By Jenny Kassman
The expansion of the private sector in Cuba, contained in the island’s new legislation proposed by the National Assembly in September 2010 was finally ratified by the Assembly on 1 August this year. However, in September, this proposed measure was greeted as a fait accompli with an outburst of joy and relief by the UK mainstream press. “End of the road for communist Cuba? ONE MILLION jobs could go private in the most radical reforms since 1959 revolution,” declared James White in the Daily Mail (15 Sept. 2010). “Thanks Fidel, but you’re 50 years too late,” gloated James Delingpole in the Telegraph, adding “It’s nice, obviously, that the cigar-smoking beardie has finally had the grace to acknowledge the error of his ways. But shouldn’t he have worked this out 50 years earlier, and spared the poor Cuban people a heap of communist misery?” And not much more was said about the matter.
However, in its haste to tell the British public once more that socialism (or, in their words, ‘communism’) in Cuba was at the “end of the road”, the western media, as is so often the case, omitted to mention how these proposals would progress along the road to becoming actual legislation. Neither had it mentioned that they had only acquired their initial form after a major input by the Cuban trade unions. At the time, only about 30% of them had been ratified before the remaining 70% were presented to the country for consideration and amendment prior to their ratification. If the media had possessed the inclination to discover more about the subject, they would have had a very different story to report.
In fact, this legislation, deals with a raft of new policies, ranging from housing, transport and food prices to health, education and tourism. But it is the part that relates to the workforce which has generated the most interest.
When I met Manuel Montero Bistilleiro a senior official at the CTC (the equivalent of our TUC) in January of this year, he explained that the reasons for this new legislation were very different from those described by the western media.
First, as in the case of the UK and most other countries around the world, Cuba has been hit hard by the world financial crisis, which has had disastrous consequences in the developing world, to which Cuba belongs, pushing up prices of food (almost 50%) and other basic commodities. Added to this, in 2008 the island was hit by 3 powerful hurricanes that destroyed much of its infrastructure. Finally, one has to take into account the severe economic consequences of half a century of the US blockade, which has been vigorously and progressively reinforced since the 1990s when Cuba was suffering the Special Period. The blockade, which in recent years has been extended to banking, seriously impedes Cuba’s ability to trade effectively with other countries.
It was during the 1990s, when the Cuban economy was at its lowest ebb and at a time of widespread hardship that the decision was taken to keep everyone working, even if as a result, workplaces would be overstaffed. This applied particularly to the administrative sector. It is only now that efficient staffing levels are to be restored in that sector.
As a result, new legislation has been necessary so that Cuba can tackle these challenges, in the same way that many other countries are having to look again at their own legislation in these times of financial crisis. In the case of Cuba, the government has emphasised that the need to create a more self-sufficient and economically viable economy. However, at the same time as introducing these new laws, the state has once again declared its clear intention of continuing to maintain and develop a socialist society in which people can enjoy the maximum opportunities and participate, both individually and communally.
Manuel who has worked for 32 years in the CTC, explained to me the important role played by the Cuban trade unions in the new legislation’s formulation and eventual enactment . Their opinions have been required primarily to ensure that workers will be protected, thus preventing the growth of a marginalised informal sector, so common in other developing countries suffering an economic crisis.
Production workers and workers in public services, such as transport, health and education generally speaking will be much less affected. The large and most important institutions in the Cuban economy – the banks, industry, public services and so on – will remain publicly owned and generally retain their current workforce. It is the administrative sector with its over deployment of workers to which this new legislation is mainly directed.
In this sector, it is envisaged that out of the 500,000-plus workers who are to lose their jobs, many are being offered redeployment in other parts of the state sector, although the work offered may not relate exactly to the nature or level of a worker’s previous employment. The principal areas with labour shortages are agriculture, education, construction and the police force. It is estimated that around 130,000 will leave the state sector to form co-operatives, create their own small businesses, or to work in businesses owned by others.
All those currently working in the private sector are already classified as self-employed (‘cuentapropistas’), but the legislation draws a distinction between workers who contract their labour to others and those who own their own business. Anyone contracted to work by an enterprise in the private sector will, by law, have to be paid not less than the average for the area where the company is located.
It is intended that all cuentapropistas – whether in co-operatives, running their own business or contracted by the owner of a business – will be liable to pay tax to enable them to access all the rights and conditions enjoyed by state workers: sickness or maternity benefits, pension rights and so on. Taxes are progressive: the higher the earnings, the more tax people will pay. The owner of a business who contracts more than five workers will also pay tax for each worker he or she contracts over that number. No-one will become rich by being self-employed, I was told.
The idea of self-employed workers paying tax is not new. During the Special Period, the government shelved its proposal that all state sector workers should pay tax (following the consensus reached at workers’ meetings in 85,000 workplaces throughout Cuba) that salaries were too low to allow tax payments. However, the private sector – people letting rooms to tourists in their homes, independent farmers, owners of paladares etc., - was obliged to do so as it was this sector that had direct access to pesos convertibles and thus earned far more than the average. The legislation also calls for workers receiving bonuses or being paid in CUCs (pesos convertibles) and state workers who receive significantly higher salaries – perhaps in some cases where earnings are linked to production – to pay a certain percentage in tax of any pay they may receive above a given threshold.
