Communist Cuba Faces Prospect of Drastic Cuts to Bloated Work Force

July 19, 2010 - 1:57 AM
Cuban President Raul Castro has startled the nation by saying about one in five workers may be redundant and the government, facing a severe budget deficit, has hinted at restructuring or trimming its bloated work force.
cuba flag
Havana (AP) – At a state project to refurbish a decaying building in Old Havana, one worker paints a wall white while two others watch. A fourth sleeps in a wheelbarrow positioned in a sliver of shade nearby and two more smoke and chat on the curb.

President Raul Castro has startled the nation lately by saying about one in five Cuban workers may be redundant. At the work site on Obispo street, those numbers run in reverse.

It's a common sight in communist Cuba. Here, nearly everyone works for the state and official unemployment is minuscule, but pay is so low that Cubans like to joke that "the state pretends to pay us and we pretend to work."

Now, facing a severe budget deficit, the government has hinted at restructuring or trimming its bloated work force. Such talk is causing tension, however, in a country where guaranteed employment was a building block of the 1959 revolution that swept Fidel Castro to power.

Details are sketchy on how and when such pruning would take place. Still, acknowledgment that cuts are needed has come from Raul Castro himself.

"We know that there are hundreds of thousands of unnecessary workers on the budget and labor books, and some analysts calculate that the excess of jobs has surpassed 1 million," said Castro, who replaced his ailing brother Fidel as president nearly four years ago. Cuba's work force totals 5.1 million, in a population of 11.2 million.

In his nationally televised speech in April, Castro also had harsh words for those who do little to deserve their salaries.

"Without people feeling the need to work to make a living, sheltered by state regulations that are excessively paternalistic and irrational, we will never stimulate a love for work," he said.

Indeed, the process of labor reform may already have started, albeit slowly.

Workers in the tourism sector say some of their colleagues have been furloughed during the lean summer months, while others have been reassigned to jobs on state-run farms.

"Since we are now in the low season, the hotel where I work has sent many workers home for two or three months," said Orlando, a chef in Varadero, a sand-and-surf enclave east of Havana.

"It's very hard because you're left with no salary at all," said Orlando, who like almost all state employees, didn't want his full name used to prevent problems at work. He added, "I'm lucky since I'm still in my job."

Veronica, a receptionist at another Varadero hotel, said she feared she may be sent home in August, when her resort will be only half-occupied.

"Sometimes they offer alternatives, to study in a particular course or another job," she said, "but sometimes, when (workers) are sent into the agricultural sector for instance, they just quit."

workers in Cuba

Cuban construction workers labor inside a building in Havana in this June 24, 2010 photo. (AP Photo/Franklin Reyes)

With the government giving no details of its thinking, rumors have spread that as many as a fourth of all government workers in some industries could lose their jobs or be moved to farming or construction. But Labor Minister Margarita Gonzalez has promised that "Cuba will not employ massive firings in a manner similar to neoliberal cutbacks," using "neoliberal" as a description of free-market policies.

The government has moved to embrace some small free-market reforms. 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.

The global financial crisis, and the $10 billion in damage inflicted by three hurricanes in 2008, have forced authorities to run a deficit of 5 percent of GDP, leaving them unable to pay back credits received from China and elsewhere.

Cuba slashed spending on importing food and other basics by 34 percent to $9.6 billion in 2009, from $12.7 billion the previous year. But so far, the moves have not been enough to rein in the deficit.

Carmelo Mesa-Lago, a Cuba economics expert and professor emeritus at the University of Pittsburgh, said Cuban officials have spent months debating cuts in the labor force and economic reforms. He said they know what's needed, but face "a problem of political viability."

Various government perks like cars, gas, uniforms and office supplies have become incentives to bloat the payroll, since they are based on the size of a company's work force.

But low pay means low productivity. On Obispo street, a state-run cafeteria sells heavily subsidized soft ice cream and pork sandwiches for the equivalent of a few American pennies – meaning wages and tips are so tiny that the staff is complete indifferent toward customers.

Three waiters sit at the counter cracking jokes. A fourth is the only one working, making coffee for three tables. Nearby, a cashier stares into space, a cook flirts with a scantily clad teen and a supervisor sits idly by.

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.

Salvador Valdes Mesa, secretary-general of the nearly 3 million-strong Cuban Workers Confederation – the only Cuban labor union allowed – has instead written that "reorganization" will ensure redundant workers are reassigned rather than fired.

He said the government wants more jobs in construction and agriculture.

Still, 35-year-old computer engineer Norberto fears for his job. He thinks it's unfair to keep workers under communist domination and yet call them unmotivated. "I didn't graduate from college to now work as a day laborer or a peasant, he said.

If he loses his job and gets an offer to work abroad, he said, "my question is 'Will the Cuban authorities put aside their paternalism and let me leave?'"