Cuba lay-offs reveal evolving communism

seamstress stands outside shop Many Cubans will be urged to form private cooperatives

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Cuba is to lay off huge numbers of state employees, in the biggest shift to the private sector since the revolution in 1959. But this is not the end of communism in the country, writes Stephen Wilkinson of the Centre for Caribbean and Latin American Research and Consultancy.

The media frenzy that has followed the announcement that Cuba is to reduce its state workforce by 500,000 by the middle of 2011, is similar to that which followed Fidel Castro's throwaway remark last week that the Cuban model isn't working - it has largely missed the point.

This is not the end of communism or socialism in Cuba.

Working it out

Cuban taxi
  • Workers at the ministries of sugar, public health, tourism and agriculture will go first
  • Many workers will be urged to form private cooperatives
  • Ideas for cooperatives include raising animals and growing vegetables, construction jobs, driving a taxi and repairing automobiles

Source: Associated Press

The announcement yesterday by the Cuban Workers Confederation is highly significant and it does spell the final death knell of the old Soviet model of centrally planned socialism in Cuba, but it would be very wrong to interpret it, as some have, as the harbinger of free market capitalism and liberal democracy.

Far from it. The changes are couched in the rhetoric of revolution and the discourse is very much one of deepening the socialist character of the system rather than one of shifting towards capitalism.

Unlike the prospect of suddenly being left without work that faces many in the UK, as the present government's budget cuts loom, these cuts in Cuba are being undertaken after a long period of consultation with the trade unions and other organisations.

Workers know what is going to happen to them. The programme is to be undertaken in stages, the effect on people's livelihoods is to be mitigated and it is important to understand that the announcement does not mean that all the 500,000 workers mentioned are to become unemployed.

A large number of them will be offered alternative employment opportunities and a good many will continue in their jobs but will cease to be employed by the state anymore.

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This is a far cry from the egalitarian days when workers were expected to labour for no recompense other than their own moral good and of the country and fellow Cubans”

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In many cases it means that they will become self-employed or become part of a workers' cooperative.

Taxi drivers for example, or shop workers and workers in small manufacturing enterprises, all of whom are currently state employees, will essentially take over the administration of their own workplaces and earn their salaries directly from their takings or revenues rather than being a salaried state employee.

They will essentially be doing what they have always done - but they will no longer be on the state's payroll.

In cases where workers are made redundant they will be encouraged to set up new business or transfer to other sectors.

This does of course imply a huge change towards a system in which the market dictates the distribution of goods and services and this in turn also implies other significant changes.

As one Cuban economist put it to me recently, the role of the state is to be transformed from being the administrator of economic activity to the regulator.

Cuba GDP graphic

The state is therefore withdrawing a good deal of its paternalistic character. Workers will not be guaranteed employment or the indefinite payment of their salary while out of work any more - they will be expected to look for and find work for themselves.

Workers will have to provide their own lunches instead of having a subsidised canteen and they will have to find their own way to work instead of being picked up by the company bus.

However, at the same time, the incentive to work will be enlarged through bonuses and pay based upon productivity. There is no longer an upper limit on what one may earn.

Workers will be encouraged therefore to move into unpopular jobs such as construction and agriculture by the possibility of earning more in those sectors.

Other sectors that the government says it is going to expand in the coming months are in oil, tourism, biotech and pharmaceuticals where it says there will be new job opportunities.

All of this is a far cry from the egalitarian days when workers were expected to labour for no recompense other than their own moral good and that of the country and fellow Cubans.

The statement on Monday therefore also implies a significant shift in the ideological underpinning of the system.

There is by implication a shift towards greater individualism and self reliance and the acceptance that there will be differential incomes and therefore different living standards among the population.

Welfare is to be directed by means testing to where it is needed rather being applied universally regardless of individual income.

All this sounds very familiar to people in Britain, who have witnessed debates on these matters recently, but how this will play out in the longer term in Cuba will be interesting to see.

Another interesting area to watch will be how the changes may increase the pressure in the US for the administration there to change its policy towards the island.

As the market increases in Cuba and more people become self-employed and low level enterprises are freed to run themselves, those who are arguing for the US to engage with island in order leverage this process and move it further down the free market route will have a stronger basis for their case.

This news, following the recent release of political prisoners, makes change on the other side of the Florida Straits more likely than ever.

Economic reform

  • April 2010: Cuba begins turning over hundreds of state-run barber shops and beauty salons to employees
  • August 2010: President Raul Castro says the role of the state is to be reduced in some areas, with more workers allowed to be self-employed or to set up small businesses
  • September 2010: Cuba announces radical plans to lay off huge numbers of state employees to help revive the economy

However, it would be wrong in the short term to see the reforms as leading inevitably to a change in the political organisation inside Cuba.

Cuba is to remain a one-party communist state for the foreseeable future.

This leads some to suggest that the Cubans are following a Chinese or Vietnamese model. True, there are similarities between the two Asian tigers and what was announced yesterday.

The Cubans have certainly studied both models closely. But my sources tell me that at a very high level, while the economic progress of the pair impressed, neither met with approval in their entirety.

Cuba, they say, wishes to avoid the negative social consequences of the Chinese experience.

A more laudable direction of travel is towards Latin America where Cuba recently announced that it was seeking to eventually form an economic union with Venezuela.

Hugo Chavez is leading Venezuela away from the free-market capitalist model towards what he calls "21st Century Socialism". Interestingly this includes encouraging workers' co-operative enterprises. Might this be Cuba's first step towards meeting Chavez half way?

As with all things Cuban, we can only wait and see, but this is certainly a carefully planned change that has been four years in the making - since Raul Castro took over in 2006 - and will certainly not be as traumatic as commentators in the media have suggested.

Stephen Wilkinson is at the Centre for Caribbean and Latin American Research and Consultancy, London Metropolitan University

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