Wednesday, September 15, 2010

The Plan for Havana

AP reported yesterday on a briefing document that explains the decision announced Monday to move a half-million Cuban workers from the state sector to the private sector, which Cuban officials and media prefer to call the “non-state” sector.

Penultimos Dias did us all the service of finding and posting it here. It’s titled “Process of reduction of payrolls,” which isn’t very inviting, but it’s worth a read because it sheds light on the much more interesting part of this story – not the downsizing of government offices and state enterprises, but where workers will go in the private sector.

The document applies to the City of Havana province. There are some unknown acronyms and some items without context or explanation, but plenty of the information is clear.

The document continues to explain that the root of this action is a realization on the part of the government that unless Cuba produces more and cuts excessive government spending, the problems affecting the family economy cannot be solved. There are quotes from Raul Castro, saying that if Cuba continues to maintain “inflated payrolls in almost all areas” and to “pay salaries with no link to results,” prices will continue to rise and purchasing power will continue to erode. Also, salary reform will remain impossible.

But a bigger breakthrough in government thinking is the idea that the country will benefit and productivity will increase if hundreds of thousands of workers move to the private sector.

There is some tough love. Again, there is a quote from Raul indicating that no worker will be abandoned – “but this is not about the State taking charge of placing everyone through several job offers. The first ones interested in finding a socially useful job should be the citizens themselves.” There is also a hint that benefits have been too generous to laid-off workers and those whose work is interrupted by natural disasters or other causes.

In Havana, 85 percent of the 64,546 new private jobs that this paper envisions are expected to be in individual entrepreneurship, or trabajo por cuenta propia. As I read the document, it assumes that these entrepreneurs will be able to hire workers (no specifics provided), it points to changes in the tax system (again, no real specifics), and it seems to say that 31 categories of jobs eligible for licensing will be reinstated, and six new ones added.

It seems that Cuba’s cuentapropistas, long viewed by officials as bit players, now have starring roles in a big government strategy.

As for cooperatives, the document lists dozens of ideas for businesses that can be performed by cooperatives in five areas: agriculture, construction, construction materials, transportation, and food production. Some are services for individuals, others (cleaning crews for parks, rivers, and beaches, bridge repair) sound like municipal governments would be the customers. I noticed many (and readers may note more) where I know Cubans already have illegal de facto companies, such as laundry services, car repair, body shops, moving companies, and caterers. In those cases, it’s an opportunity for people to come out of the black market and join the legal economy.

The document doesn’t discuss how many jobs are expected in newly created cooperatives, and how many in cooperatives that will be formed by converting small state enterprises such as cafeterias, light manufacturing operations, repair shops, etc.

But since the actions are to take place in the coming months, the answers to these and other questions will become evident.

In the meantime, if you add it all up, it sounds like an outline for a small and medium-sized business sector, regardless of what they call it down there.

1 comment:

El Yuma said...


I read through the document last night as well and I share your analysis. I will try to post later today giving my own two cents (or maybe 5 cents) on the details about TPCP in the document as they relate to previous experiments and rules governing TPCP.

Keep up the solid analysis.