Sustaining the revolution

Autumn 2010

Dr. Steve Ludlum gets behind the media headlines and gives an in depth analysis of the recent redeployment measures announced in Cuba.

On 13 September 2010, the Cuban trade union federation, the Central de Trabajadores de Cuba (CTC), issued a statement announcing to Cubans that half a million state employees are to be redeployed by April 2011. The measures, discussed below, outlined the selection of redundant workers, alternative work, and unemployment benefits.

The majority of redeployed workers are expected to transfer into the non-state sector, into worker co-operatives or forms of self employment, or into private employment in small businesses which are to be permitted to directly employ non-household and family members for the first time. Also for the first time, Cubans who are not in formal employment or official retirement will be permitted to become legal self-employed workers - a little-noticed measure to assist Cubans who abandoned the formal employment sector entirely in the Special Period.

Redeployment into other state employment will be limited to sectors with labour shortages, such as agriculture, construction, teaching, police, and some industrial work. This restructuring of the labour market was widely interpreted in the international media as a crisis measure by a government beating a rapid retreat from socialism and expelling ten percent of the workforce form the state sector. The Financial Times remarked that the changes made Margaret Thatcher look like a leftist!

Such crude characterisations ignore the fact that in Cuba such changes come about as a consequence of debate and negotiation in a society based on solidarity and collective responsibility, and not in a Thatcherite war on organised labour won by criminalising solidarity and defeating strikes with a militarised police force!

The context of the redeployments

This announcement has not come out of the blue. It is the latest stage of a process of policy debate and change that has been going on for years, and especially since, in 2005, Cuba’s GNP recovered its pre-Special Period level. This recovery enabled an acceleration of the restoration of normality in a Cuba that had been severely dislocated economically and socially by the crisis measures of the 1990s.

Those measures secured the Revolution’s survival but left massive problems of economic inefficiency and of income inequality, and a vast and untaxed network of informal economic activities often resourced by theft of public property.

Three linked processes have led up to the CTC’s September announcement:

In the first place, Cuba has been taking action for some time to restore its fundamental, constitutional principle of socialist distribution, ‘from each according to their capacity, to each according to their contribution’ - in simple terms performance-related pay (an approach adopted uncontroversially across the socialist movement since its advocacy by Marx in the 1870s). In today’s Cuba this means pulling up official salaries, which Raul Castro famously acknowledged as inadequate in a 2007 speech, and taxing unearned incomes from remittances and high incomes in the formal and informal hard currency employment sectors. This, in turn, requires ending the dual currency regime which has been the fundamental demand made in public and institutional debates.

Secondly, raising official salaries and personal consumption, and abolishing the dual currency economy, require a sustained increase in national productivity, a constant theme of public discussion in recent years. Raising national productivity, and universalising output-related pay, have of course developed since 2008 from being desirable and necessary objectives to achieve higher living standards, to being a more urgent necessity to tackle the current balance of payments crisis. This crisis, brought on by the 2008 hurricanes and the world recession, has made more urgent the need to move financial resources from internal subsidies in jobs and services, to financing necessary imports of food and materials and making strategic investments to reduce import dependency and boost exports. Recent mergers of ministries and the return to 5-year economic planning announced in 2009 signalled a more systematic approach to managing state expenditure. The labour market restructuring that has now been announced is an assumption built into the plan for 2011-15. The CTC statement endorsed the view that the number of potentially redundant posts exceeds one million, roughly 20% of the workforce.

The third process has been the national debate in recent years, conducted partly in the massive public consultation processes in 2007 and 2008, on the structure of Cuba’s post-Soviet economy. Another key dimension of these debates has been the scope for removing many non-strategic activities (strategic in the case of food production) from direct state management and into regulated and properly-taxed worker co-operatives, self-employment and small-scale private enterprises. The lifting of restrictions in this respect has also been a repeated demand in the public consultation meetings, and will be popular where legalization of existing informal work can provide greater opportunities to earn an adequate living.

These processes have been addressed across the past decade by changes designed to relate income to work, raise productivity and incomes, and rationalize the state sector. The 2008 hurricanes and the world crisis hit Cuba’s balance of payments and its budget very hard, triggering more radical measures to prevent a serious financial crisis.

Taking up themes frequently stressed by Fidel Castro, Raúl Castro has repeatedly declared the necessity of raising national productivity, and restoring the ‘socialist principle of distribution’ by linking incomes and consumption to work contributed to the society.

In a succession of keynote speeches since late 2009, to the Cuban National Assembly (December 2009, August 2010), and to the Young Communist Union (April 2010), Raúl has drawn attention to the need to address the problems of inefficiencies in the state sector including paying people to do work that does not cover the cost of their salaries, and confronting the associated issue of keeping unemployed workers at home on indefinite earnings-related unemployment benefit.

The unions and change

Trade union friends of Cuba, in particular, will ask what the measures signify for union and worker rights and influence? The unions and the CTC are legally autonomous and financially independent. Politically, the unions support the Revolution, accept the Constitution and the leadership role of Communist Party that the Constitution created.

The dual union role of defending the Revolution and defending workers interests is openly promoted, and based on the concept that workers are both social owners and individual employees. Of course it opens unions to the charge that they are mere ‘transmission belts’ for government policy. But the record of recent years suggests otherwise.

