Ten years have passed since Congress imposed the Fiscal Control Board on Puerto Rico under the PROMESA Act. During this period, Puerto Rico’s working class has faced a systematic austerity offensive that has cut the social wage, destroyed public services, weakened labor rights, and undermined pensions.
[Originally published in Spanish on rumboalterno.net]
It was promised that these sacrifices would bring prosperity, that the Board would put public finances in order, and that it would end corruption. None of those promises came true.
The reality has been exactly the opposite. The Board, or “Junta” (as it is known in Spanish), was not created to protect the people on the island but to guarantee repayment of the government’s debt to bondholders and vulture funds. Its role has been to ensure that the wealth produced by the working class is transferred to finance capital. Meanwhile, corruption persists, poverty is rising, and hundreds of thousands of Puerto Ricans have emigrated.
The fiscal crisis was not the result of a single administration. It is the result of the exhaustion of the colonial and capitalist economic model built since the mid-20th century. The so-called “developmentalist model” was based on attracting foreign capital through tax exemptions, subsidized infrastructure, and cheap labor; encouraging emigration to alleviate unemployment; relying increasingly on federal transfers; expanding public employment; and financing it all through growing debt.
For a time, this model allowed for some growth, but by the late 1970s it had entered a permanent crisis. Faced with capitalism’s inability to sustain economic development, the PNP and PPD governments increasingly resorted to public debt and shifted the cost of the crisis onto the working class.
Privatization: Turning Public Assets into Private Business
The colonial government launched a privatization offensive in the 1990s, and it has continued to this day. Public enterprises were sold off, highways were put out to concession, airport management was privatized, and electricity transmission and distribution—among other services—were handed over to private companies.
The justification was always the same: the private sector would be more efficient. Reality tells a different story. Privatization has meant billions in subsidies to private corporations, deteriorating public services, higher utility rates, and new burdens on the public treasury. The state took on the debts and risks, while the profits went to private hands.
Far from resolving the fiscal crisis, privatization became yet another mechanism for transferring public wealth to private capital.
Privatizations have meant millions in subsidies to private corporations, deterioration of services, tariff increases, and new burdens for the public treasury. / Image: Rumbo Alterno
The Attack on Pensions
One of the most brutal manifestations of austerity has been the attack on public employee pension systems.
In 1999, the so-called Retirement Act of 2000 was passed, eliminating the traditional “defined-benefit” system for new central government employees and replacing it with individual “defined-contribution” accounts. The state shifted the entire financial burden onto the working class, leaving pensions completely unfunded, with no contribution from the government as employer. As a result, the risk of retirement no longer fell on the government; it shifted to workers.
While the previous system guaranteed a pension based on years of service and salary, the new model depends exclusively on the money accumulated in an individual account, managed by private companies that profit from administering those funds.
Subsequent reforms froze the pensions of thousands of retirees for nearly two decades. As a result, tens of thousands of pensioners today live on incomes below the poverty level.
The “Junta” intends to extend this same model to other retirement systems, including those of the University of Puerto Rico and the Electric Power Authority, and to eliminate future cost-of-living adjustments as well.
The Crackdown on the University of Puerto Rico
The University of Puerto Rico has been another key victim of austerity.
Eliminating the formula that guaranteed a fixed budget allocation resulted in a 50% cut to the budget it received from the government ten years ago. To compensate, the university administration resorted to steep tuition increases, the reduction of academic programs, the elimination of positions, and the deterioration of study and work conditions.
The result has been the gradual commodification of higher education. With the UPR charging $157 per undergraduate credit hour—not including technology, maintenance, and laboratory fees—a university education has stopped being a public service and has become just another commodity.
For thousands of young workers, attending a public university is now much more difficult than it was just a decade ago.
The University of Puerto Rico has been another major victim of austerity. / Image: Rumbo Alterno
The Demolition of Labor Rights
The fiscal crisis was used to justify the most significant legislative offensive against labor rights in Puerto Rico’s recent history.
Act 7 of 2009 initiated this process with mass layoffs of public employees and the freezing of collective bargaining agreements in government agencies.
Later, Act 66 of 2014 suspended the economic provisions of collective bargaining agreements and further restricted bargaining in government agencies and public corporations.
Acts 3 of 2017 and 9 of 2021 froze collective bargaining agreements and prohibited new union representation elections.
Act 8 of 2017 established the concept of a “single employer,” making it easier to forcibly transfer employees between agencies and undermining job security.
Act 26 of 2017 further intensified the offensive. It standardized fringe benefits downward, reduced vacation and sick leave, and, for the first time, made legally established benefits a ceiling rather than a minimum. This means that unions can no longer negotiate benefits exceeding those established by law.
This legislation stripped collective bargaining in the public sector of its economic substance. If fiscal plans established by the “Junta” prohibit wage increases and the law bars negotiations over improved benefits, what remains to negotiate?
In the private sector, Act 4 of 2017 reduced leave for new employees, weakened protections against unjust dismissal, extended the probationary period, and made it harder to qualify for the Christmas bonus. The Board has even supported eliminating the mechanism for periodic minimum-wage reviews.
