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Posted September 14, 2010 by publisher in Business In Cuba

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Rob Sequin | Havana Journal

Are there two Cubas?

There certainly appears to be two Cuban leaders with two different views of Cuba.

Raul Castro sees a Cuba that is in serious trouble. So much so that he announced that 500,000 workers will be laid off and many of them given the opportunity to work for themselves.

Then there is Fidel Castro who recently said “The Cuban model doesn’t even work for us anymore” but later denied it and said that he actually meant that capitalism doesn’t work.

Do Fidel and Raul talk? Do they see the same country? It appears as if they do not and it would also appear that their two world’s are about ready to collide.

What are the Cuban people supposed to think? On one hand Fidel is talking about nuclear war, stating that the US blew up a South Korean war ship to provoke North Korea and plenty of other meaningless comments coming from an old man that no one likes. On the other hand Raul is talking about economic reforms coming from an old man that no one likes.

Sara Miller Llana in her Christian Science Monitor article agrees: Former revolutionary leader of Cuba Fidel Castro may claim he was misinterpreted by a US reporter last week when he stated that the Cuban model no longer works. But his words were bolstered Monday when Cuban authorities announced the biggest economic shift in decades: Half a million state workers will be laid off by next year and more private enterprise will be tolerated.

“It is a very good development toward harnessing the entrepreneurial spirit and know-how of the Cuban people,” says Ted Henken, a professor at Baruch College-CUNY who has studied private enterprise in Cuba. “It will hopefully be a beginning of the end of the Cuban government´s ‘internal embargo’ on the inventiveness of the Cuban people.”

Articles about the massive adjustment to the Cuban workforce

Anyway, there are several good articles and commentary out today regarding this massive lay off of Cuban workers/privatization of labor. 

Cuba’s leaders lay out details for layoffs by By ANDREA RODRIGUEZ and PAUL HAVEN of AP

Cuba’s communist leaders have already determined what soon-to-be-dismissed workers should do after they get pink slips in sweeping government layoffs, detailing a plan for them to raise rabbits, paint buildings, make bricks, collect garbage and pilot ferries across Havana’s bay.

Many of the workers tossed from state jobs into the marketplace could see their new enterprises fail within a year, officials acknowledge.

The plans, along with a timetable for which government sectors will feel the ax first, are laid out in an internal Communist Party document obtained Tuesday by The Associated Press. Cuba on Monday announced plans to cut 500,000 state workers by March 2011 and help them get work in the private sector, in the most sweeping reforms instituted since President Raul Castro took over from his brother in 2008.

The document says workers at the ministries of sugar, public health, tourism and agriculture will be let go first — and some layoffs already began in July. The last in line for cutbacks include Cuba’s Civil Aviation and the ministries of foreign relations and social services.

Many laid-off workers will be urged to form private cooperatives. Others will be pushed into jobs at foreign-run companies and joint ventures. Still more will need to set up their own small business — particularly in the areas of transport and house rental.

The 26-page document — which is dated Aug. 24 and laid out like a PowerPoint presentation with bullet points and large headlines — explains what to look for when deciding whom to lay off. Those whose pay is not in line with their low productivity and those who lack discipline or are not interested in work will go first. It says that some dismissed workers should be offered alternative jobs within the public sector.

The document hints at higher wages for the best workers — something Castro has been promising for years — but says, “It is not possible to reform salaries in the current situation.”

The outline includes a long list of “ideas for cooperatives,” including raising animals and growing vegetables, construction jobs, driving a taxi and repairing automobiles — even making sweets and dried fruit.


Larry Birns, director of the Washington-based Council on Hemispheric Affairs, said a series of small changes — such as privatizing some state-run barbershops, licensing more private taxis and distributing fallow land to private farmers — have moved Cuba toward economic reform. While none of those were blockbusters, Birns said, Monday’s revelation had the potential to be one.

“Cuba is rapidly becoming like any other country,” he said. “It is not going back. These are big changes.”

