* Stoppage called to protest large public sector layoffs
* Strike closes government offices, businesses, schools
* Governor appeals for calm, defends layoffs (Updates with protest
details, governor’s comments)
by Matthew Goldstein
Reuters (Oct 15, 2009)

SAN JUAN, Oct 15 (Reuters) – Tens of thousands of Puerto Rican public workers protesting layoffs shut down the center of the capital San Juan on Thursday in a one-day strike that closed many government offices, businesses and schools.

Labor unions in the U.S. Caribbean island territory called the 24-hour stoppage to protest the firing of thousands of workers by the government, which is trying to shrink a $3.2 billion budget deficit.

While Governor Luis Fortuno insisted the layoffs were essential to cut government spending and bolster the island’s credit rating, around 50,000 protesters packed Roosevelt Avenue, the main thoroughfare of the central Hato Rey financial district in San Juan, witnesses said.

Most government offices and schools, and many businesses remained closed on Thursday during the strike protest, which was also backed by religious and student organizations.

“The street will be our battleground. There will only be peace when those that govern respect the will of the people,” said Methodist Minister Juan Vera, who addressed the protesters along with labor leaders and other personalities.

Puerto Rico’s unemployment rate was 15.8 percent in August, higher than any U.S. state.

The island, which has a population of nearly 4 million and is a manufacturing hub for petrochemical, pharmaceutical and technology companies, as well as a major tourism destination, has been in recession for more than three years.

Fortuno, who last month announced the firing of 17,000 public workers, appealed for calm but defended the government’s strategy. Heavily indebted Puerto Rico is a leading issuer of tax-free bonds in the United States.

“I will not allow our credit ratings to suffer any further because of the effects it would have on the population,” Fortuno told Reuters in an interview. “It is just unthinkable …. We would be impaired from providing basic services.”

The government is hoping to avoid a downgrade of Puerto Rico’s bond rating to junk, or non-investment, grade.

Bond rating agencies Moody’s and Standard & Poor’s rate Puerto Rico a notch above junk level and Fortuno says any downgrade would lead to even more job cuts.

San Juan’s international airport, as well as the port area, operated normally on Thursday. Buses stopped running but many taxi cabs and the light rail system ran as normal.

Plaza Las Americas, the Caribbean’s largest mall located in the Hato Rey district, shut its doors.

Fortuno says the public sector layoffs are necessary to cut government spending by $2 billion annually. He told Reuters the government had already achieved savings of $1.2 billion and was on track to reach the $2 billion target.

Puerto Rico’s economy shrank a record 5.5 percent in the 2009 fiscal year that ended June 30. The Puerto Rico Planning Board said the decline showed the economy had touched bottom and predicted 0.7 percent growth in fiscal 2010.

(Additional reporting by Michael Connor in Miami; Writing by Pascal Fletcher; editing by Jim Loney)