I hope, that Obama reads the news and will rethink his approach of “fixing” the USA economy his way…The Government cannot create jobs for everyone and pay us to do nothing. In Eastern Europe there were literally millions of people paid to do nothing, just so the party leaders can say that the socialism is the better system than is the capitalism.
Cuba eyes more self-employment, not market reforms
by Carlos Batista
With government plans afoot to reshape Cuba’s workforce by cutting the bloat out of some payrolls, President Raul Castro said he would allow more small private businesses.
The economy is 95 percent in state hands at the moment. Castro’smove is aimed at limiting the socioeconomic fallout from planned work force shifts that could target one million excess jobs.
The Council of Ministers “agreed to expand the range of self-employment jobs, and their use as another alternative for workers who lose their jobs,” Castro said as he gave a closing address at a biannual session of the National Assembly.
After the crash of the former Soviet bloc, Cuba’s cash-strapped government in the 1990s approved a wide range of self-employment. Positions such as beauticians, dog groomers, small restaurant owners and even cigarette lighter refillers were legalized as long as workers got licenses and paid taxes.
But social resentment spread when some workers, particularly in small private restaurants, achieved dramatic levels of success.
The government began increasing taxation and regulation, and decreasing license-granting, until the self-employed sector was largely rendered paralyzed, like most of the economy.
By 2009, there were just 148,000 people out of a work force of five million who were legally self-employed.
Cuba has no regular access to international funding; it depends heavily on the cut-rate oil it gets from Venezuela in order to keep its fragile economy afloat. Tourism earnings and remittances from emigres also are key pillars of the Cuban economy.
Inefficiency is rampant and wages are woefully low.
Cubans’ hopes had been running high that change was coming to allow some economic opening in the Americas’ only one-party communist regime.
But the Castro government flatly ruled out the possibility of a sweeping turn toward capitalism.
“One cannot speak of reforms,” said Economy Minister Marino Murillo.
“We are studying an updating of the Cuban economic model in which socialist economic priorities will be at the forefront, and not the market,” he stressed, in a message sure to disappoint many on the island desperately weary after years of hardship and almost no economic or political change.
If there was any welcome news for Cubans, many of whom were fearful that job shifts discussed in state media recently could leave them unemployed for the first time, Castro insisted no massive firings without reassignment of workers would take place.
“No one will be simply left out in the cold” on the employment front, Castro said.
Raul Castro, 79, said he would launch new wage and salary practices early next year. He did not give details.
Three months ago he gave a green light for a test-run privatization of barber and beauty shops.
Under the limited program, the state now rents out shops to workers who used to live mainly on tips and work at home on off hours. Now stylists are able to set their own prices, and are working at improving service. Stylists pay for a license, their rent, social security plus electric and water bills.
Legislative committees have been looking at whether privatization can be expanded in food businesses, long plagued by insufficient supply, high prices, and major problems in the distribution chain, from rampant theft to spoilage.
Castro took the reins from his ailing brother Fidel Castro four years ago, saying he wanted to boost production. But the Cuban government has not made bold policy shifts able to achieve the gains it wants.
So far the government has handed fallow land to Cubans willing to farm it, and has ended the equal scale for salaries for all workers across industries.
But workers still make an average of around 20 dollars a month.
And here is another article from July 18 that I was about to post with some comments, but due to lack of time I postponded it.Here it is few days later
Jobless in Cuba? Communism faces the unthinkable
By ANNE-MARIE GARCIA (AP) – Jul 18, 2010
HAVANA — At a state project to refurbish a decaying building in Old Havana, one worker paints a wall white while two others watch. A fourth sleeps in a wheelbarrow positioned in a sliver of shade nearby and two more smoke and chat on the curb.
President Raul Castro has startled the nation lately by saying about one in five Cuban workers may be redundant. At the work site on Obispo street, those numbers run in reverse.
It’s a common sight in communist Cuba. Here, nearly everyone works for the state and official unemployment is minuscule, but pay is so low that Cubans like to joke that “the state pretends to pay us and we pretend to work.”
It is funny, that in Eastern Europe we had the same exact joke
Now, facing a severe budget deficit, the government has hinted at restructuring or trimming its bloated work force. Such talk is causing tension, however, in a country where guaranteed employment was a building block of the 1959 revolution that swept Fidel Castro to power.
Details are sketchy on how and when such pruning would take place. Still, acknowledgment that cuts are needed has come from Raul Castro himself.
“We know that there are hundreds of thousands of unnecessary workers on the budget and labor books, and some analysts calculate that the excess of jobs has surpassed 1 million,” said Castro, who replaced his ailing brother Fidel as president nearly four years ago. Cuba’s work force totals 5.1 million, in a population of 11.2 million.
In his nationally televised speech in April, Castro also had harsh words for those who do little to deserve their salaries.
