Puerto Rico Unions Threaten Strike Against Austerity Budget

Yana Kunichoff June 9, 2014

Union workers in Puerto Rico are resisting a crippling budget proposal.

Pub­lic union work­ers from a hand­ful of unions across Puer­to Rico have spent the last week block­ing ports, shut­ting down thor­ough­fares and slow­ing pub­lic tran­sit. But that may be just the begin­ning: In the com­ing week, work­ers are expect­ed to vote on whether to hold a gen­er­al strike across the country.

The unions are stand­ing against the aus­ter­i­ty bud­get pro­posed this spring by mem­bers of the U.S. commonwealth’s Gen­er­al Assem­bly to deal with the country’s recent bond down­grade and loom­ing pay­ment of its debts to bond­hold­ers. The Fis­cal Sus­tain­abil­i­ty Act of the Gov­ern­ment of the Com­mon­wealth of Puer­to Rico, as the bud­get is called, would allow the gov­ern­ment to bring in emer­gency pow­ers” to deal with the cri­sis. Under this author­i­ty, it could rene­go­ti­ate all pub­lic employ­ees’ con­tracts, liq­ui­date unused sick days, and freeze salaries — there­by gut­ting work­ers’ col­lec­tive bar­gain­ing pow­ers. Pri­va­tiz­ing the commonwealth’s elec­tri­cal com­pa­ny, the Puer­to Rico Elec­tric Pow­er Author­i­ty, has also been placed on the table as an option for stanch­ing the cri­sis; the emer­gency mea­sures would also include clos­ing 100 pub­lic schools.

The bud­get must be passed on June 30 to coin­cide with the begin­ning of the 2015 fis­cal year on July 1. And as that dead­line nears, unions across the island have been esca­lat­ing their protests. On June 5, the union of trans­porta­tion employ­ees pre­vent­ed fer­ries around the coun­try from func­tion­ing. That same day, work­ers from the bus and port author­i­ties, as well as the state insur­ance funds, blocked the entrance to the cen­tral gov­ern­ment build­ing in San Juan. Amid the dis­rup­tions, the labor sec­re­tary said at a coun­cil meet­ing he would not spec­u­late as to whether the actions already con­sti­tut­ed a gen­er­al strike, or were just a series of protests. 

Nora Var­gas-Acos­ta, a labor lawyer in Puer­to Rico who rep­re­sents sev­er­al of the unions who would be affect­ed by the bill, includ­ing health­care work­ers and cor­rec­tion­al facil­i­ty work­ers, says that although the fis­cal cri­sis is cer­tain­ly real, its effects shouldn’t be whol­ly shoul­dered by work­ers. The way the gov­ern­ment wants to address the eco­nom­ic cri­sis is falling on the right of work­ers,” she says. From my per­spec­tive, it is right that the unions feel that it should not be this way. There are some costs but the gov­ern­ment does not want them to bear equal­ly on all.”

In Feb­ru­ary, sev­er­al cred­it rat­ing ser­vices, includ­ing Moody’s Investor Ser­vice and S&P, brought Puer­to Rico’s bond rate down to junk” sta­tus. But the alarm bells set off by the rat­ing are only the lat­est signs of trou­ble for the island, con­sid­er­ing the strong hold finan­cial mar­kets from the Unit­ed States have on Puer­to Rico. The coun­try is in its eighth year of reces­sion, with more than $70 bil­lion in pub­lic debt held large­ly by U.S.-based investors.

Blame for much of this cri­sis has been laid at the doorstep of the Unit­ed States, which has held Puer­to Rico as a ter­ri­to­ry for 115 years. In 2006, the U.S. Con­gress did away with the island’s main eco­nom­ic devel­op­ment strat­e­gy—fed­er­al tax cred­its for com­pa­nies who made prof­its in Puer­to Rico — which caused many Puer­to Rico-based com­pa­nies to flee to oth­er tax havens such as the Cay­man Islands and the Nether­lands. In recent years, the island has again begun woo­ing the super-rich from the Unit­ed States, with a hand­ful of mil­lion­aires already tak­ing up its offer of low tax­es and warm weather.

