Economy & Trade, Headlines, Labour, Latin America & the Caribbean

LABOUR-CUBA: Torn Between Hope and Anxiety

Patricia Grogg

HAVANA, Oct 7 2010 (IPS) - The radical restructuring of employment launched by President Raúl Castro has Cubans, on the one hand, feeling anxious about possibly losing their jobs and, on the other, looking forward to testing the real scope of opportunities in the private sector, where an estimated 250,000 additional people may soon be working for themselves.

Registration to work on a self-employed basis in one of the 178 areas that have been authorised was to have started this month, but officials at both the Ministry of Labour and Social Security and the national tax office told journalists they had received no detailed instructions.

Nor has the Ministry of Finance and Prices published its resolution on the new taxation scheme. “I want to know how much a permit will cost me. If the taxes are too high, I will try to carry on as I have so far,” said Caridad, who has worked as an unregistered seamstress for several years.

The Cuban government intends to shed half a million state employees between now and the first quarter of 2011, in the interests of efficiency and labour productivity, which it sees as essential in order to raise wages and “bear the enormous social costs” of the country’s socialist system.

The employment restructuring aims for at least 80 percent of all workers to be engaged directly in production, services or other essential activities. Public employees deemed “available” (redundant) may be retrained and relocated in agriculture, construction or the police, which are short of labour, or become self-employed.

According to the authorities, reducing inflated payrolls and eliminating excessive subsidies and gratuities, as well as freeing the state from some of its responsibilities, should allow wage increases in the immediate future that have long been demanded by workers.

“I don’t want to join the police, nor do I see why I should leave the capital, where I was born and raised, to go and work in the countryside. Nor do I have money to set up a business of my own. I don’t know what I will do if I lose my job,” a 26-year-old Afro-Cuban who is a service worker in a Havana hotel told IPS.

Castro said in August that “no one will be abandoned to their fate,” and support would be available for those who “are really incapable of working (in other jobs).” However, neither the president’s words nor the explanatory meetings held in workplaces have succeeded in calming workers’ fears of finding themselves among the ranks of the unemployed.

“It is a logical concern,” a Cuban economist who requested anonymity told IPS. “Breaking with 50 years of state paternalism isn’t easy, but this reorganisation of the productive forces is absolutely necessary if we are to maintain other cherished rights, like free healthcare and free education.”

According to official estimates, health and education alone account for 46.7 percent of state expenditure, and injections of new revenue are urgently needed. The right of Cuban citizens to free education and health services is guaranteed under the constitution.

The archbishop of Havana, Cardinal Jaime Ortega, said people are worried about possibly being sacked, especially those who “have bureaucratic posts,” but he sensed “there is a certain expectancy about the changes and their potential benefits, and some people welcome them.”

People “with special qualifications that equip them to open a small business are even eager and enthusiastic,” Ortega told journalists. His own view is that the change “is positive in itself, in that it addresses Cuba’s economic difficulties and how to overcome them.”

However, many Cubans are not enthusiastic at all about the expansion of opportunities to work independently, either because they are already working for themselves on the side — without registering for a licence or paying income tax — or because they fear higher taxes.

According to documents leaked to the foreign media, the tax proposals include personal income tax levied on sales or services, and for hiring workers, as well as social security contributions and fees for advertising, where applicable.

Taxation rates would range from 10 to 40 percent, and taxes would be collected in national currency (pesos) in all cases. Transactions in convertible Cuban pesos (CUC), the only hard currency available on the island, will be subject to the official exchange rate at the chain of state exchange shops (CADECA).

The official exchange rate is 24 pesos to the CUC. Preliminary estimates from the tax working group indicate that 250,000 self-employed people would contribute an additional one billion pesos a year to state coffers from 2011 on.

Some economists consulted by IPS said this amount of projected revenue was overly ambitious, and would not encourage a mass move towards self-employment. “The tax burden should be lighter, at least at first, so that people have a chance to get a taste of the advantages of the system,” one academic said.

Information provided by the government so far has confirmed the introduction of new features, like the freedom to subcontract workers in 83 areas of activity, and to rent full houses (previously Cubans were allowed to rent out no more than two rooms) in hard currency, as well as cars.

These rental facilities apply even to persons who have authorisation to live abroad, and to those who travel abroad for more than three months. Access by self-employed persons to start-up bank loans for the trade of their choice is also being considered.

In the view of analysts, these measures taken together are opening doors which may lead to even bolder steps in future. For the moment, though, the restructuring of employment and its consequences are heightening tension in Cuban families, particularly where the heads of households have the lowest levels of education and skills.