Puerto Rico's government announced Friday that it will lay off more than 16,000 public workers in the US Caribbean territory, adding to an unemployment rate higher than that of any US state.

The government hopes the layoffs will help close a US$3.2 billion deficit as the island struggles through its third year of recession and a 15 per cent unemployment rate.

Union leaders announced an islandwide strike in protest on October 15.

The layoffs of 16,970 employees are needed to prevent the government from shutting down and sinking the island's credit, said Carlos Garcia, president of the Government Development Bank of Puerto Rico.

"Today is an extremely difficult day for all Puerto Ricans," he said.

Most workers will be laid off November 6 in a move expected to save US$386 million, he said.

However, 500 of those workers will be contracted by the Treasury Department to help collect US$3.6 billion in outstanding debts owed by residents, private corporations and other entities.

It is unclear whether the contracts will just be temporary.

Layoffs unavoidable

Governor Luis Fortuno said the layoffs were unavoidable.

"Not doing anything would have been devastating to our economy, your pocketbook, your family and our society," he told Puerto Ricans in a pre-recorded message issued to the news media.

"It would have meant more increases, more taxes and another government shutdown."

In May 2006, a budget stand-off forced a partial government shutdown.

Garcia said the layoffs were delayed because 75 per cent of 134 governmental agencies did not have statistics about its employees or their responsibilities.

He said officials identified 800 employees not accounted for within the Corrections and Public Works departments.

They also found employees in jobs they were not hired for, such as a low-level secretary who oversaw air operations at a local military base and an office clerk who served as a bailiff, Garcia said.

The layoffs mean unemployment will now rise to 17 per cent, Garcia said.

Jose Rodriguez Baez, president of a union that represents about a third of the island's 200,000 public employees, said that other protests beyond the strike also are planned.

Rey Rosario, a 34-year-old teacher, argued the layoffs will only worsen the economic crisis.

"This will have a domino effect on the economy because with less income there is less consumption," he said. "This is an insensitive act, and layoffs should always be the last alternative."

Eight thousand workers were fired in May.

-AP