Cuba to Fire 500,000 Government Workers
Cuba announced Monday it will cast off at least half a million state employees by mid-2011 and reduce restrictions on private enterprise to help them find new jobs - the most dramatic step yet in President Raul Castro's push to radically remake employment on the communist-run island.
Castro suggested during a nationally televised address on Easter Sunday that as many 1 million Cuban workers - about one in five - may be redundant. But the government had not previously laid out specific plans to reduce the work force.
The layoffs will start immediately and continue through the first half of next year, according to the nearly 3 million-strong Cuban Workers Confederation - the only labor union allowed by the government.
To soften the blow, it said the government would increase private-sector job opportunities, including allowing more Cubans to become self-employed, forming cooperatives run by employees rather than government administrators and increasing private control of state land, businesses and infrastructure through long-term leases.
The statement, which was published in state-controlled newspapers and read on government-run radio and television, said because of the sheer number of workers involved, the layoffs would come slowly, but that they would affect all government sectors.
It did not say which parts of the economy would be retooled to allow for more private enterprise. The union said that the state would only continue to employee people in "indispensable" areas where the labor force is historically insufficient, such as in farming, construction, industry, law enforcement and education.
In August, Castro warned that layoffs would be coming and said Cuba would expand private enterprise on a small scale, increasing the number of jobs where Cubans could go into business for themselves.
Still, Monday's announcement shows his government is moving to pair back state payrolls far faster than expected.
"Our state cannot and should not continue supporting businesses, production entities and services with inflated payrolls," the union said, "and losses that hurt our economy are ultimately counterproductive, creating bad habits and distorting worker conduct."
It added that Cuba would overhaul its labor structure and salary systems since it will "no longer be possible to apply a formula of protecting and subsidizing salaries on an unlimited basis to workers."
Instead, Cubans will soon be "paid according to results," it said, though few details were provided. Castro has said repeatedly he sought to reform the pay system to hold workers accountable for their production, but the changes have been slow in coming.
Currently, the state employs 95 percent of the official work force. Unemployment last year was 1.7 percent and hasn't risen above 3 percent in eight years - but that ignores thousands of Cubans who aren't looking for jobs that pay monthly salaries worth only $20 a month on average.
In exchange for the low salaries, the state provides free education and health care and heavily subsidizes housing, transportation and basic food.
Castro's government has moved to embrace some small free-market reforms. Earlier this year, it handed some barbershops over to employees, allowing them to set their own prices but making them pay rent and buy their own supplies. Authorities have also approved more licenses for private taxis while getting tough on unlicensed ones.
© 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Castro suggested during a nationally televised address on Easter Sunday that as many 1 million Cuban workers - about one in five - may be redundant. But the government had not previously laid out specific plans to reduce the work force.
The layoffs will start immediately and continue through the first half of next year, according to the nearly 3 million-strong Cuban Workers Confederation - the only labor union allowed by the government.
To soften the blow, it said the government would increase private-sector job opportunities, including allowing more Cubans to become self-employed, forming cooperatives run by employees rather than government administrators and increasing private control of state land, businesses and infrastructure through long-term leases.
The statement, which was published in state-controlled newspapers and read on government-run radio and television, said because of the sheer number of workers involved, the layoffs would come slowly, but that they would affect all government sectors.
It did not say which parts of the economy would be retooled to allow for more private enterprise. The union said that the state would only continue to employee people in "indispensable" areas where the labor force is historically insufficient, such as in farming, construction, industry, law enforcement and education.
In August, Castro warned that layoffs would be coming and said Cuba would expand private enterprise on a small scale, increasing the number of jobs where Cubans could go into business for themselves.
Still, Monday's announcement shows his government is moving to pair back state payrolls far faster than expected.
"Our state cannot and should not continue supporting businesses, production entities and services with inflated payrolls," the union said, "and losses that hurt our economy are ultimately counterproductive, creating bad habits and distorting worker conduct."
