Friday, September 17, 2010

Cuba to Axe One Million State Jobs

Cuba has begun the process of modernization and is clearly attempting to follow the Chinese model rather than the Russian model that was so disastrously implemented.  Starting with a million newly released workers is certainly going to jump start something and from the sounds of it, it looks as if the government will be working to support all this.

Of course, outsiders want it all in a day.  That is the road to Russian chaos.

The reason I was so hopeful when Deng began reforms in China at the time was that he dispatched 10,000 of the brightest students to the West in the first year and committed to repeating the process every year.  In several years they were coming back and they had authority that even their elders could not attempt to match.

Cuba has the advantage that a large army of émigrés live in Miami who will jump at the chance to support this opening in the same way that Hong Kong supported China and helped to provide a soft landing for the politicians.

A million folks out on their butts is a large dose of cold water but also quite invigorating, particularly if the State does provide minimal support.

Cuba to axe one million state jobs

Tue Sep 14, 7:12 AM

HAVANA (AFP) - Cuba has announced plans to slash one million state jobs and encourage the growth of small businesses in a gamble it hopes can keep its communist system and floundering economy afloat.

Workers laid off from government jobs will no longer be sent home with partial pay, but will instead have to find other means to make a living, the Cuban Worker's Central, or CTC by its Spanish acronym, warned Monday.

It said more than 500,000 public sector jobs will be eliminated, in a first major cut, by March 2011.

"Our state neither can nor should continue maintaining companies... with inflated payrolls, and losses that are a drag on the economy, are counterproductive, generate bad habits and deform workers' performance," the CTC said.

President Raul Castro said in 2009 the government wanted to relocate more than a million state employees, sending shockwaves through a society grown accustomed to stable levels of employment over the last 50 years.

Cuba has a workforce of 4.9 million people in a country with 11.2 million population. The state controls 95 percent of the economy.

For years, the government has given laid off workers up to 60 percent of their salary while they wait to be placed in a new job.

But the CTC said it would "no longer be possible to indefinitely protect or subsidize workers' incomes."

The government is to now hand out 250,000 permits in some 120 different types of small business and is encouraging mechanics, hairdressers, gardeners and translators among others to apply, say documents circulating in workplaces.

Workers typically will pay a license fee, and sometimes rent. The government is hoping the emerging private sector can absorb workers but many analysts have their doubts.

Still, Yvonne Molina, 27, who recently received a permit to open a small seamstress business in her garage in downtown Havana, was hopeful.

Molina said she hopes to earn significantly more than the meager wages of around 20 dollars a month the government pays.

"Every month I pay 300 pesos (about 12 dollars) for my license, and I earned 250 pesos in one week," she told AFP.

"I've always fixed clothes. I used to do it illegally. Now I can make dresses, sell them and earn a living with no fear that I will be fined."

Cuba's economy went into freefall after the collapse of former communist allies in the east bloc after 1989.

It emerged battered but afloat once it locked in Venezuela's President Hugo Chavez as a key political ally. Caracas supplies Havana with cut-rate oil and props up its economy -- as do hundreds of millions of dollars in remittances from about 1.5 million Cubans who live abroad.

Hopes for change ran high when Raul Castro took over the helm in 2006 as his brother, revolutionary icon and longtime president Fidel, faced a life-threatening illness.

But even economic change -- much less political -- has been rare under Raul Castro, 79. Fidel, now 84, remains Communist Party chief.

Half of Cuba's land is currently not producing, and the country imports 80 percent of its food.

Fidel Castro last week caused a stir when it was reported he told a US journalist: "The Cuban model doesn't even work for us any more", although he later said he did not mean to be taken literally.

This is not the first time Cuba's leadership has encouraged self-employment.

After the crash of the former Soviet bloc, jobs such as beauticians, small restaurant owners and even lighter refillers were legalized as long as workers obtained licenses and paid taxes.

But social resentment spread when some workers, particularly in private restaurants, achieved dramatic levels of success.

The government began increasing taxes and regulation, as well as decreasing the number of licenses, until the self-employed sector essentially collapsed.

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