The Cuban government recently announced plans to eliminate a half million government jobs by April 1, 2011, while opening up new opportunities in cooperatives, in self-employment and in private business. The plan is to eventually transfer about 1 million people from Cuba's labor force of 5.1 million out of the state sector, where 95 percent now work, into other forms of employment. Cuba's total population is 11.2 million people.
Cubans have not been satisfied by the performance of the economy for a long time. Officials complain too many people are on the payroll of state enterprises in proportion to the productive capacity of the country, and too little actual productive work getting done. For example, the country imports too much food when its fertile soil and balmy climate could yield much more, but it is difficult to attract people to agricultural occupations. President Raul Castro said in a speech to the National Assembly, "We have to get rid forever of the notion that Cuba is the only country in the world where one can live without working."
On top of long-term stagnation problems, Cuba has been hit by the shock waves of the world financial and economic crisis which started in 2008. Two important sources of income -- namely tourism and remittances of cash from Cubans living overseas -- have dropped sharply.
According to government announcements, some state workers slated to lose their jobs will be placed in other state enterprises, which do not have enough workers or are expanding. Some state enterprises will be turned into worker-run and -owned cooperatives, generating perhaps 200,000 jobs. More licenses will be issued for people to be self employed, increasing this sector by a possible 250,000, while laws and regulations will be modified to make it much easier for coops and private businesses to purchase supplies and services and employ people. There will also be changes in wage and salary structures to move further away from "leveling" tendencies and toward rationalizing the relationship of remuneration to productivity level.
The government says key aspects of the economy, such as industry, finance and the educational system, will remain under state control, and that socialism will not be abandoned. Up to now, 95 percent of Cubans have been working for the state, and the announced cuts, which amount to 10 percent of the labor force, will take a big bite out of this.
Cuba has done something like this before, only a smaller scale, during the 1990s. At that point, Cuba was in difficulties because of the abrupt loss of favorable trade relations with the Soviet Union. and Eastern Europe, whose socialist governments had collapsed. Unable to keep so many people on the government payroll, Cuba began to give out licenses for several types of small-scale private initiatives, including small scale restaurants in people's homes.
Neither the government, nor people who took advantage of these openings, were very satisfied with the results. In the intervening period, the number of such enterprises has dropped as people have given up or licenses have not been renewed.
Today, about 169,000 people in Cuba are self-employed or employed by cooperatives or private businesses, down from a high of around 200,000 in 1996.
However, the number of people thought to be doing basically the same kind of thing at the margins of the law is much higher. So in one sense, the government will be catching up with what is already going on, and regulating and taxing it. This time around, there will be a much greater effort to make sure that the cooperatives and individual enterprises can succeed, by streamlining the mechanisms whereby they get supplies and other support needed to prosper and contribute to the overall economy.
The Cuban Central Federation of Labor (CTC) whose member unions represent the vast majority of Cuban workers, said on Sept. 12 that the changes are necessary. But, citing the vital question of the unity of workers, the CTC announced that it will be taking control over the specific processes whereby jobs will be eliminated, and workers oriented toward other opportunities . In addition to the unions, the Cuban Communist Party and the neighborhood-based Committees for the Defense of the Revolution will be holding meetings in worksites to discuss the changes.
Meanwhile, Cuban Foreign Minister Bruno Rodriguez pointed out the damage that the U.S. trade blockade instituted against Cuba shortly after the revolution is another heavy burden on the economy. He stated on September 15 that, adjusted for inflation and currency fluctuations, the U.S. policy has cost Cuba over $751 billion.
Photo: Farmers from the Granma Cooperative, just outside of Havana, share the fruits of their labor. (John Bachtell/PW)