Friday, September 17, 2010

Cuba joins mainland of austerity

Cuba joins mainland of austerity
RORY CARROLL | HAVANA, CUBA - Sep 17 2010 11:18

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 forty-something 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 in a sweeping privatisation drive.

Authorities announced on Monday that they would lay off more than
one-million state employees in the island's biggest economic shake-up
since the 1960s. The cuts begin immediately, with 500 000 jobs due to go
by March 2011. Loosened controls on private enterprise will, it is
hoped, jump-start the private sector and turn former public workers into

"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 Cuban labour federation,
which announced the news. "Job options will be increased and broadened
with new forms of nonstate employment, among them leasing land, forming
co-operatives and self-employment, absorbing hundreds of thousands of
workers in the coming years," it said.

In fact, the changes started in April this year with a pilot scheme to
privatise barbers and hairdressers. Formerly employees of the state --
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 customers.

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 as a wage regardless of job performance. "I
don't want to take over this place," said Luis, the barber, who
preferred not to give his surname. "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, some
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 that lack of experience, insufficient
skill levels and low levels of initiative could sink new enterprises.

"Many of them could fail within a year," it said. After half a century
of official certitude about 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 think-tank. "We're seeing a
uniquely Cuban transition, but within the global

Unemployment last year was officially 1.7%, but with average monthly
salaries of only $20, supplemented by a ration book and free healthcare
and education, many Cubans make a minimal effort, prompting an old joke:
"They pretend to pay us and we pretend to work." 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 United States embargo -- a
crippling, punitive measure -- could no longer be blamed for all the
island's woes, he said.

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. Last in line will be those at civil aviation and the
ministries of foreign relations and social services. To ease the pain,
the authorities hope to energise the 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
vocal protests. 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

"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 protest."

Europe is enduring its own economic travails, but is 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."

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