Cuba to cut 500,000 state employees while reforming salaries, increasing self-employment

Cuba to cut 500,000 state employees while reforming salaries, increasing
self-employment
By Will Weissert (CP)

HAVANA — 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 labour 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 co-operatives 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 labour
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 labour 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 per cent of the official work force.
Unemployment last year was 1.7 per cent and hasn't risen above 3 per
cent 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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