What about the workers?

Autumn 2014

Dr Steve Ludlam explores the benefits and challenges that a recently updated Labour Code and ongoing economic changes present to Cuban workers and their unions

Commentary on Cuba’s economic reforms generally highlights the growing private sector, implying a transition to capitalism. This ignores Cuba’s dominant state sector, the revived planning system, and the role of small-scale private enterprise in socialist transition models. But, from a socialist perspective, the impact on workers is as important as forms of property. After all, the defining feature of capitalism is not private property, but how ‘free’ labour is exploited.

So how do Cuba’s reforms affect workers and unions? The new national economic strategy certainly gives managers more autonomy, and significantly diversifies and decentralises the economy, with consequences for working life. The 1985 Labour Code, Cuba’s ‘law of laws’ for workers and unions, was written for another epoch. So what is in the updated Labour Code, published in June 2014, and other relevant legislation, and what about salaries and job security in general?

Workers’ rights

The new Code emerged from a five-month, mass consultation on the draft version, itself the product of government discussion with unions, which have a constitutional right to be consulted on legislation. Nearly 70,000 workplace meetings were convened. A joint national commission of the union federation (CTC), the Ministry of Labour and Social Security, and the National Assembly analysed workers’ submissions, and agreed changes before the parliamentary debate.

More than 100 changes were made. Of these, on my analysis, 80 per cent were substantial. Examples include the following: The draft version inserted a new stage into the workplace grievance and disciplinary procedure, giving senior management exclusive powers. This was removed. The draft proposal to permit workers to work all but 7 of their 30 days of annual leave was amended, to permit such work only in exceptional circumstances, and after consulting the union. Giving written contracts to private sector workers was made obligatory rather than ‘preferable’. Provision was also added for indefinite contracts for workers in cyclical work like tourism.

An ‘independent’ journalist alleged in the on line magazine ‘Havana Times’ that the new Code “eliminated” the right to work! Article one of the Code acknowledges constitutional worker rights in Cuba that include the right to work.

Article Two explicitly guarantees the right to work in its first section! Cynical, or just lazy?

Other fundamental rights include equal pay, a minimum salary, and non-discrimination (with reference to sexual orientation for the first time, after a parliamentary amendment). The rights of workers, including the self-employed, to welfare benefits such as pensions, maternity leave, unemployment benefit and accident benefit are established. Workers have the right to individual and collective participation at work, through workplace assembles and trade unions respectively.

More specific rights include a written contract, with a maximum of three years for fixed-term contracts. The working week is 40-44 hours, based on an 8-9 hour day and five-day week. The right to training is stated, and to use two weeks of paid annual leave to participate in daytime education of the workers own choice. In the state sector, 30 days paid annual leave (plus 10 paid public holidays) and guaranteed weekly rest days, remain rights. For private employees a seven-day minimum paid leave, the international labour rights standard, is established for the first time. Unpaid compassionate leave is introduced.

The right to health and safety at work requires employers to eliminate risks, provide training, and supply adequate protective equipment and clothing. Individual workers and unions, have the right to stop work they consider dangerous. Overtime, strictly limited and subject to union agreement, will now be paid at a premium rate (time and a quarter). Maternity rights are further enhanced with protection from overtime or shift working, and include an hour’s paid time, daily, for feeding a baby up to age one.

Grievance and disciplinary issues go before the workplace Organs of Labour Justice, the majority of whose members have to be elected workers. Appeals go to the courts. Non-state workers can go directly to the courts.

The new Code elaborates rights for non-state employees for the first time. Since 2010, self-employment includes a category of ‘contracted worker’ selling their labour to another self-employed worker or business. After an intense debate, the Supreme Court declared that such workers were not civil contractors, but employees subordinated to an employer. The Code therefore gives contracted workers rights to written contracts, minimum salaries and maximum hours, rest periods and paid holidays, and health and safety at work. Laws for the new coops sector further protect them from exploitation. After three months, they must be offered membership of the profit-sharing coop, or released. No more than ten per cent of a coop’s working time can be performed by hired labour.

Union rights

The draft chapter on union rights was the most amended. The Code restates the right to voluntarily associate, and form trade unions. This right is now described as existing, “in conformity with foundational unitary principles”, an implicit reference to the CTC and its affiliates. This reflects a union concern to avoid divisive breakaways, especially in the private sector, and given US destabilisation activities.

Unions have the right to participate in company planning and control, and a new right to receive information from management (to raise the quality of worker participation). Unions are guaranteed office space and materials, and facility time for union officers (a draft item to restrict this where it prejudiced paid work was removed). A new right, reflecting members’ concerns, is to promote training for union representatives.

The Code also reflects the shift from moral to material incentives. The new Code no longer includes the right of unions to organise voluntary work. Their right to run ‘socialist emulation’, the system of democratic recognition of meritorious work, removed in the draft Code, was restored, but only where “legitimate” and “fair”. This compromise reflects diverse opinions in the union movement.

