Pressure grows on Peru's Humala as public health strike widens

LIMA Thu Oct 18, 2012 6:43pm EDT

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LIMA (Reuters) - Hundreds of hospital managers have resigned from Peru's public health service in solidarity with striking doctors who accused President Ollanta Humala on Thursday of ignoring their demands for a bigger share of a record fiscal surplus.

The resignations, in support of the lingering strike by 11,000 doctors in the nation's health system, underscore growing criticism of the government over its inability to negotiate labor accords and forestall closures of hospitals and schools.

Humala is also still struggling to end strife with the national teachers' union. After striking for a month, teachers agreed this week to temporarily return to classrooms for a one-time bonus of 300 soles ($116) but the broader wage dispute remains unresolved.

The walkout by doctors, now in its fifth week, has caused huge backlogs at 170 public hospitals and 1,500 clinics where most patients are of modest means. Many of them voted for Humala in 2011 on the basis of his promises to help the poor.

Public sector unions blame Humala's conservative economic team, led by Finance Minister Luis Miguel Castilla, a favorite of Wall Street, for blocking wage increases.

"Our country has been growing strongly but pay in the public sector for the last decade has fallen substantially. We haven't received a cent of increases. Our buying power has fallen 30 or 40 percent," said Jesus Bonilla, a leader of the doctors' union which also represents hospital managers.

Unlike neighboring Brazil, where public sector unions have long had close ties to the ruling Workers' Party and routinely won wage increases, Peru's past three presidents have kept wages essentially frozen and haven't relied on unions for votes.

Peru ranks last in Latin America in public health spending with funding worth just 4.7 percent of gross domestic product, the doctors' union says.

"We think the root cause of this bad situation is the finance minister," Cesar Palomino, a leader of the doctors' union, told reporters.

Humala and his ministers have repeatedly said pay must be merit-based and linked to performance.

"We call on the doctors to return to work because the people who are suffering the costs of this are the patients. Dialogue is always open, an offer has been made, but we won't respond to blackmail," Castilla said late last month, the last time he addressed the issue publicly in any detail.

The strikes by professionals in Lima have put renewed pressure on Humala after he enjoyed several weeks of relative quiet following a July cabinet shuffle to calm a wave of anti-mining unrest in far-flung provinces.

The government's overall fiscal position has never been better. The public sector fiscal surplus rose to a record 7 percent of gross domestic product in the first half of this year and the economy is on track to grow 6 percent, the fastest pace in South America.

The approval rating of Humala, who has drifted to the right since being elected on a center-left platform in 2011, has hovered around 40 percent for the past three months after falling from highs of more than 60 percent when he took office.

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Doctors want their monthly pay doubled or more. The current pay scale runs from 850 soles ($327) to 3,400 soles. Teachers are also demanding the government double the average salary from an average of 1,200 soles a month.

But the government has rejected demands for pay increases, saying the unions must agree to new wage scales that will link pay to performance.

It has also accused one faction of the teachers' union of being led by far-left radicals and doctors of relying on "violence, blackmail and threats" to push their case.

Health Minister Midori de Habich said hospital administrators who quit "would be committing a crime."

Politicians from across the political spectrum, not just the left, have criticized the government's handling of the walkouts.

Juan Sheput, a politician from the centrist Peru Posible party, has accused Habich of "not knowing what to do" and doctors are demanding her resignation.

Critics say there is plenty of money available for pay increases. The education ministry has only spent 52.7 percent of its budget so far this year, while the health ministry has spent just 54 percent, according to official data.

Lourdes Flores, a politician from the conservative PPC party, said Humala's government was incompetent.

"The president told the country he believed in a strong state. But the state is a disaster," she said this week on RPP radio. "The school year is lost" and "the hospitals don't work."

(Writing by Terry Wade; Editing by Claudia Parsons)

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