News from Puerto Rico as of
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Puerto Rico cuts more government jobs
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| Published on Saturday, September 26, 2009 | Email To Friend Print Version
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SAN JUAN, Puerto Rico (Reuters) -- Puerto Rico on Friday said the commonwealth's new governor would undertake a second round of layoffs to eliminate 13,774 government jobs in order to trim a $3.2 billion deficit and shelter wobbly credit ratings.
Government Development Bank President Carlos Garcia told a news conference that 16,970 workers would be let go across many agencies and departments but other people would be hired for finance and educational jobs.
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| Governor Luis Fortuno |
Governor Luis Fortuno said earlier this year that the government would have to lay off as many as 30,000 employees in order to cut government spending by $2 billion annually. Some 7,816 government workers were laid off in late May.
He said this would be the first step in a restructuring to bring spending in line with revenues and avoid a downgrade of Puerto Rico's bond rating to junk, or non-investment, grade.
Moody's and Standard & Poor's currently rate Puerto Rico a notch above junk level.
The administration has also cut spending on contracts, instituted a hiring freeze, levied temporary taxes and announced measures, such as increased public infrastructure investment and low-cost financing, to jump-start the economy, which has been in recession for more than three years.
Officials said austerity measures have saved about $400 million annually, but that the $2 billion target would have to be reached this year.
Employee unions, including island school teachers oppose the staff reductions, and plans are being made for a general strike.
"This new round of layoffs is unacceptable. We are not only relying on a strategy of strikes but are talking about multiple actions, including civil disobedience and lobbying to stop this," said Jose Rodriguez Baez, president of the Puerto Rico Workers Federation.
Many business leaders and economists also criticized the move, arguing that the firings will harm the island's fragile economy even more.
The governor has argued a credit downgrade would inflict "massive" harm on the economy, costing 130,000 private sector jobs and halving the value of government pension funds.
Puerto Rico's economy shrank 5.5 percent in the 2009 fiscal year that ended June 30, a record drop, the Puerto Rico Planning Board said in August.
The agency said the decline showed the economy had touched bottom and predicted 0.7 percent growth in fiscal 2010.
The island's unemployment rate hit 15.8 percent in August, the highest recorded for that month in 16 years.
The administration floated some $5 billion in bonds this year backed by a sales and use tax. It is not expected to make another general obligation bond issue until it fulfills its fiscal stabilization plan, which includes the layoffs. | | | | Reads : 808 | | | |
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