Cuba’s worker cooperatives: “We decide what to do here”

HAVANA – We are seated in an airy section of a newly renovated restaurant. Waiters cheerfully deliver platters laden with meat and vegetables to go along with refreshing mojitos, the classic Cuban drink. The grilled meat is tender and savory and vegetables and fruits are fresh and crisp.

We are dining at La Casona de 17. What makes this place different is that it’s a cooperative of 46 workers who entirely run the operation and share in the profits. It represents one of the bold new changes sweeping Cuba as it updates its social and economic model of socialism.

La Casona Cooperative was once operated by the Ministry of Tourism. The workers made the decision to become a cooperative seven months ago. “At first we were very nervous and worried, especially about how much we would earn,” related Migdelis Azahares, president of the cooperative. “Then we thought because we were one of the first, we would be well known.”

Cooperatives have operated in Cuba’s agricultural sector since the start of the revolution in 1959. New economic and social guidelines adopted in 2011 after a nationwide discussion provide the blueprint for the far-reaching restructuring going on in Cuba. The guidelines promote the role of cooperatives, especially in the service sector. Today there are 500 non-agricultural cooperatives employing 8,000 to 10,000 workers, mainly in the food, transit and retail sectors. Permits have been approved to start up another 1,500 with a total of 3,000 expected by the end of 2015.

The cooperatives democratically manage state property which has been loaned to them. This not only promotes economic incentives for the workers; it also decentralizes economic authority, allowing greater decision-making power in the workplaces.

It also streamlines what is regarded as a bloated and inefficient state sector. Besides turning over management to cooperatives, a lot that was once done by state ministries will now be done by the provinces and municipalities. All together, it is expected that 1.5 million workers will be laid off from the state sector. However workers are not being thrown on the scrap heap. They will be offered new jobs to replace workers who have retired, or retrained for new careers.

Cooperative experiment

The service cooperatives are in an experimental stage. La Casona “is a pilot project, but in the future I think all Palmares (state owned) restaurants will become cooperatives,” said waitress Marylin Herrera. If something is not working things can be changed. Out of these experiments new rules and regulations governing service cooperatives will be established.

La Casona de 17 has some built in advantages. The restaurant, which occupies an old 1920s colonial-style mansion, has both an indoor section and an outdoor grill. Situated within walking distance of the famed National and Cuba Libre hotels, the restaurant will benefit from the expected growth in tourism from normalization of relations with the United States.

“We serve the best food in Havana!,” coop head Azahares proudly exclaimed. Her boast is backed up by some great reviews on TripAdvisor. She noted, “Our menu includes traditional Cuban food like cocoyam fries, roasted pork, tamales from the Eastern provinces, tostones, rellenos, lobster and shrimp. We’re also rescuing some lost recipes and serve international food to cater to the tourists.”

The cooperative is always experimenting with new foods. “We get a brainstorm, for example a hamburger with multiple kinds of meat,” explained Azahares. “Before we didn’t sell anything with bread. But we watch very closely how people respond to the food.”

The cooperative also supports other small businesses in the neighborhood such as self-employed people who produce breads and cakes and other bakery items, often working out of their homes. In the future the cooperative will bake in-house.

It took the workers about a year to establish the cooperative. They hired consultants as needed and received five months of training from a group in the Ministry of Tourism, including on legal issues so they could draw up contracts. Workers who manage finances were trained by a state bank.

They established their own pay scale taking into account quantity, quality and responsibility of work. Minimum pay scales and workplace protections fall within guidelines established by the new labor code covering all workers in Cuba.

The restaurant closed for two months to remodel. It borrowed 2.7 million pesos and has nearly finished paying it back.

Among other expenses, the cooperative must pay the government a tax of 10% of total sales. There are also taxes to use utilities and employ workers who are not members of the cooperative. This pays for the social benefits like free health care and education and retirement benefits.

The cooperative can hire up to five temporary “contract” workers without paying any taxes. But after that it pays a tax 50% higher than if the worker were permanent. It’s a disincentive to hire too many contract workers. The restaurant only hires the contract workers during the heavy seasons.

Thirty percent of the profits go into a reserve fund of which 2% to 10% goes for dividends. The rest is allocated for new investments.

The laws on cooperatives don’t permit an accumulation of capital nor are they permitted to create franchises. The cooperative cannot be sold or merged with another cooperative or sold to an individual. However, there are no limits to hiring people or setting up tables, except limitations of space.

If they get more revenues, they pay out more dividends and higher taxes. If they have leftover money they may help workers with their housing or help out day care centers or orphanages, or make a contribution to cancer research.

Workplace democracy

The cooperative is governed by a general assembly (GA) of workers that meets monthly and makes all decisions through majority vote. The workers elect a president and managing council that meets more frequently and makes decisions on smaller allocations of resources. If a worker has a problem he or she takes it to the GA.

All workers belong to the Cuban Workers Central (CTC), the Cuban trade union federation. A Communist Party club has been established at the request of the workers.

When La Casona de 17 was part of the Ministry of Tourism it employed 12 workers. The number has grown to 46 workers because the cooperative is now doing things the Ministry of Tourism once did and the restaurant has expanded its services including catering, takeout and group parties.

The cooperative is also able to more efficiently utilize its resources. “We used to have three workers in our business department,” said Azahares. “Now only one person. But we hired more workers for the kitchen. We are more efficient than before.”

“It used to be the state supplied all the materials we needed. Before we would remain idle and see who would call the boss if we needed something,” recalled Azahares. “Now we can buy things at any market so we can get the best deal.”

The cooperative still buys retail, but a wholesale market is in the works. When it buys from a state enterprise it gets a 20% discount.

“We are true entrepreneurs,” Azahares said. “We have to decide what we do here. We look for things we are going to sell and we will earn according to what we sell.”

The workers at La Casona cooperative may have been worried when they first started, but today they are brimming with confidence. The new Cuba is being born.

Photo: The cashier at the La Casona de 17 cooperative restaurant, at her desk. John Bachtell/PW