While avoiding the “u” word, Cuba’s official labor union is preparing hundreds of thousands of state workers for unemployment, telling them it will be their own responsibility to find new ways of making a living in an expanding private sector.
In order to “consolidate the achievements” of 52 years of revolution, it is necessary to “transform and make more efficient the current productive and labor process,” the national secretariat of the Central de Trabajadores de Cuba (CTC) explained in a statement directed to workers. The document, published by Communist Party daily Granma on Monday, uses the terms “available” and “suspended” instead of “unemployed.”
The layoffs will begin immediately, the statement said, and the government plans to cut 500,000 state jobs by the end of the first quarter of next year, as part of a plan of “gradual and progressive” cuts through 2015. According to the statement, there are more than 1 million “excess” jobs.
The union statement follows up on a speech by Raúl Castro in August, in which he said massive layoffs were necessary to make the Cuban economy sustainable. Subsidies to loss-making state companies made up 22 percent of government spending in the 2009 budget, according to official statistics, just five percent down from 2000. At 33.2 billion pesos, the national budget in 2009 was three times as large as in 2000.
If the announcement’s figures are correct, one in 10 workers will soon have to scramble to replace their low-paying state jobs — and the often crucial benefits and security that come with it — with another source of income.
The CTC listed “renting, usufructo, cooperatives, and self-employment” as alternatives for “hundreds of thousands of workers in the next years.” Usufructo refers to the long-term leases of state land to private farmers and cooperatives. Cooperatives are already playing a central role in agriculture, but they are now expanding into the retail sector. These new entities will be allowed to rent state-owned properties for their business. Self-employment, or cuentapropismo, has been allowed since 1993 for taxi drivers, bed-and-breakfast owners, watch and clock repair, carpenters or plumbers.
At its peak in the late 1990s, the fledgling private sector employed some 210,000 Cubans; by the end of 2009, after the government re-centralized many economic activities, the number was down to 143,000.
Raúl Castro recently announced that small businesses will be allowed to hire employees. However, the government has yet to specify; a comprehensive body of rules and regulations about private-sector activities is still absent. According to two Communist Party presentations seen by Cuba Standard, the government plans to issue 250,000 licenses for 118 different types of private businesses, all of them in areas that were not permitted before. That includes restaurants, cafes, bars, hostels, wineries, construction companies, appliance repair shops, computer services, funeral homes, shoe repair shops, shoeshiners, barbers, clock and watch repair shops, auto mechanics, trucking companies, van and taxi operators, gardeners, translators, massage therapists, construction material producers, canned goods factories, and small textile factories. Also, the self-employed will be allowed to do business in cities and provinces beyond their home base. The self-employed will have access to credit from state banks.
These businesses will be taxed, “in a more personalized, rigorous way,” the same document said. Taxes will range from 10 to 40 percent of revenues. Cooperatives will be charged a tax on profits.
In a new modality for Cuba, the government not only allows private businesses to sell their products and services to state entities, but it expects to create mixed public-private companies, partnering state companies with Cuban-owned private companies, according to the Party documents.
Even so, one of the documents warned that “many” of these new privately owned or cooperative businesses should be expected to fail in the first year, due to lack of experience, skill and resources.
Meanwhile, state jobs will continue to be available. However, laid-off state workers will only be allowed to transfer to state jobs in sectors with long-time labor deficits, such as in agriculture, construction, teaching, law enforcement, and industry. The government will continue to expand state companies in the oil sector, biotechnology, pharmaceuticals, construction, and tourism, which in turn will create jobs, the statement said.
Laid-off workers will only receive up to five months of salaries, depending on seniority, according to one of the Party documents.
“Today, the duty of Cubans is to work and do it well, with seriousness and responsibility, to achieve a better use of the resources we have, thus satisfying our needs,” the CTC statement said.
Companies and institutions with inflated payroll and financial losses are “burdening the economy, end up being counterproductive, generate bad habits, and warp workers’ behavior, ” the CTC said. “It’s necessary to increase production and the quality of services, reduce inflated social spending, and eliminate undue gratuities, excessive subsidies, [university] studies as a source of employment, and early retirement.”
The union said it will “systematically control” the process of layoffs and hiring. The CTC, under the direction of the Communist Party, will identify non-essential jobs, and determine transfers to essential jobs or re-training of the newly unemployed.
The statement said the process will be based on new bases and norms, but it didn’t specify. The current treatment of laid-off workers will be “modified.” It isn’t clear whether that means the total elimination of unemployment insurance, as some observers believe, or just a limitation on how long salaries and benefits will continue after termination. “It will not be possible to protect or subsidize indefinitely” salaries, according to the statement.
The process of identifying “available” workers began in late July at five ministries and the state companies that report to them, according to the Aug. 24 document. It was expanded to six more ministries on Aug. 16, and is expected to include the remaining 13 ministries, plus municipalities and state holding company CIMEX by March 31, 2011. The first round of layoffs will be announced Oct. 4.
The government will begin to issue new self-employment licenses in October.
“In the process of identifying, changing, and moving to other work, the conduct and personal disposition of the person in concern will play a very important role,” the union said, adding that state jobs will be given to the best-qualified candidates.