On the ground, the nation of 3.7 mil­lion peo­ple has a 15.4 per­cent unem­ploy­ment rate; gov­ern­ment pen­sions are under­fund­ed by $37 bil­lion. These prob­lems have prompt­ed an exo­dus of peo­ple to the Unit­ed States, with more than 35,000 peo­ple leav­ing between April 2010 and July 2011 alone, sev­er­al years into Puer­to Rico’s reces­sion. The econ­o­my is dom­i­nat­ed by man­u­fac­tur­ing, finance and pub­lic sec­tor jobs, but the gov­ern­ment is the island’s largest employ­er — mean­ing that its work­ers are the most liable to suf­fer from pub­lic cut­backs. Puer­to Rico’s con­sti­tu­tion goes so far as to legal­ly stip­u­late bonds will be paid off even before gov­ern­ment pay­checks.

And the Fis­cal Sus­tain­abil­i­ty law isn’t the first time the gov­ern­ment has put its employ­ees on the line to deal with its finan­cial prob­lems. In Octo­ber 2009, then-Gov. Luis Fortuño’s fir­ing of 17,000 work­ers, osten­si­bly to avoid an imme­di­ate gov­ern­ment shut­down caused by the fis­cal cri­sis, had already set off protests from pub­lic work­ers as well as polit­i­cal par­ties and com­mu­ni­ty orga­ni­za­tions, all of which cul­mi­nat­ed in a gen­er­al strike. Despite the unrest, Pub­lic Law 7, passed in March 2010, gave Fortuño’s con­ser­v­a­tive admin­is­tra­tion the lee­way to sus­pend union con­tracts and dis­miss even more pub­lic sec­tor work­ers with­out due process rights laid out in their contracts.

Despite the sim­i­lar­i­ties of Law 7 to the fis­cal sus­tain­abil­i­ty law, cur­rent gov­er­nor Ale­jan­dro Gar­cía Padil­la has tak­en steps to pub­licly sep­a­rate the two mea­sures. Padil­la, whose par­ty crit­i­cized Law 7 when it was ini­tial­ly intro­duced and has said its effects have been neg­a­tive, defend­ed his party’s fis­cal sus­tain­abil­i­ty law by say­ing it won’t cre­ate lay­offs in the pub­lic work­force. Still, unions regard the bud­get as yet anoth­er way to leach civ­il employ­ees of their rights.

Var­gas-Acos­ta doesn’t deny that there are trou­bles with­in the labor orga­ni­za­tions them­selves, such as cor­rup­tion and unions who work close­ly with the admin­is­tra­tion. But, she says, unions have helped pro­vide pub­lic work­ers with a good stan­dard of liv­ing, one she would like to see shared by all work­ers in the coun­try. The things that you are hear­ing from the gov­ern­ment is look how many rights they have, look how well they are doing,’” she says, refer­ring to the government’s impli­ca­tion that the pub­lic sec­tor is the place to trim the fat. This means unions are in fact doing their jobs and doing it well.”

As rumors of a nation­wide pub­lic work­ers’ strike swirl, Var­gas-Acos­ta says unions have put for­ward their own sug­ges­tions for how to fix the cri­sis. Among the pro­pos­als are sug­ges­tions that state agen­cies should min­i­mize their num­ber of out­side con­trac­tors, which they heav­i­ly rely on or, as the head of the elec­tri­cal work­ers’ union has sug­gest­ed, place a mora­to­ri­um on debt pay­ments. With debt pay­ments expect­ed to total $18.35 bil­lion through 2018, accord­ing to esti­mates from Moody’s Investors Ser­vice, and the afore­men­tioned con­sti­tu­tion­al clause promis­ing the pay­ment of debt ser­vices, its unclear how like­ly these plans are to gain traction.

The unions have for years been telling the gov­ern­ment, let’s address this, and offer­ing an alter­na­tive plan,” she said. But work­ers’ attempts to have fruit­ful dia­logue with the admin­is­tra­tion are not hav­ing any results.”

Yana Kuni­choff is a Chica­go-based inves­tiga­tive jour­nal­ist and doc­u­men­tary pro­duc­er. Her work has appeared in the Guardian, Pacif­ic Stan­dard and the Chica­go Read­er, among oth­ers. She can be reached at yanaku­ni­choff at gmail​.com.
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