Publications and Research

Document Type

Article

Publication Date

6-30-2010

Abstract

In November 2010, the Cuban government published a 32-page document called “Lineamientos De La Política Económica y Social” [“Guidelines of Economic and Social Policies], which outlines the economic transformations approved in the Sixth Communist Party Congress last April 2011. The guidelines presented in this document expand the economic changes initiated by Raúl Castro in 2008. One of the major changes that already began is the transfer of State workers to the (emerging) private sector. This is the most transformative labor oriented economic adjustment implemented in Cuba so far and is a clear indicator of Cuba’s movement towards a reformed model of socialism in which the Non-State sector is likely to play a more significant economic role. In October 2010 the Government authorized (or legalized) 178 self-employment activities. Self-employed workers are now able to directly negotiate the provision of their services to State-owned producers, thereby creating new contracting opportunities between the State and the (emerging) private sector. In addition, self-employed workers will be able to make contributions to the State-run social security fund, open bank accounts, obtain loans expand their operations, and will pay taxes on their income or earnings. In addition, self-employed workers and small-scale entrepreneurs will be permitted to hire third parties (i.e., other workers or employees), which expands the possibilities for the development of micro or small enterprises. At the same time, the Government announced plans to facilitate the creation of leasing arrangements (or contracts)that would allow current (State) employees to lease facilities such as cafeterias, barbershops, retail outlets, repair shops, etc. from the State and organize production cooperatives in other sectors of the economy besides agriculture. The measures recognize the need to further expand the role of Non-State actors in the Cuban economy and explore alternative property forms and allocation and coordination mechanisms. To accomplish these goals, the State may assign a larger share of non-strategic economic activities to the Non-State sector, and even promote the creation and development of (privately-owned) Small and Medium Enterprises (SMEs) in areas such as agriculture, housing, retail commerce, transportation, etc. The transfer of State workers to the emerging private sector is also part of a series of economic policy transformations implemented by the Cuban government in response to the severe economic crisis confronted by island since 2008. As a response to this crisis, Cuba has also adopted a series of austerity measures focused on energy conservation, fiscal adjustment to reduce the ratio of the fiscal deficit to gross domestic product (GDP), transfers of non-productive State-owned lands to cooperatives and private producers, and the liberalization of consumption. The labor adjustments and the economic changes present limitations, and if left unchanged, are likely to hinder Cuba’s prospects for successful economic reforms. The present article examines recent labor adjustments in Cuba and presents a balanced analysis of the new economic measures. This article demonstrates that while recent labor force and economic changes in Cuba represent a step in the right direction, these reform measures face a series of challenges that will require profound policy transformations and greater flexibility on the part of the Government.

 
 

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