“Without people feeling the need to work to make a living, sheltered by state regulations that are excessively paternalistic and irrational, we will never stimulate a love for work,” he said.
Indeed, the process of labor reform may already have started, albeit slowly.
Workers in the tourism sector say some of their colleagues have been furloughed during the lean summer months, while others have been reassigned to jobs on state-run farms.
How about that – government bureaucrat assigning you a job. You do not like it? You better stay unemployed? They will throw you in jail and there you will work what they tell you, but without pay.
Or just to make an example for the others, who do not want to work, the party will make you an enemy of the state, a spy and capitalistic pig and execute you publicly.
Free market doesn’t work? The planed economy is better? I disagree.
“Since we are now in the low season, the hotel where I work has sent many workers home for two or three months,” said Orlando, a chef in Varadero, a sand-and-surf enclave east of Havana.
“It’s very hard because you’re left with no salary at all,” said Orlando, who like almost all state employees, didn’t want his full name used to prevent problems at work. He added, “I’m lucky since I’m still in my job.”
Veronica, a receptionist at another Varadero hotel, said she feared she may be sent home in August, when her resort will be only half-occupied.
“Sometimes they offer alternatives, to study in a particular course or another job,” she said, “but sometimes, when (workers) are sent into the agricultural sector for instance, they just quit.”
With the government giving no details of its thinking, rumors have spread that as many as a fourth of all government workers in some industries could lose their jobs or be moved to farming or construction. But Labor Minister Margarita Gonzalez has promised that “Cuba will not employ massive firings in a manner similar to neoliberal cutbacks,” using “neoliberal” as a description of free-market policies.
The government has moved to embrace some small free-market reforms. 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.
The global financial crisis, and the $10 billion in damage inflicted by three hurricanes in 2008, have forced authorities to run a deficit of 5 percent of GDP, leaving them unable to pay back credits received from China and elsewhere.
Cuba slashed spending on importing food and other basics by 34 percent to $9.6 billion in 2009, from $12.7 billion the previous year. But so far, the moves have not been enough to rein in the deficit.
95% of the economy is in the states hands and yet they are importing food. Reason? – the government cannot produce anything efficiently. It employs paper pushers, while no one wants to go and sweat under the sun farming the land, because there is no incentive in doing that. The food prices in Cuba are fixed and it doesn’t matter the demand, the labor or other costs, as an independent farmer you cannot make a profit. I even have doubts that farmers going to break even. Thats why the government is re-assigning workers as receptionists and sending them to the farms.That is how planed economy works…
Carmelo Mesa-Lago, a Cuba economics expert and professor emeritus at the University of Pittsburgh, said Cuban officials have spent months debating cuts in the labor force and economic reforms. He said they know what’s needed, but face “a problem of political viability.”
Various government perks like cars, gas, uniforms and office supplies have become incentives to bloat the payroll, since they are based on the size of a company’s work force.
But low pay means low productivity. On Obispo street, a state-run cafeteria sells heavily subsidized soft ice cream and pork sandwiches for the equivalent of a few American pennies — meaning wages and tips are so tiny that the staff is complete indifferent toward customers.
Very true. During the communist years everything sucked. Customers? What the hell the workers care? They were getting paid the same no matter, if they get one person to visit the restaurant (or whatever business) or one hundred. Actually they had the incentive to have less customers, because they would work less and still get the same salary. Serving more customers means more work for the same money… Nobody wants that.
Another incentive to work less, cheat the customers or steal from the business – the costs of running the business was absorbed by the government. The inventories were being constantly stolen, left to rot, but no one cared…
What if someone complains? So what? If they do not like our business, let them visit the business that is few blocks away. It is also run by the government and no one there cares for them either.
Of course eventually someday the workers from the restaurant will buy a product made by the same those customers they treated poorly. The product will be with poor quality, will not work as intended and so on…But what does the worker at the manufacturing plant care? If you do not like their product… good luck finding a better one.
Three waiters sit at the counter cracking jokes. A fourth is the only one working, making coffee for three tables. Nearby, a cashier stares into space, a cook flirts with a scantily clad teen and a supervisor sits idly by.
The state employs 95 percent of the official work force. Unemployment last year was 1.7 percent and hasn’t risen above 3 percent 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.
Salvador Valdes Mesa, secretary-general of the nearly 3 million-strong Cuban Workers Confederation — the only Cuban labor union allowed — has instead written that “reorganization” will ensure redundant workers are reassigned rather than fired.
He said the government wants more jobs in construction and agriculture.
Still, 35-year-old computer engineer Norberto fears for his job. He thinks it’s unfair to keep workers under communist domination and yet call them unmotivated. “I didn’t graduate from college to now work as a day laborer or a peasant, he said.
If he loses his job and gets an offer to work abroad, he said, “my question is ‘Will the Cuban authorities put aside their paternalism and let me leave?’”
Also read this one – Why Did the Soviet Union Collapse?