Cuba's Big Layoffs: What to Do with the Unemployed?

Cuba's Big Layoffs: What to Do with the Unemployed?
By Tim Padgett Tuesday, Sep. 14, 2010

As a layoff notice, it was more blunt than what even corporate America
puts out these days. But it's hard to sugarcoat letting half a million
workers go — which is what Cuba's communist government, via its official
labor union, announced on Monday. "Our state cannot and should not
continue maintaining enterprises with inflated payrolls, losses that
pull down our economy and make us counterproductive, generate bad habits
and distort worker behavior," said a statement by the Cuban Workers'
Central (CTC), making it known that some 500,000 government jobs will be
eliminated by next spring. It also suggested something fairly anathema
to socialism's collectivist dogma: how the unemployed find their way
after the mass dismissal "depends in large part on the private
management and initiative of the individual."

Rumors had been swirling all summer that Cuban President Raúl Castro was
planning to trim the state's workforce by as many as 1 million. Still,
now that it's official that half that many jobs will be lost, "it has
the potential of being an earthquake," says Marifeli Pérez-Stable, a
sociologist and Cuba expert at Florida International University in
Miami. The CTC insisted that the layoffs, which represent almost
one-tenth of Cuba's total labor force, are meant simply to "make the
Cuban production model more efficient." But to most Cuba watchers, it
signaled an acknowledgment that "the contract Cubans had with the
revolution doesn't work anymore," says Pérez-Stable.

If so, what Castro left unanswered is: What will replace it? He insists
that socialism is "irrevocable" in Cuba and that the country is not
moving toward capitalism. But even he groused over the summer that Cuba
seemed to be "the only country in the world where you can live without
working." And it's clear he's counting on private enterprise to help dig
Cuba out of its economic sinkhole, the result of epic inefficiencies as
well as this year's 35% drop in crucial tourism revenue and the effects
of a 48-year-old U.S trade embargo. Former President Fidel Castro, 84,
who handed power to his brother Raúl four years ago because of failing
health, mused to the Atlantic Monthly recently that the Cuban economic
model "doesn't work for us anymore." He then said last week that his
quote was misinterpreted as an admission of that model's failure when in
fact he meant "exactly the opposite," that the system simply needs
repairs. (See pictures of Fidel Castro's years in power.)

Either way, Monday's declaration opens the door to a significant
expansion of the Cuban self-employed, from mechanics to hairstylists,
which Havana has allowed to varying but always limited degrees since the
collapse of the Soviet Union left the revolution without its main
economic prop two decades ago. But given that almost 90% of Cuba's 6
million workers are employed by the state, it will take Horatio Alger on
steroids to revive the island's economic growth anytime soon. About
600,000 Cubans are privately employed today — more than 100,000 of them
as cooperative farmers tilling land leased from the government — and
Havana hopes to double that number in the next couple of years. (Will
the White House fight to end the Cuba travel ban?)

But more important than augmenting Cuba's entrepreneurial ranks will be
broadening the kind of enterprises they can run. Taxi drivers and
barbers do not an economy make — and those minor service sectors cannot
absorb all the pink-slipped state employees who are about to hit Cuba's
streets. And so the big question is whether Raúl and his government will
change Cuban law and allow the self-employed to not only hire workers
outside their families but also acquire private investment and credit
that can promote small manufacturing. Sources with knowledge of the
negotiations tell TIME that European governments and the Roman Catholic
Church are in discussions with Havana about establishing microloan
projects in Cuba to help seed small enterprises like bodegas and
furniture-making shops.

The U.S. can play a role in that effort as well. The Washington-based
Cuba Study Group, a nonprofit headed by Cuban-American business leaders,
has already proposed, along with Mexico's Banco Comportamos, a $10
million microloan program for Cuban entrepreneurs. Study Group executive
director Tomás Bilbao says the Obama Administration should explore
something similar, as well as a change in embargo regulations to let
Americans invest in private Cuban businesses. (See visions of Cuba
through an artist's drawings.)

Anti-Castro hard-liners in the U.S. oppose the idea, saying it will only
give the communist regime an economic crutch. Bilbao acknowledges that
"the Cuban regime is certainly going to weigh any potential reforms from
here on out based on what they believe to be the greatest economic
benefits with the smallest political costs." But, he insists, "if we
support economic reform in Cuba as a means of empowering the Cuban
people, then we have to help create the conditions to realize that
objective."

Up until now, Raúl — long considered more reform-minded than Fidel but
criticized internationally for moving too slowly — has adopted only
minor changes, like letting Cubans have cell phones. "Raúl is very
methodical," says Pérez-Stable, "and unlike his brother he needs
consensus to do something as dramatic" as the layoffs — or as stunning
as this summer's release of 52 political prisoners jailed in 2003 during
one of Fidel's harshest crackdowns on dissidents. If Raúl does indeed
have the backing of Havana's communist hard-liners to move ahead,
Pérez-Stable adds, he's likely to call a Cuban Communist Party Congress
for next year, at which Cubans and the outside world might finally see
real economic alterations.

One hurdle, says Mark Weisbrot, co-director of the left-leaning Center
for Economic and Policy Research in Washington, remains Havana's fears
that too liberal an opening could usher in a U.S. economic takeover of
Cuba like the one that helped prompt the Castros' 1959 revolution in the
first place. "You're still going to see a lot of debate and discussion
about what to do next," says Weisbrot. "They don't feel like they can
just turn around and adopt a China model," a hybrid of communist
governance and capitalist economics, "because they're [situated] too
close to the U.S."

Which is all the more reason for the U.S. to drop its utterly failed
economic embargo against Cuba. It wouldn't lead to a Yanqui conquest of
Cuba — but it could help energize, as Cuba's communist labor union put
it this week, "the initiative of the individual."

http://www.time.com/time/world/article/0,8599,2019225,00.html?xid=rss-topstories