Ailing Puerto Rico cuts more public sector jobs

By MIKE MELIA

SAN JUAN, Puerto Rico

Puerto Rico's government eliminated 2,000 civil service jobs on Friday, cutting further into the public payroll as the island suffers its deepest economic slump in decades.

The mass layoffs, along with some 12,000 planned for early next year, are casting workers out into an economy starved for jobs. Bankruptcies have soared, many businesses have closed and there is a growing waiting list for public housing.

About one in six people are now out of work on the U.S. island territory of 4 million people.

Marcelo Massol said his wife cried for hours when they learned that they would lose their jobs as public school custodians in the southern city of Ponce. They now plan to sell sandwiches from home to support two children and a grandson.

"There's nothing else for me to do," the 42-year-old Massol said.

Gov. Luis Fortuno, a Republican elected last year on a pledge to spur the island's economy, ordered the layoffs to narrow a $3.2 billion budget deficit. He says the dismissals of clerks, nurses, social workers and other employees will avert a government shutdown.

The U.S. federal stimulus program has helped the island, with $2 billion so far awarded to projects that repair roads and build public housing. But the territory's main economic engine -- manufacturing -- is hurting from the global recession. Real estate and tourism are also in a slump.

The government is the largest employer in Puerto Rico, where the U.S. and local governments account for nearly 30 percent of the work force -- roughly twice the rate of states of similar populations such as Connecticut, Kentucky and South Carolina.

Sergio Marxuach, an analyst with the Center for the New Economy think tank, said the island's financial crisis is a breakdown of an economic model that has prevailed for three decades. Since foreign investment dried up in the 1970s oil crisis, he said, Puerto Rico has relied on transfers from the U.S. federal government, tax breaks and expanded public employment.

Three years into a recession, Puerto Rico's unemployment is above 16 percent -- higher than any other U.S. territory or state. The economy shrank 5.5 percent in the last fiscal year, hammering households across the island.

Bankruptcies are up 30 percent and more than 10,000 people are on a government waiting list for public housing.

Rob Grune, a senior vice president for Jacksonville, Fla.-based Crowley Maritime Corp., said the shipping company is bringing 85 percent fewer new cars to Puerto Rico from the U.S. than it was three years ago.

On an island where nearly half the population lives below the federal poverty line, laid-off government workers say Fortuno's austerity plan demands sacrifices from those who can least afford them.

"They're messing with the rice and beans of poor people," said Carmen Latorre, 49, who is losing her $21,110-a-year job as a school janitor.