Many unknowns about Cuba private employment plan

Many unknowns about Cuba private employment plan
Mon Aug 2, 2010 6:32pm EDT
By Jeff Franks

HAVANA Aug 2 (Reuters) - President Raul Castro has announced that more
Cubans will be allowed to work for themselves and to hire employees as
the government looks for ways to put up to 1 million state workers in
more productive jobs on the communist-ruled Caribbean island.

He made the announcement in a stern speech to the National Assembly in
Havana on Sunday in which he told Cubans: "We have to wipe out forever
the notion that Cuba is the only country in the world in which one can
live without working."

Much remains unknown about this work plan, and the devil will be in the
details in terms of its impact on a state-dominated society and economy
long accustomed to all-encompassing socialist welfare.

The following is a look at some possibilities:

HISTORY AS A GUIDE?

The Cuban government adopted a similar measure in the 1990s when Cuba's
economy plummeted after the fall of the Soviet Union, its top ally and
benefactor. To stimulate economic activity, licenses were handed out for
enterprises ranging from restaurants to clowns, which helped Cubans
survive that deep economic crisis known as the "special period."

But as the economy recovered, the government returned to its old ways
and many licenses were not renewed.

At the end of 2009, out of 11 million Cubans, there were only 143,800
registered self-employed workers or "cuenta propistas," as they are known.

Will the same thing happen this time? Will the government pull the plug
on the self-employed once the Cuban economy, which has been in crisis
again the past two years, improves?

Nobody knows, of course, but one difference is the government's new goal
of redeploying those 1 million "excess" workers over the next five
years. If it sticks to that plan, it should give the move toward
self-employment more staying power, because all those individuals will
have to work somewhere.

LOT OF UNKNOWNS

President Castro gave few details about the labor plan, including
whether the government would limit the number of licenses or give them
out freely. Obviously, the more licenses, the broader the impact,
especially to the extent that licensees may hire others to work for them.

There are already many people in Cuba illegally working privately, but
the total is unknown, although it is believed the number could be tens
and possibly hundreds of thousands.

Analysts are divided on the importance of Castro's announcement, with
some saying it does not address the basic inefficiences of Cuban
communism or the economic needs of many Cubans. Others say it represents
the government's recognition that some things are better done by private
workers.

It is not a panacea for Cuba's economic problems, the analysts say, but
if nothing else it should enable the licensees to make more money, the
lack of which is the principal complaint of most ordinary Cubans who
rail against low average salaries equivalent to $18 a month.

Some see it leading towards wider changes.

"It will be very difficult to reverse the process," dissident Cuban
economist Oscar Espinosa Chepe said.

"This opens the possibility of creating small- and medium-sized
companies in fields like gastronomy and construction. This can give
tremendous agility to the Cuban economy," he said.

POSSIBLE POLITICAL CONSEQUENCES

There is also the possibility that the changes could have political
implications as more people -- in a country where the state has
traditionally controlled 90 percent or more of the economy -- grow
accustomed to operating outside the system.

But the government is likely to keep a close eye on the private workers,
if for no other reason than it views them as a source of tax income. It
is perhaps indicative that Castro gave as many details about how the
newly self-employed will be taxed as he did about the rest of the program.

Some analysts believe that allowing more people independent sources of
income, and reducing the number of those who are dependent on state
jobs, could also encourage more dissidence and open criticism of the
government.

But Castro and other Cuban leaders have repeatedly made clear the idea
is to "update" Cuban socialism, not switch to capitalism. (Additional
reporting by Esteban Israel; Editing by Pascal Fletcher and Cynthia
Osterman)

http://www.reuters.com/article/idUSN0211091520100802