By Clay Boggs and Geoff Thale
In the past two years, Cuba has taken important steps to open up its economy. 378,000 Cubans now have licenses for self-employment. The Cuban government has legalized car and home sales, and has started offering loans to small businesses, homeowners (for renovations), and farmers. Yet Cuban officials, including Raul Castro, continue to say that the biggest reforms—which include shifting up to 500,000 jobs off the state payrolls—are still ahead. These reforms are necessary to stimulate Cuba’s sluggish economy and to improve opportunities for Cubans, but there are many unanswered questions about their impact on Cubans’ everyday lives. In evaluating the pace of reforms and the Cuban government's sometimes ambivalent approach, it is useful to reflect on the complicated effects the reforms have on daily life in Cuba. The reform process has generated a mixture of support and resistance as it impacts not only government bureaucrats but also ordinary Cubans who may experience both gains and losses in the process.
In particular, the reforms raise many questions about the future of Cuban workers. Will the interests of workers in the emerging private sector be protected? Will the current labor movement incorporate and represent these workers? Can the labor structure adapt to a mixed economy, with more adversarial labor-management relations? Will labor relations in the state sector of the economy also change?
WOLA took a delegation of U.S. labor experts to Cuba in early May 2012. Our visit allowed us to ask some of these questions and to begin discussions with workers, academics, union officials, and others about what the future might hold.
The delegation met with workers in a variety of settings—a factory that makes semi-trailers, a cell phone service center, and a four-star tourist hotel. The situation of state-employed Cuban workers is hardly enviable—salaries are still shockingly low, compared with other Latin American countries. The official state-sponsored labor union, the Central de Trabajadores de Cuba (CTC) does not negotiate salaries or hours with management. Instead, salaries and hours are set for each profession and industry at a national level through discussions with the CTC and guidelines from the official labor code (the current version of which can be found here).
As a result, the role of the CTC is focused on providing training and education to workers and legitimizing centralized decisions about wages, hours, and working conditions. This is the classic “transmission belt” function of unions in planned economies, though it’s important to note that the belt travels in both directions: the CTC also communicates workers’ opinions and complaints to management and to the state-level decision makers.
Though it does not provide workers with opportunities to negotiate wage increases, the Cuban labor system does offer them a number of significant protections. While wages are shockingly low, most Cubans are guaranteed employment. Their working hours are limited to 44 hours per week, higher than in the United States, but still limited. All workers have free health care and participate in a social security retirement system. Workers in high-risk settings (miners or chemical engineers, for example) are given yearly check-ups at specialized health and safety centers in order to diagnose any work-related illnesses. While they cannot engage in collective bargaining over salaries and wages, workers, through their CTC and workplace-level union representatives, do have some say about their working conditions, such as safety equipment and production schedules in manufacturing. In some cases, they can negotiate the rates of productivity bonuses. When workers are dismissed, the layoffs or firings can sometimes be challenged through a system of labor tribunals.
The expanding private sector will inevitably pose challenges for this limited but meaningful set of labor protections. As self-employment and small business enterprises expand, a growing number of people in Cuba will be in the employ of private business owners and working for private managers, rather than for state enterprises. In the face of this new reality, a new labor relations framework will have to be developed. For example, most workers in state enterprises currently pay no income taxes; the costs related to health care and retirement is covered by the general state budget, whose revenue comes from the surplus generated by state enterprises. Will a new taxation system be developed for employees in the new private sector? How will wages for workers in the private sector be set? Who will advocate for the interest of private sector employees to ensure that they continue to receive key benefits like healthcare and retirement security? Who will advocate for the interests of workers vis-à-vis private sector employers? These are all still open questions.
Two upcoming laws will attempt to answer some of these questions.
The first is a new legal framework for non-agricultural cooperatives, which is likely to permit the formation of cooperatives in services, including in transportation and food services, and small-scale industry. Further details about cooperatives can be found in a recent article that describes their role in the economic reform process. Until now, private sector growth in Cuba has been primarily focused in the “self-employed” sector—restaurants, barbershops, et cetera—that are likely to have relatively few employees; legalizing non-agricultural cooperatives will establish a framework for the private sector to grow beyond these small enterprises. The structuring of this law, the organization of cooperative ownership, the rights and responsibilities of worker-owners, and the character of labor protections and access to social welfare benefits, will give an indication of how Cuba intends to deal with some of the questions raised above.
The second law, likely to be approved next year, consists of a revision to the Cuban labor code, which is expected to include regulations for self-employed workers and labor-management relations in the small business sector. Many expect the new labor code to adapt the existing framework of legal protections to the needs of private sector workers, define how wages and hours are set in small and medium businesses, and establish criteria for the hiring and firing of private sector workers. Since it is the labor code—and not the CTC—that determines wages and salaries in Cuba, how it addresses these issues will be a strong indicator of the way
that Cuba intends to adapt its labor system to an increasingly mixed economy.
Talking with workers in Cuba, one gets the feeling that Cubans are reinventing their society and social contract. They are improvising constantly. Despite the risks, this is in many ways a very exciting process. Viewed through the lens of its economic reforms, Cuba is a more dynamic country than its harshest critics would have us believe.
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Clay Boggs is WOLA’s Program Assistant for Cuba and for Rights and Development.
Geoff Thale is WOLA’s program director. Mr. Thale has studied Cuba issues since the mid-1990s and traveled to Cuba more than a dozen times, including organizing delegations of academics and Members of Congress.
