The World of Work in a Changing Cuba
Winter 2008
Dr Steve Ludlam reports on how unions and government are working together to reduce income inequalities and corruption in employment
While commentators have been pre-occupied with Fidel’s illness and the prospects of change under Raul, there has been less attention to changes already happening in the Cuban economy, especially in employment relations and union rights. These are key indicators of Cuba’s socialism as it develops in a world of ruthless capitalism.
The Special Period, of measures to overcome the Soviet collapse and renewed US hostility, is officially not over. However, in spite of the tightened US blockade, the Cuban economy has restored its pre-crisis GNP, based on the success of strategic sectors of the Special Period, notably tourism and Cuba’s ‘knowledge economy’ in health, education and science. But, and it is a big but for Cubans, the pre-crisis distribution of incomes has not recovered. As every visitor to Cuba knows, and as Cuban leaders repeatedly stress, the Special Period, with its ‘dollarisation’, remittances from relatives in the USA, western tourists, self-employment and partial marketisation of agricultural produce, has undermined equality in Cuba, both socially, and especially in terms of income distribution. Less measurable has been the impact on everyday ethics, with the population having to boost legal incomes by odd-jobbing and trading in the informal sector, often with material pinched from work.
State workers, for example in health and education, and indeed government ministers, are paid on the modest national peso scales. Most have limited opportunities to earn anything on the side or in Cuba’s ‘hard’ currency, the CUC. The CUCs are needed in the informal sector and in the well-stocked CUC stores, which sell at ‘western’ prices, enabling Cuba to ‘farm’ hard currency to pay for vital imports. Those who can afford something in these shops, are those get CUCs in salary bonuses, from tourist tips, self-employment, remittances, or from informal or illegal trading. A few constitute the ‘new rich’ attacked by Fidel, some of whom have no need to work at all, something most Cubans find shocking and immoral.
Since Fidel’s much-cited November 2005 speech lambasting corruption and black markets, Cuba’s unions have prioritised the fight against workplace fiddling. But union leaders point out that until legal salaries once again give people a decent income, this is an uphill struggle. It is in this context that Raul, in his 26 July speech, admitted bluntly that ordinary salaries were ‘insufficient to satisfy all necessities’. Nor, he said, could inadequate salaries secure the ‘socialist principle’ of distribution of income based on work. He launched a nationwide debate in workplaces and communities to discuss the problems of everyday life, work and efficiency that pre-occupy Cubans and their government.
Addressing Income Inequalities
So what has been happening in recent years, as the economy has been recovering, to address inequalities? In the first place, in 2005, the government raised national salaries and benefits. The minimum pension was tripled, and the minimum wage more than doubled. All salaries were then raised modestly. There is no income tax, but higher prices for electricity and food in the non-rationed food markets have eaten into the rises. Productivity bonuses have spread. In the ‘company improvement’ sector of firms given more autonomy and profit incentives, workers have seen average 30% increases in salaries. More generally by 2004/5 some 1.5 million workers were receiving productivity bonuses, often in CUCs. Such bonuses now count as part of income for calculating pensions, sick pay etc.
Other measures were aimed at reducing income inequality. Cuba ‘de-dollarised’ in 2004, making the peso and CUC the only legal currencies. In 2005 the CUC was revalued against the dollar by 8%, and a 10% exchange tax imposed, in effect an 18% tax on dollar remittances. And the national peso was also revalued to close the gap a bit with the CUC. In 2004/5 the government acted to cut out unauthorised hard currency activities by companies, and to prevent corruption in dealings with foreign firms. Also in 2005 the government sent the young social workers into the fuel distribution networks to regularise deliveries. This revealed that half of Cuba’s fuel had been going straight in to the black market! Since then other campaigns have targeted cheating consumers in peso shops. And the new progressive electricity tariff in 2006 indirectly taxes wealthy consumers, some running self-employed CUC businesses on highly subsidised peso electricity.
Raul’s insistence on 26 July that higher salaries require higher production and productivity, a commonplace of Cuban debate, raises other issues of central importance to Cuban socialism, its workers and their unions. The economy remains state-regulated, politics rules the market. Cuba’s ‘apertura’, its opening to capitalism, has been ‘Special’ and limited. Cuba did not collapse into Russian-style gangster capitalism. Nor is it ‘marketising’ along Chinese lines. But working life was changed forever by the crises of the 1990s. Full-time employment for life in a ministry-controlled enterprise has broken down. Over 90 per cent of workers are union members, but often with new types of employer: state firms in the ‘company improvement’ scheme, mixed enterprises involving foreign capital, worker co-operatives in agriculture, self-employment, and much expanded service and high-tech sectors.