During the past decade, the CTC and Cuban unions have been at the heart of a process of reforming labour relations to take into account the more diverse post-Soviet economy. Seeking consensus on labour relations reflects, of course, the fact that Cuba’s Constitution declares the country to be a ‘socialist state of workers’, in which all workers are protected by Cuba’s Labour Code and associated employment legislation.

Cuba has many avenues for participation in political life, but workers as workers have influence principally through their unions and the CTC, which has a constitutional right to propose, and be consulted on, legislation relevant to their members’ interests.

Secondary legislation since 2000 on health and safety at work, collective bargaining, work organisation, performance review and so on, has amounted to what CTC officials refer to as a new approach to human resource management. And the unions have been senior partners in the line-by-line drafting of such legislation, alongside specialist lawyers and Ministry of Labour officials.

In the real world of Cuban politics, the government does not introduce new labour law without union consent. It was a crucial part of this process of negotiated normalisation of work that resulted in 2005 in what the unions regarded as a major advance: a general law on employment relations, Resolución No.8/2005. This law embedded the union role across the full range of human resource management, and crucially required the incorporation of all the key aspects of labour relations into the workplace collective bargaining agreement that is a legal requirement in all of Cuba’s workplaces, and that must be agreed with unions and supported by workplace assemblies.

Resolución No.8/2005 introduced enhanced protection in redundancy and redeployment situations. It provided that, in any such situation, restructuring must be negotiated with the unions, and the worker would receive 100% of her salary for 30 days, then 60% until an alternative was agreed.

The alternative could be another job, with training if necessary, or, for the first time, ‘study as a form of work’ with workers retaining their salaries and employment rights. It codified the notion of unjustifiable rejection of alternative work by an individual, and loss of earnings-related unemployment benefit as the consequence, provided unions had been consulted, a principle restated in the current measures . Resolución No.8 /2005 also introduced into law the crucial principle of idoneidad demostrada, roughly ‘demonstrated suitablility’, will be now also be used to select workers for redeployment.

This concept, based on analysis of a worker’s qualifications, productivity and work record, was introduced to determine job appointments, promotions and access to training. Unions wanted this more objective and equitable principle to displace seniority-based and other local practices, including favouritism. It is applied by joint workplace committees of unions, management, and elected workers.

So it is important to acknowledge on the central union role in the drafting and implementation of employment relations legislation and policy, in general and in the case of the current redeployment programme. In July 2010, a government policy summit was held that included the CTC union leadership to consider, among other things, how to restructure the labour market. The CTC statement in September followed directly from this meeting, and made clear its endorsement of the economic and social aims of the policy. The CTC has called on the union movement to monitor the process carefully to ensure that the principle of idoneidad demostrada is properly applied in the process of selection for redundancy as some guarantee of fairness. The CTC and the unions will be actively involved in the redeployment process, and transparency and full information to workers has been promised.

It is also important to recognise that in some aspects of the programme, unions have not only accepted the urgency of the measures, but also have agreed to some dilution of rights established in the 2005 legislation on redeployment.

The options of redeployed workers taking up ‘study as a form of work’ (established in the 2005 law), or of early retirement (as in the sugar restructuring in 2002), are no longer available. Temporarily redeployed workers will no longer have the right (established in the 2005 law) to continue to be paid their original salary if it is higher than the salary in the job to which they are redeployed.

Earnings-related unemployment benefit (‘salary protection’) will now be time-limited: paid at 100% of salary for the first month, at 60% for a further one to five further months for those with 10 to 30 years’ service (the 2005 law did not specify any limit on the 60% period); thereafter welfare benefits in cash and kind are available, subject to regular household income and availability to work assessments.

Resist the media cynicism and end the blockade

In summary, the measures announced by the CTC are, paradoxically, a logical consequence of both long-term social and economic recovery, and short-term budget and balance of payments difficulties. The impact on Cuba is intensified, as ever, by the US embargo which remains as tight as ever under Obama.

In the crisis that followed the collapse of the Soviet bloc and the intensification of US hostility in the 1990s, Cubans worked miracles in preserving their principle of never abandoning their fellow citizens, and Raúl has again promised that no-one will be abandoned. One means of achieving this was to keep workers in non-jobs. That phenomenon is now being rectified.

It is easy, if cynical, to observe world market pressures, labour market restructuring, performance-related pay, and benefits conditional on availability to work, and declare that Cuba is surrendering to the logic of capitalist enterprise. But the key judgement must be about who benefits from the changes and who has power in the process.

The purpose is to strengthen Cuba’s sovereignty and its solidaristic socialist model, on the basis of overwhelming state regulation of the economy, with a stronger tax regime in the private and self-employed sectors. The purpose is higher incomes and a closer match between contribution and consumption.

Cuba’s leaders, including its union leaders, are engaged in a hard struggle to sustain and develop the Cuban Revolution. The CTC statement is blunt on the need to take the current measures to secure the economic and social future of the Revolution, but the CTC and the unions at all levels exercise real influence in the process.

Those who sympathise with the Cuban unions’ perspective can help by countering the media war against Cuba, and above all by redoubling the campaign to end the US blockade, and allow Cuba to trade freely and develop its society according to the wishes of its own people.

Dr. Steve Ludlam, University of Sheffield, researches the politics and labour law in Cuba.