It added that Cuba would overhaul its labor structure and salary systems since it will "no longer be possible to apply a formula of protecting and subsidizing salaries on an unlimited basis to workers."
Instead, Cubans will soon be "paid according to results," it said, though few details were provided. Castro has said repeatedly he sought to reform the pay system to hold workers accountable for their production, but the changes have been slow in coming.
Currently, the state employs 95 percent of the official work force. Unemployment last year was 1.7 percent and hasn't risen above 3 percent in eight years - but that ignores thousands of Cubans who aren't looking for jobs that pay monthly salaries worth only $20 a month on average.
In exchange for the low salaries, the state provides free education and health care and heavily subsidizes housing, transportation and basic food.
Castro's government has moved to embrace some small free-market reforms. Earlier this year, it handed some barbershops over to employees, allowing them to set their own prices but making them pay rent and buy their own supplies. Authorities have also approved more licenses for private taxis while getting tough on unlicensed ones.
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Noval53 said, "How can the Worker's Paradise be failing? Perhaps if Cuba consults with Greece, they can resolve this problem. A telethon might be in order. Could it be possible that capitalism could help socialism survive? I guess so."
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Guesswork has little to do with it. Greece does not fail because it is like the EU, but precisely because it is not. When Greece joined the EU, it had a reasonably solid agrarian economy. Then, the capitalists arrived with easy loans that were based on the idea no economy could fail, if it had EU investment and backing.
If that sounds a bit like one Wall Street bank betting its assets on another, you have stumbled upon the formula that made Wall Street crash, and Greece lose its sense of balance in all things. In both cases, it was wild speculation by hot capital that led greedy people to make foolish, risky decisions.
In contrast, Cuba was set up in the Soviet model, with a bit of Latin leeway. And while Cuba was not a splendid example of wealth and prosperity, it was an agrarian economy, after all.
But Cuba did feed and educate its people in a way Batista, the Mafia and the Havana casino economy never did.
Cuba also provided a better system of health-care outcomes than the so-called "private market" in the US. Neonatal survival rates are better in the people's paradise than in the US, and contrary to GOP declarations, that is not due to following our example.
All that said, it is naive to suppose any political system is perfectly capitalist or communist. A state-run economy, like the PRC, is one model of a developing balance between state and private sectors, and it appears to be thriving, thank you.
Which casts the shadow of doubt on GOP bozos who insist that all America needs is another era of GOP lessez faire economics-- replete with mandatory recession, as part of a divinely-ordained business cycle of boom and bust.
The only people with enthusiasm for such risky business games are the GOP fat cats who never pay the price-- while the rest of us must.
Meanwhile, watch and wait while Cuba appears to be following the Chinese path to embracing the advantages of both centralism and a promising private sector-- mind you, one kept under careful regulation.
Could the hint be made more explicit?
The Chinese conversion to the free market economy aka capitalism was nothing new to the Chinese. That is what they had before the Mao Tse Tsung revolution in 1949 when China had no middle class and the vast majority were hideously poor and got tired of working for the wealthy few. Cuba had a similar history - again without a middle class and an overwhelming impoverished majority that made Communist revolutions easy to follow. For the first decade, most saw improvements in their living standards in both countries.
In the USA, there was not much of a middle class until WW-II and afterward. The prosperous economic recovery did grow the middle class after WW-II into a very respectable majority.
Economists constantly debate the conditions that encourage incentives that entice a thriving middle class. Fiscal policies about taxation, credit, and savings & investment have their challenges in both regulated and deregulated industries, whether an economy is capitalist or socialist. Economic contentment is a state of mind that is all relative.
Unions prevent people working overtime and not getting paid? Are you a dinosaur living in the dark ages? That hasn't been a problem in the world since the Industrial Revolution. Get a clue. Unions have outlive their usefulness in America. They are bloated and greedy and an overwhelming drag on the economy. Cuba has it right.