Cuba announces mass layoffs in bid to spur private sector by Marc Frank of Reuters

“Our state cannot and should not continue maintaining companies, productive entities, services and budgeted sectors with bloated payrolls (and) losses that hurt the economy,” the statement said.

“Job options will be increased and broadened with new forms of non-state employment, among them leasing land, cooperatives and self-employment, absorbing hundreds of thousands of workers in the coming years,” it said.

The plan is the most important reform undertaken by President Raul Castro since he succeeded his brother Fidel Castro in 2008 and the biggest shift to private enterprise since all small businesses were nationalized in 1968.


According to Communist party sources who have seen the detailed plan to “reorganize the labor force,” Cuba expects to issue 250,000 new licenses for self-employment by the close of 2011, almost twice the current number, and create 200,000 other non-state jobs.

The government’s definition of self-employment includes many entities that are essentially small businesses, including such things as family-run restaurants and cafeterias, auto repair shops and jobs in the building trades.

The non-state jobs will include, among other things, workers hired by the small businesses, taxi drivers who will now lease their cabs from the state and employees of small state businesses to be converted to cooperatives.


“Today’s announcement opens a new chapter, one that has a deadline, that will be felt and seen in every town, and that promises to create a much more substantial private sector inside the socialist economy,” said Philip Peters, a Cuba expert at the Lexington Institute think tank in Washington.

Peters said the half million workers will not find themselves suddenly on the streets of Cuba because their workplaces will likely be converted gradually into cooperatives driven by private initiative.

“The 500,000 figure is alarming—it conjures up an image of 500,000 Cuban workers going home with a pink slip, not knowing where they will go the next morning, and of the economy suddenly needing to create 500,000 new jobs,” Peters wrote on his blog The Cuban Triangle.

“In fact, many workers will go to the same workplace as ever, but the business arrangements will be different.”

Cuba currently has only 591,000 people working in the private sector, a number that includes mostly family farmers as well as 143,000 self-employed, according to the National Statistics Office.


Phil writes on his blog about Cuba expanding its private sector and how this time its different.

Seismic Shift Ahead for Cuban Labor Force? by Anya Landau French

Ever since Raul Castro stepped in for his brother Fidel more than four years ago, and officially was elected President by the Cuban National Assembly 30 months ago, he has repeatedly highlighted the shortcomings of the current Cuban economic model and promised to reform it.  First he announced a few mainly cosmetic, but symbolically meaningful changes like authorizing Cubans to set up their own cell phone accounts, ending an unwritten policy that kept most Cubans from patronizing tourist facilities occupied by foreigners, and allowing Cubans to purchase high-energy consuming electronics like toasters.

The BIG Questions

Is the Obama Administration paying attention?

Will they be the 11th Administration to get it wrong with the failed “Plan A” Embargo thinking that this time its different and the Castro regime will fail?

Will Fidel do something to sabotage Raul’s efforts?

Will Fidel do something to sabotage Obama’s efforts?

Miscellaneous Small Business Enterprises to be Allowed

Animal handlers
Apparel textiles
Automotive Repair
Beauty Services
Boats in the bay
Bodywork and auto painting
Breeding Geese
Breeding goats
Breeding pigs
Breeding rabbits
Bridge repairs
Catering services for parties
Clean rivers and ditches
Cleaning and care of multiple buildings
Cleaning beaches
Clothing and costume rental
Collector, sorter and seller of raw materials
Community hygiene
Computer Services
Construction repairs
Cultural Cafes
Dry Cleaning
Event management
Feed producers
Food Delivery Services
Food Production
Freight Transportation
Funeral Services
Furniture Repair
Gym and massage
Interior decoration
Making and selling toys
Manufacturers of brick and clay tiles
Mattress Repair
Minor equipment repair
Omnibus auxiliary routes
Parks Maintenance
Party Planners (weddings, quinces, birthdays, etc.).
Producers of organic fertilizer
Production and sale of wine
Production of smoked sausage
Repairers of roads and sidewalks
Selling flowers, wreaths and floral arrangements
Solid waste collector home
Sports facility maintenance
Taxi Driver
Variety shows

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