Cuban response to public-sector layoff

M.B. Cawston, Freelance Writer

On September 13, Cuba announced plans to cut one million of the estimated 5.1 million public-sector jobs within the next year, with the first 500,000 slated for termination by April 2011.

This decision comes two weeks after revolutionary leader and former Cuban President Fidel Castro, in a recent article in The Atlantic, declared that the Cuban economic model does not work. Current President, Raúl Castro, admits that the state sector suffers from redundant and unnecessary positions that are largely responsible for Cuba's economic woes.

As such, Cuba has committed to the largest top-down assessment of public-sector administration, agencies, and enterprises in its history since the 1960s. Though it is difficult to foresee its long-term results, this economic overhaul will certainly change the balance of power between the public and private sector in Cuba's domestic economy.

In order to promote a more efficient state sector, Cuba has initiated a significant reorganisation and redistribution of labour nationwide. This neoliberal approach includes the elimination of unnecessary positions, the consolidation of responsibilities, and the promotion of non-state employment options, among which include expanded self-employment opportunities and eased restrictions for private businesses.

The private-sector growth will then be tapped into accordingly through a system of new taxes and fees for private businesses.

While the mass media outside Cuba considers this economic reform to be big news, the response within Cuba has not been one of much alarm. In fact, when asked about the impending public-sector overhaul, a University of Havana employee observed: "To be honest, the Cuban people are not that worried. This process of public-sector appraisal has happened before in each [public] institution and it will likely happen again."

Passive or not, the Cuban public has mixed feelings regarding the promised economic reform. There are those who believe the increased private-sector opportunities will be beneficial to Cuba and its people.

The government intends to offer about 120 new small-business licences which will grant proprietorship of many businesses to the workers who currently run them.

Easing restrictions

With easing restrictions and new private-sector options, the self-employed will be able to open bank accounts and even take out loans in order to expand their businesses. Referring to the impending growth of the private sector, one Cuban security worker admitted: "It's always better to make more money."

Nonetheless, economic reform may spell trouble for the less entrepreneurial Cubans. For those without any contingency plans, the threat of losing their jobs is a real problem. Even if these newly unemployed were to privatise their businesses, these new inexperienced owners risk bankruptcy if unable to navigate their businesses without the protective policies afforded by the public sector.

Moreover, some businesses may buckle under the weight of the new tax structure designed for the opening private sector.

For those who choose not to enter the private sector, the government will likely offer positions in industries that suffer from labour shortage, namely in agriculture and construction. However, with an average salary of US$20 per month, state employment propositions may fall unto deaf ears.

Furthermore, the state has given no reason to believe that fundamental social services like universal health care and education will be cut for private-sector employees. As such, the possibilities for a higher standard of living outside the public sector may be difficult to turn down.

It will be interesting to see how Cuba's socialist economy accommodates a stronger private sector. Though this plan is ambitious and daring, it is still in its infancy. It remains to be seen which elements of Cuba's economic model will be discarded and which maintained. We will simply have to wait and see how Cuba's economic experiment, with a more free-market economy fares in the months and years to come.