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Posted October 17, 2008 by publisher in Business In Cuba

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Cuba is pushing state-run companies to adopt new wage policies by 2009 that would allow workers and managers to earn as much as they can, local media said on Thursday, as President Raul Castro seeks to improve economic performance.

The Labor Ministry, in conjunction with Raul Castro’s closest military economic advisors, issued instructions to managers this week on how to design the new system. He ordered it be fully discussed with workers and ready by December, after they failed to meet an August deadline, Cuba’s most popular economic commentator, Ariel Terrero, said on state-run television.

There is little difference in wage scales set by central planners so someone who does little earns almost as much as someone who works hard, including managers.

The plan would replace the current across the board egalitarian system with one based on piece work and concrete conditions in each work place.

Cubans make an average salary of about 17 dollars per month but they receive subsidized food and utilities, transportation, health, education and, in some cases, collective bonuses.

The Cuban state controls more than 90 percent of the economy.

“The goal is to put an end once and for all to these egalitarian concepts that are so damaging for the economy and socialism and that have done more harm than good during these years,” Terrero said.

Raul Castro has pushed for economic incentives, in contrast to Fidel Castro’s penchant for limiting them in the name of equality, since taking over for his legendary brother in February.

“Equality is not the same as egalitarianism,” Raul Castro said in his last major speech to the nation in July. “Egalitarianism is in itself a form of exploitation—exploitation of the good workers by those who are less productive and lazy.”

Raul Castro also has launched a major reform of the agricultural sector to create conditions for state and private farmers to legally earn as much as they can from their efforts after meeting state quotas.

Raul Castro wants to keep the Cuban economy firmly in state hands while making it more efficient, using a model developed by the military when he was defense minister.

As defense minister, the younger Castro set about in the 1980s trying to improve the performance of companies supplying the armed forces of the communist-run country.

They adopted modern management and accounting practices, granted local managers more day-to-day decision making power and tied wages to individual and collective performance instead of nationally set salaries, with some good results.

The model was applied to new military businesses in the civilian sector in the 1990s as Cuba was deep in the economic crisis that followed the collapse of its old trade and aid partner the Soviet Union. The armed forces entered tourism, urban agriculture and other sectors.

“One of the most important things happening now is that more than one important change in how the economy functions is under way ... such as how work is measured, management ignorance of the new wage system and the organization of production,” Terrero said.

Castro promoted the man in charge of the military’s businesses, Gen. Julio Casas Regueiro, to defense minister and top party and government posts. Sources said he has installed Maj. Luis Alberto Rodriguez as one of his aides. Rodriguez had run the businesses day-to-day and is married to Raul Castro’s daughter Debra.

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  1. Follow up post #1 added on October 25, 2008 by Asoka Kuruppu

    Well done Raul- that’s the way to go per Deng Tsiao Peng.

  2. Follow up post #2 added on October 28, 2008 by Erick Mendez

    Well it’s a start, but still no Cuban cigar…

  3. Follow up post #3 added on October 29, 2008 by manfredz with 464 total posts

    lets see how long it takes before they pay their CEO millions of dollars and then scream for bailout .... wont be that much different from spending billions and then screaming for creditor country bailouts .....

  4. Follow up post #4 added on December 16, 2008 by Alberto

    Well done Raul, keep it up! Show them that YOU CAN DO, without capitalism!

  5. Follow up post #5 added on December 18, 2008 by Irina

    And he will show ! And without capitalism! Good Luck Raul ! I belive that Cuba will progress very fast now.

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