined as “not having water for three or more days a week,” the San Juan daily El Nuevo Día reported July 1.

The rate hike is only the latest in a series of austerity measures pushed by the Puerto Rican government and Washington, including other utility rate increases, moves to slash government jobs, and university tuition hikes.  
 
Union leaders jailed
Two weeks before the water rate increase, a federal court in Puerto Rico convicted and jailed 10 former top officials of the Independent Authentic Union (UIA), the water workers union, on charges of misappropriation of the union’s health-care fund. In October 2004, during a hard-fought strike by the UIA against the water authority’s proposal to turn over the medical plan to a private outfit, FBI agents had raided the union headquarters and carted off files, which they used to prosecute the union officers.

Spokespeople for U.S. capitalists, for whom Puerto Rico serves as a profitable source of superexploited labor to produce pharmaceuticals and other manufactured goods, have used the “fiscal crisis” to call for a more open assault on what the British magazine The Economist called Puerto Rico’s “oversized welfare state.”

In a May 27 article titled “Trouble on Welfare Island,” the Economist article complained that Puerto Rico, where manufacturing accounts for 42 percent of economic output, has become less competitive as a source of profits than Ireland, south Korea, and other semicolonial nations. The reason, it said, was “generous” federal payments. Noting that “around 30% of the territory’s jobs are in the public sector,” it called for an offensive against a “coddled bureaucracy”—meaning the unions, which in Puerto Rico are concentrated among public employees.

Washington’s social welfare measures were instituted after World War II to guarantee social stability, undercut the independence movement, and make Puerto Rico a lucrative source of investment. Even after cutbacks over the past decade, federal payments that include food stamps and housing subsidies make up more than 20 percent of total personal income on the island.

“The result is lots of idle poor,” the Economist stated. “Many families do not view the federal handouts as temporary.”

The business magazine reported that annual income per person was $12,000 in 2004, less than half that of Mississippi, the poorest U.S. state. More than 48 percent of Puerto Rico’s people remain under the federal poverty line—a proportion nearly four times higher than in the United States.

Joblessness is officially 12 percent, and the real figure is much higher if it includes discouraged workers who have given up actively looking for work.
 
 
Related articles:
New York: Protesters demand release of Puerto Rican patriot Antonio Camacho  
 
 
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