Beyond the union rights chapter, there are dozens of other references to agreement or consultation with unions. Agreement is required, for example, for lay-offs, patterns of working hours, overtime or rest day working, the annual safety report, and the content of the obligatory workplace Collective Bargaining Agreement that covers implementation of labour law and items like bonus payment systems and accident investigation.

The new Code thus restates most existing worker and union rights, and adds new ones reflecting economic reforms. But the reforms are also creating a new landscape in the world of work.

Diversity in salaries

In its final 20th Congress Report, the CTC bluntly addressed the problem of falling real wages. The Code itself does not specify salary scales and basic rates, noting that these are the responsibility of the Council of State, “having heard the opinion” of the unions. Nevertheless, the salary issue produced the most interventions in the Code consultations.

A central objective of the economic reforms is to restore adequate salaries, and the ‘socialist principle of distribution’ that bases salaries on the quantity and quality of workers’ output. In March 2014, salaries in the health service were doubled, in some cases tripled. Basic salary increases across the board, though, will not be possible until the national economy is more productive, and ending the dual currency system will not alter that fact. So for most workers, increases will come through performance-based bonus payment systems, recently simplified to abolish the bonus cap on supervisory workers who have been resigning and going back on the shop floor to earn more.

Crucially, bonus schemes have been decentralised. State enterprises can establish profit-based bonus funds, and negotiate local bonus systems without ministerial permission. This will diversify take-home pay, as will increased employment in the foreign investment and other non-state sectors. Under new legislation, Cubans’ pay in the foreign investment sector will be subject to a higher minimum than elsewhere, will be locally negotiated, and no longer based on the national salary scale.

So there is a challenge and an opportunity for workers and unions in this diversification and decentralisation. Bonus payment schemes have to be in the Collective Bargaining Agreement, subject to union and workers’ assembly agreement. That is an opportunity. But such diversification could have consequences for the constitutional rights to equal pay for equal work, and for the principle of socialist distribution. It is not difficult to envisage workers doing the same jobs with the same output, but receiving very different salaries depending on local bonus schemes and company profitability.

Diversity in employment structures and security

The post-2010 labour restructuring, slimming the state sector, was a major jolt to job security. The over-hasty launch was soon reined in, but a third of Cuba’s workers should be outside the state sector by 2016. This was never neoliberal informalisation. All workers have rights to free health, education, and welfare services. Indeed, expanding legal self-employment has reduced illegal informalisation. According to the CTC, 69 per cent of the currently registered self-employed were previously ‘off the books’, but are now working with full rights.

Now, annual rationalisation of payrolls is planned for state companies. And this will be complicated by the end of the dual currency system, which artificially sustains company profitability in many cases. The new Code adopts much of the 2010 redeployment procedure. Prior notice and consultation with workers and unions is a legal right in the Code. Workers will be recommended for redeployment by analysis of qualifications and achievements, not by seniority or favouritism. This analysis is conducted by a ‘committee of experts’ with union representation and a built-in majority of elected workers. The Code also incorporates the 2010 reform of unemployment benefit. Earnings-related unemployment benefit is no longer indefinite, but limited to one month at 100 per cent of salary, then up to five months at 60 per cent depending on length of service. Thereafter benefits are discretionary. This is a significant shift of responsibility for finding work from state to worker.

Solidarity vital as ever

The reforms mean that both job security and salaries will be more directly linked to productivity, profitability, and market forces. If the reforms produce the intended “prosperous and sustainable socialism”, then greater market exposure within a mainly state-owned and planned economy should be offset by greater prosperity for all, not just those with hard currency access.

Far from signalling a transition to capitalism, Cuba’s new labour laws embed comprehensive worker and union rights and welfare benefits that labour movements elsewhere can only dream of. All workers are covered, including those in the growing private and foreign investment sectors. And the changes, both in economic strategy and in the new Labour Code, genuinely reflect the influence of mass participation.

But the changes do present challenges. Unions have recruited about 70 per cent of the self-employed, to keep them “on the side of the Revolution”, in one CTC leader’s words. When a third of workers are in non-state sectors, union representation will be an ongoing challenge. Rights to ‘equal pay for equal work’ and the ‘socialist principle of distribution’ are harder to guarantee given salary system decentralisation and diversification. The reform strategy explicitly rules out private accumulation of capital in general terms, but the constitutional ‘suppression of the exploitation of man by man’ becomes a serious task for unions in the private employment sector. And restructuring and redeployment will become more frequent, in a state sector more vulnerable to profitability tests. But the Labour Code, not least the new scope of the Collective Bargaining Agreement, gives unions real powers to manage change and diversity in their members interests. The legitimacy of Cuba’s constitutional ‘socialist state of workers’, to a significant extent, depends on their success.

They deserve our support. It goes without saying that all the challenges facing Cuban workers and their unions would be easier to confront if the US embargo were lifted. International solidarity, which includes respecting the sovereign choices Cubans are making, is as vital as ever.

Dr Steve Ludlam will be one of the speakers at the Latin America Conference 2014 Tickets available at www.latinamerica2014.org.uk