Reforming Employment Relations
To take all this on board the national Labour Code - Cuba’s core employment law since 1985 - is being reformed in an extensive process of consultation, above all with the unions. This is partly to incorporate subsequent legislation, like greatly extended maternity and paternal leave. But it will also formalise the emerging post-crisis world of work. Cuba is modernising and professionalising its whole human relations culture. As Elio Valerino Santiesteban, legal head at the Central de Trabajadores de Cuba (CTC), the national union federation, put it, ‘It is a new way of thinking about human relations, and human capital as a central element of the economy.’
All of this is delaying the new Code, but in the meantime important reforms have been introduced. In 2002 health and safety at work law was strengthened, and the law on collective bargaining revised to cover new types of company. Crucially for workers and unions, collective bargaining law requires that local employment relations, and implementation of employment legislation, are negotiated with unions, with workplace assemblies having the final vote on agreements.
In 2005 a major new employment law, Resolution 8/2005, formalised equal rights for workers on part-time and other non-standard contracts. It set down workers rights in the redeployment and redundancy situations in a restructuring economy, notably the right to a new job; income protection; and education and training on full salary. Procedures for promotion and training, and recognising qualifications, were set out, tied to the worker’s right to an annual review. In 2006 new regulations covered forms of payment-by-results, shift rates and other plus payments. There is an emphasis on flexibility and productivity that we normally associate with joblessness and impoverishment. But in Cuba, on top of the protection of the legal right to work and income protection, everything has to be negotiated with the unions and accepted by workers’ assemblies, where all workers, unionised or not, vote. The new laws give unions more not less power.
Cuba is Different
A recent example is new laws on timekeeping and work discipline, erroneously described by the BBC as the new Labour Code, and by Miami sources as having provoked a revolt against Raul! The true story illustrates the strength, not the weakness of Cuban society. Resolutions 187 and 188 were announced in August 2006, for implementation in January 2007. But workers and unions argued that, while it was right to regularise the working day, it was unfair to penalise workers for being late to work, or nipping out of work. The state of public transport often made it impossible to get to work on time. And shops and public service and council offices worked the same hours as everyone else, so workers had to visit them during the working day.
So the implementation was postponed for three months, to give time to fix transport problems and negotiate new opening hours in shops and services. Of course, especially in Havana, transport could not be sorted out quickly enough. But the key point here is that implementation has to be through the collective bargaining agreement, giving unions and workers themselves an effective veto until material conditions make implementation feasible and fair. As Raul Hodelín Lugo, Secretary General of the CTC in City of Havana told me, ‘In the places where these conditions might not have been created, even though the implementation date is reached for these Resolutions, we will not agree to them being enforced. Unless the conditions exist, we cannot apply the Resolutions mechanically. The application is flexible, not mechanical. Like everything else in Cuba, we discuss with the workers.’
This is consistent with Cuba’s employment relations culture. US-inspired propaganda insists, for example, that strikes are illegal in Cuba. This is untrue. There is no legislation against strikes. There is simply no legislation on strikes. The Cuban constitution and its employment legislation embody positive rights for unions. But, unlike in most countries like the UK, the law does not regulate how unions conduct their affairs or their industrial activities. Cuba’s unions are organisationally and financially independent, but they have a constitutional right to propose, and be consulted on, labour legislation. As Dr Francisco Guillén Landrián, head of the legal section of the Labour Ministry, told me, ‘You must remember that we do nothing, absolutely nothing, until we reach agreement with our comrades in the unions. If tripartite co-ordination prevails today in any country in the world it is in Cuba, according to the International Labour Organisation.’ As for Cuba using managerial ‘human resources’ methods to sideline unions, he laughed heartily and said, ‘Whoever does that in Cuba is either suicidal or mad. We are not a society of technocrats or profit seekers. We work to satisfy peoples’ needs, and labour is a right of the people.’
Unions know that they have to work hard to make union and worker rights and participation a reality. In recent years the unions have retrained representatives at all levels, right into the workplace, especially in health and safety, and in collective bargaining. And the CTC is restructuring itself to improve its performance. So, as a new world of work emerges in Cuba’s expanding economy, Cuba’s unions remains at the heart of the political process, with the central role in developing and defending workers’ rights, rights that are indeed being strengthened in the new legislation.
Dr Steve Ludlam, University of Sheffield, has been researching employment relations in Cuba with the support of the Nuffield Foundation.