Manuel pointed out that in every municipality there is an employment office for those seeking work. Any workers who find themselves with no job is entitled to unemployment benefit. For the first month, an unemployed worker will be entitled to his or her full salary. Workers with ten to thirty years of service can then receive 60% of their salary for a further one to five months. Discussions are now in hand to ensure that job-seekers will be entitled to household means-tested social security payments after six months. (This is in addition to the existing allowance paid to people who for one reason or another are not able to work.) The government has assured the public that no-one affected by this legislation will find him or herself unprotected and that the socialist nature of the Cuban state will in no way be sacrificed.
The western media prefer to overlook the fact that Cuba appears to be the only country in Latin America to offer universal unemployment benefit. (Six other countries in the region offer individual unemployment insurance schemes which, apart from Brazil only benefit small percentages of the workforce.)
The unions have been assigned a central role in the process of deciding lay-offs. In each workplace there is a committee formed for this purpose, including one representative from the union and another from management. Between three and five members are workers elected by the workforce. The findings of this committee need to be ratified by the local branch of the trade union before being presented to the administration of the establishment in question. The CTC has been running a national training scheme to prepare union representatives for this process.
Cuentapropistas who are contracted to work for others are encouraged to continue their union membership. Manuel explained how such workers are contacted by the appropriate union once they have found work. In a number of provinces, newly licensed cuentapropistas have been visited by union officials who have offered help and support, which has been warmly welcomed.
As union members, cuentapropistas have the right to call on their unions to represent them in instances of complaints against an enterprise or co-operative by which they have been contracted. Complaints could range from demands for excessive hours of work or unfair dismissal before a contract terminates, to the right to accompany a sick member of the family to hospital. In cases where mediation is ineffective, the union will pay for legal and even court costs where necessary.
Last year, after the National Assembly had presented the proposals, all members of grass-roots and professional organisations and all other interested members of the public were invited to attend open meetings to scrutinise the content of the proposed legislation and to suggest amendments. As a result, from November until March of this year meetings were held the length and breadth of the island at workplaces, universities, youth and pensioners’ organisations, in local neighbourhoods, branches of the Federation of Cuban Women and in other grass-roots organisations. The intention was to compile recommendations, concerns and comments from all those members of the population who wished to participate. In all, eight million people attended these discussions, three million actively took part in debates and 781,644 submissions for amendments were received.
While I was in Cuba early in 2011, I spoke to a number of people who told me about the concerns that had been expressed at the meetings they had attended: students were worried that there would be no work for them in the state sector if the current workforce was being reduced; people nearing pension age were concerned about what would happen to them if they had to leave their jobs; other groups feared that ill health or problems at home, which can affect one’s performance at work, would lead to such workers losing their jobs. Other aspects of the new legislation were also discussed: a large number feared the plan to abolish the ration book would lead to basic food and necessities becoming far more expensive.
In March, the concerns and recommendations expressed at meetings were collected and compiled and, where they reflected a consensus, they were passed to the Communist Party which made its own recommendations at their congress that took place in April 2011. These included the gradual abolition of the ration book, more state regulation to ensure fair treatment of workers and staggering the implementation of the proposed legislation, especially those aspects about which the population has expressed concern. The legislation relating to the workforce will now be staggered over five years. A total of around 68% of the original proposals were modified at Congress to take into account these concerns.
The next stage was for the professional associations and organisations to study the revised proposals which fell into their area of expertise in order to make their own recommendations. Finally, the modified proposals were submitted to the National Assembly for their consideration prior to ratification. The Assembly also has the responsibility of establishing the legal and structural framework on which the modified legislation will operate. This task will be done over the next five years through a Commission which will oversee and iron out problems in the implementation of the new laws. It will produce reports twice a year about how the changes are progressing. Any further changes that may be necessary would first be submitted for public discussion.
Inevitably, there are many details that still need to be finalised over this period. In the area of employment, for example, arrangements need to be made for the independent auditing of the income of self-employed workers in order to assess tax payments. There is also the legal question of whether the laws protecting self-employed workers contracted by others should adhere to the labour or civil code. And certain parts of the legislation will need to be clarified, such as the right to paid annual leave for contracted cuentapropistas.
Manuel stressed the importance of reaching a democratic consensus on the various aspects of any new and far-reaching legislation. He explained his father had been a representative in the dockworkers’ union before the Revolution, when the idea of democratic decision making had to be fought for. It is the role of the trade unions in the democratic processes upon which Cuban society is structured, with 98% of its working population of about 5 million choosing trade union membership, that provides Manuel with one reason for his work being so worthwhile.
So far this year, Cuba has seen a significant increase of cuentapropositas, although not to a great extent from the state sector. In August Carlos Mateo, Deputy Minister for Work & Social Security gave the total number of people registered as self-employed as 325,947. Of these, 147,000 had obtained licences in the 1990s. Of the remaining 179,000 or so, 68% were people who previously had worked outside the formal economy (a trend that started in the Special Period of the 90s) and 15-16% had transferred from the state sector. The most popular areas for self-employment are catering, transport and letting rooms (casas particulares).
No-one can dispute that extensive efforts have been made by the Cuban government so that the population feel they have taken a part in the processes of formulating this new legislation. However, people’s fears have not been totally allayed. This is understandable, as losing a secure job is never easy and during my stay in January 2011, a number of workers expressed to me their apprehensions about joining the private sector while others saw it as an opportunity opening up for them. Nevertheless, it is apparent that the importance of public participation and social well-being has been paramount in the drafting of this legislation. Perhaps the UK could take a leaf from Cuba’s book in this respect. One can only imagine the consequences!