Austerity has not been limited to government policy. It has been part of a broad offensive against the living conditions of the entire working class. It has led to school closures, deteriorating hospitals, neglected infrastructure, higher electricity rates, increasingly precarious work, declining pensions, and the growing privatization of essential services.
None of these measures constitute a policy or management error. They are the logical consequence of an economic system that prioritizes debt repayment and private profits over human needs. There should be no doubt: the Fiscal Control Board does not represent the people of Puerto Rico. It represents the interests of bondholders and international finance capital.
The Limits of Reformism and the Communist Alternative
The experience of the past decade raises an unavoidable question for the labor movement: Why, despite countless demonstrations, strikes, legal challenges, and changes in government, does austerity not only continue but intensify?
Answering this question correctly is crucial. If we misdiagnose the disease, the treatment will also fail.
For years, much of the labor movement’s leadership has denounced the Board’s policies as expressions of “neoliberalism” or “savage capitalism.” There is no doubt that these policies are deeply anti–working class. But this explanation falls short because it frames the problem as a deviation from capitalism rather than as an expression of its normal functioning in times of crisis.
Marx explained more than a century and a half ago that capitalism does not produce to satisfy human needs, but to make profits. As capital accumulation advances, the bourgeoisie can make limited concessions to the working class. But when profitability declines, and the system enters a crisis, those concessions become an obstacle to restoring profits, and the ruling class attempts to roll them back one by one. That is exactly what we have seen in Puerto Rico.
The Fiscal Control Board did not invent austerity. Congress established it to manage a crisis that colonial capitalism could no longer resolve. Privatization did not begin with PROMESA, nor did the attack on pensions begin in 2016. The Board accelerated a process that had been brewing for decades because it responds to the needs of finance capital, not to the personal preferences of its members.
This understanding changes the political perspective entirely.
If the problem were simply the Board, it would be enough to abolish it. If the problem were a specific political party, it would be enough to elect another government. If the problem were solely corruption, it would be enough to imprison corrupt officials. But experience has shown otherwise.
PNP and PPD governments, despite different programs and rhetoric, implemented essentially the same austerity policies. Not because all politicians are identical, but because they administer the same economic system and face the same pressures from finance capital and US imperialism.
This is precisely reformism’s limitation.
Reformism rests on the idea that the state can be persuaded to manage capitalism for the benefit of the majority. But the capitalist state is not a neutral arbiter above social classes. As Marx, Engels, and Lenin explained, it is the instrument through which the ruling class protects its fundamental interests.
That is why workers’ gains, won over decades of struggle, can be wiped out quickly when economic conditions shift. As long as the major banks, multinational corporations, and monopolies control the main levers of the economy, every right won by the working class will remain under constant threat.
This does not mean that struggles over immediate demands are unimportant. Quite the contrary. Every strike, every mobilization, and every collective bargaining agreement defended strengthens working-class organization and consciousness. Communists participate in all these struggles because they are the school where workers gain collective experience and discover their own strength.
But we also speak the truth.
We communists participate in all these struggles because they represent the school in which workers acquire collective experience and discover their own strength. / Image: Rumbo Alterno
No collective bargaining, however important it may be, can eliminate the root causes of austerity as long as capital retains control of the economy. No legislative reform can prevent a new crisis from bringing the same attacks on wages, pensions, and public services back to the table.
That is why the economic struggle must be consciously transformed into a political struggle. Against the dictatorship of finance capital, we put forward a program based on the interests of the working class majority.
We demand the immediate abolition of the Fiscal Control Board and the repudiation of a debt incurred to enrich bankers and speculators.
We advocate nationalizing the banks, the energy system, telecommunications, ports, and major monopolies under the democratic control of the workers. Society must use the immense wealth it creates to meet social needs, not to increase the profits of a privileged minority.
Only on this basis will it be possible to develop a democratic economic reconstruction plan that guarantees decent jobs, housing, healthcare, free public education, and adequate pensions for the entire population.
It requires the working class to seize political power and replace market anarchy with democratic economic planning. This is not a utopian aspiration. It is the conclusion drawn from the experience of the past decade.
Ten years of the Fiscal Control Board have demonstrated, beyond any doubt, that there is no capitalist solution for Puerto Rico. Every attempt to manage this system ultimately shifts the burden of the crisis onto those of us who live off our labor. The choice is not between harsher austerity and milder austerity; nor is it between “neoliberal” capitalism and a supposedly “humane” form of capitalism. The real alternative lies between the dictatorship of finance capital and the democratic power of the working class.
That is the perspective for which we revolutionary communists fight.
History shows that no ruling class has ever voluntarily relinquished its privileges. The working class won every one of its rights through organization, solidarity, and struggle. That same force exists today. It is present in every workplace, every community, every school and university, every union, and among the thousands of young people who reject a future of poverty, precariousness, and emigration.
The decisive task of our time is to organize that force into a revolutionary communist party capable of unifying all the separate struggles into a single struggle for the socialist transformation of society. Only in this way can we put an end once and for all to austerity, exploitation, and the domination of capital.
Because wealth is produced by the working class. And the working class must govern society.
We are poor because they are rich!
Make the capitalists pay for the crisis!
For the right to live, capitalism must die!