Capitalist storm clouds loom over Havana after state cuts 1m jobs
Cuban workers told to become entrepreneurs in bid to boost island's
It was supposed to be the start of a brave new world in which the
customer was king. But the teenage boy in the barber's chair stared at
his reflection, aghast and almost crying. "What have you done?" he
asked, caressing uneven clumps on a shorn scalp.
The barber, a fortysomething man with a grubby white coat, put down the
scissors, lit a cigarette, and shrugged. "Looks OK to me. Don't know
what you're on about."
The young customer examined his head from different angles, each worse
than the last. "It's like …" – he struggled for words – "a tennis ball.
A bald bloody tennis ball." The barber took another drag and put out his
hand. "Forty pesos. Have a nice day."
The scene on Neptuno street, a crumbling, sun-bleached quarter near
downtown Havana, was a taste of Cuba's challenge in transforming its
socialist economy with a sweeping privatisation drive.
Authorities announced yesterday they will lay off more than 1 million
state employees in the island's biggest economic shake-up since the
1960s. Cuts begin immediately, with 500,000 jobs due to go by March.
Loosened controls on private enterprise will, it is hoped, jumpstart the
private sector and turn former public workers into entrepreneurs.
"Our state cannot and should not continue maintaining companies,
productive entities, services and budgeted sectors with bloated payrolls
[and] losses that hurt the economy," said the official Cuban labour
federation, which announced the news.
"Job options will be increased and broadened with new forms of non-state
employment, among them leasing land, co-operatives and self-employment,
absorbing hundreds of thousands of workers in the coming years," it said.
In fact, the changes started in April with a pilot scheme to privatise
barbers and hairdressers. Formerly state employees – about 85% of the
labour force works for the communist state – they were told to take over
their own salons, charge whatever they wanted, pay tax – and court
As the barber showed, providing good customer service, let alone
expanding market share, is an alien concept to many accustomed to
receiving the same pittance wage regardless of job performance. "I don't
want to take over this place," Luis, the barber, who preferred not to
give his surname, told the Guardian. "How do I know it'll make a profit?
How do I pay suppliers?"
Like it or not, those are questions many more Cubans will soon be asking
after receiving their pink slips. The authorities, according to a
26-page party document leaked to the Associated Press, have a plan for
them to raise rabbits, paint buildings, make bricks, collect garbage and
pilot ferries across Havana's bay.
Some of those let go will be urged to form private co-operatives, others
will be directed towards foreign-run companies and joint ventures, and
others will be encouraged to set up their own small businesses.
The Communist party document admitted lack of experience, insufficient
skill levels and low initiative could sink new enterprises. "Many of
them could fail within a year," it says.
After half a century of official certitude about being its socialist
course, Cuba is entering new waters. Its final destination remains
unclear. "A hybrid is evolving which can't be said to be any one thing,"
said Julia Sweig, a Cuba expert at the Council on Foreign Relations
thinktank. "We're seeing a uniquely Cuban transition but within the
Unemployment last year was officially 1.7%, but with average monthly
salaries of only $20, supplemented by a ration book and free health care
and education, many Cubans make minimal efforts, prompting an old joke:
"They pretend to pay us and we pretend to work." Che Guevara's dream of
creating a "socialist man" motivated by moral rather than material
incentives has long been abandoned.
This week's announcement – widely reported across state media – has been
trailed since Raul Castro succeeded his brother Fidel as president in
2008. "We have to erase forever the notion that Cuba is the only country
in the world in which people can live without working," he told the
national assembly last month. The decades-old US embargo – a crippling,
punitive measure – could no longer be blamed for all the island's woes,
It was no longer possible to protect and subsidise salaries on an
unlimited basis and cuts will affect all government sectors, said the
labour federation. "Losses that hurt our economy are ultimately
counterproductive, creating bad habits and distorting worker conduct."
Workers at the ministries of sugar, public health, tourism and
agriculture will be let go first, according to the Communist party
document. The last in line will be those at civil aviation and the
ministries of foreign relations and social services.
To ease the pain, authorities hope to energise the stunted private
sector by encouraging Cubans to raise animals, grow vegetables, drive
taxis, repair vehicles, make sweets and dried fruit and seek building work.
Leftwingers abroad may feel let down by the cuts, but Cuban officials
believe the thriving black market is an indicator that the private
sector will soak up surplus labour. Such consensus would contrast with
Britain, Ireland and Greece, among others, where cutbacks have triggered
One Havana-based western diplomat was less sanguine about Cuba's
response, especially as there were simultaneous cuts in subsidies for
food, cigarettes and other products which people used to barter. "People
knew this was coming, but now it's here, it's real, and they're worried.
Bosses will get rid of the least productive employees, the ones who
don't work or show up for work. The type of people who may lack the get
up and go to start a business. People wonder if there will be a rise in
crime, or social protests."
Europe was enduring its own economic travails but was at least
accustomed to unemployment, said the diplomat. "People here aren't used
to being threatened with losing their job. They may complain their
salary is only $15 a month, but that's $15 more than nothing."
The US journalist who elicited Fidel Castro's apparent admission that
Cuba's economic model does not work has insisted the quote accurately
reflected the former president's views. Castro confirmed uttering the
nine-word remark,, which caused widespread astonishment, but said he had
been misinterpreted and that he had meant the "exact opposite".
At the end of a lunch in Havana Castro told Daniel Goldberg, a
correspondent with the Atlantic magazine: "The Cuban model doesn't even
work for us anymore."
The comandante was in full flow, touching on many different topics at
the same time, said Goldberg. "I don't want to call it a throwaway line
but it was kind of semi-stream of consciousness."
Goldberg said he was surprised at Castro's subsequent attempt to explain
away the remark. "I don't know how you can interpret that as its opposite.
The 84-year-old had made similar admissions before, said the journalist,
and economic changes underway on the island made it "a truism that the
Cuban model isn't working".
Julia Sweig, a Cuba expert who also attended the lunch, backed
Goldberg's version and said Castro's apparent U-turn was aimed at a
"He wanted to say that although we're changing our model that doesn't
mean we're importing US-style capitalism," she said.
Castro's spate of public appearances and comments, said Sweig, were
"spontaneous" but fitted the economic reform strategy of his brother and
successor, Raul Castro.