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CUBA
Changes come with hope, fears
Lucila Horta
10/28/2010
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Government cuts half a million state jobs and opens the doors to private enterprise.

“For a lot of people, leaving their jobs will require them to readapt, which will be challenging… There is concern, and I would say there is also a bit of expectation.” This is what Cardinal Jaime Ortega says about the structural upheaval unfolding in Cuba that implies changes to the rights of ownership, especially in the realm of small business.

In early August, President Raúl Castro announced several measures to reduce the bulky state bureaucracy, primarily by encouraging self-employment as an alternative for superfluous workers.

Around 500,000 of Cuba´s population of 11 million will be laid off over a six-month period; half of these people are expected to enter the private workforce by the following year.

To make way for the 10 percent of the labor force that will be eliminated from their current jobs, 178 occupations were revalidated as legal for self-employment.

But Zoila Malverde Izquierdo, a retired teacher who returned to the classroom for the 2009-2010 school year following a sector-wide pay increase, believes that several fields are missing from that list – jobs related to country´s general academic level, with the highest number of professionals and technicians on the continent – like private tutors.

Delayed reforms
In July 2008, President Raúl Castro warned that there was opposition to the changes planned, which intended to produce higher yields with less cost and more productivity and would occur within a viable system to provide benefits and protect the majority of the population, but not in such a paternalistic manner that it ultimately debilitates the process.

Within the country´s administrative structures, however, there are employees who benefit from the symbiosis of inefficiency and corruption, and who don´t want to lose out on what they have.

“Maybe that is why there was a delay in what was announced, but it seems that the kinks were worked out and no one can stop this now,” says Esteban Ramírez, a barber who tried his luck and with his coworkers leased the space where they had been working; now they pay the rent and the electric bill, and buy their equipment. They can set their prices, though, and split the profits as they see fit.

Until now, private hiring was prohibited; within a business, only working with family was permitted. The authorization of waged workers, however, will foment the growth of small- and medium-sized businesses.

Engineer Curbelo Dacosta believes that “within the scope of self-employment, small-scale private ownership is implied.” He goes on to explain that a restaurant with seating for 20 and three employees is already a small business, just as two potters who employ three helpers and someone to transport their wares “can team up to share a kiln and it´s also a small business.”

The same thing happens, he adds, if “a bricklayer, a carpenter, an electrician, a plumber and three assistants can all be licensed and work together. When they build or repair a house, then that is a small business too.”

Of the 178 occupations that qualify for self-employment now, “83 admit to hiring laborers and in almost all of them a small business could be formed.”

At the same time as there is enthusiasm from entrepreneurs who were already developing themselves outside the official sphere — 209,000 self-employed workers in 1996; 143,000 in early 2010 — as they see the expansion of possibilities, there is also worry among those who kept professional ties to the State. Before, they could take goods from their workplaces to sell outside; they also had the ability to moonlight and keep all of their earnings from that, because they weren´t investing or paying taxes.

There are families that now fear unemployment.

Absence of credit and tax culture
Apart from artisans, taxi drivers, landlords and others, only those people who work in state-owned companies that undergo a “perfecting process” contribute to a retirement fund, since taxes were eliminated almost entirely in the 1970s, leading to the demise of a tax culture; it would be a shock to return to it.

Another problem would be the uncertainty with regard to credit.

“You can´t open a business without credit,” says Benito Peña, a member of a Havana hotel security team who became “available.” Peña worked for a security company that offered protective services to workplaces.

Given the new conditions, workplaces that must reduce their staff prefer to offer the jobs that remain to their workers. If none of them accept the position, they open the position up to others.

In general there are four sectors nationwide with labor shortages. One is the police, and training is offered for specialties within the force. Other professions short on staff are education at all its levels, agriculture and construction. Anyone can aspire to these jobs or try their luck in private enterprise.

It is also expected that certain state organizations will become co-ops or privatize into small businesses that maintain all or part of its current workforce.
There is anticipation that investments in the petrochemical industry, among others, will create new opportunities and absorb part of the laid off workforce.

The Central Bank studies ways to provide loans similar to those mentioned by Benito. There are offers by Spain of upwards of €5 million, to be granted to farmers, the most favored sector right now. Benefits would include turning over land to them and improving product prices. 

“There is a provision by the European Commission to facilitate the process of economic reforms, if the government wants so, as well as to jointly defining which forms they´ll adopt, which could vary,” said European Union Representative in Cuba Javier Niño-Pérez.

According to rumors, the organization is considering approximately US$2.8 million in loans to the island state. The EU´s recent readiness to improve relations with Cuba could benefit the proposed reform projects.

Scholars Pavel Vidal Alejandro and Omar Everleny Pérez, from the Center for the Study of the Cuban Economy, believe that promoting microcredit along with international cooperation “could lead to an increase in foreign exchange to the country and allow self-employed workers to import goods.”
—Latinamerica Press.


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