By Bill Duryea, Times Staff Writer
In Print: Wednesday, September 15, 2010
The Cuban government's announcement Monday that it intended to slash
500,000 government jobs — 10 percent of the island's entire workforce —
sent a clear signal that the communist nation intends to accelerate the
growth of its minuscule private sector. Unemployed workers will be
encouraged to find jobs raising rabbits, making bricks, painting
buildings and collecting garbage, according to an internal government
document. Johannes Werner, editor of the Cuba Standard news website, has
observed Cuba's hesitant steps toward economic reform for 12 years. He
assesses the implications of the layoffs, which have already begun and
are expected to continue through March.
Can Cuba's private sector absorb these new workers?
I don't expect co-op owned retailers, family restaurants, bed and
breakfasts, taxis, and car repair shops to absorb 500,000 people.
Agriculture has some potential — in fact, co-ops and private farming
have already absorbed some 50,000 people recently, through long-term
leases of state land for private farmers.
That said, the most obvious chance for the newly unemployed in the
short- and mid-term will be to find another state job.
The announcement says state companies and institutions will continue to
hire in the oil sector, construction, biotech, teaching, police and
industry. People doing these hard or highly skilled jobs have been
woefully underpaid. That's why these are all sectors with pronounced
labor shortages. Now that there is an excess labor force, these state
companies likely will begin to see an influx, which will increase as
performance pay is becoming the norm.
Will Cuba encourage more foreign investment to create jobs for these
workers?
The expanding space for private business in Cuba is likely not going to
open additional space for foreign investors. The standard 49-51 joint
venture arrangement between foreign investors and the Cuban government
will continue.
More than anything, a resurgence of foreign investment will depend on
the global economic climate and on new regulations, such as for foreign
real estate ownership.
What does this mean for the U.S. economic embargo?
The failure of U.S. sanctions has been obvious, but it's a domestic
political issue. I would be very surprised if the entrenched
embargo-and-vengeance industry in Miami and Washington would suddenly
stop finding fault with Cuba. Even with Cuba's economic opening, there's
little domestic incentive for the Democratic leadership — in terms of
power, popularity or campaign contributions — to move that little island
up on their agenda.
If this economic overhaul doesn't work, should we expect a mass exodus
from the island?
It's hard to say what will happen. The outlines of economic reform seem
to satisfy both the pragmatics (more space for private business) as well
as leftist critics in Cuba (collectivization and more workplace
democracy via co-ops). It also seems the government continues to
prioritize health care and education in their spending, while continuing
some subsidies for food and housing. That should give the government
broad backing and some leeway should the reform hit serious bumps.
The biggest resistance will come from an entrenched bureaucracy. It
remains to be seen whether inflated ministries will also be reduced in size.
Doubtless, the transition means a massive disruption. And any
substantial disruption of the economic structure — look at Puerto Rico
in the 1960s and '70s, Mexico in the 1980s and '90s, Dominican Republic
in the 1990s — inevitably produces mass emigration. The question is how
Cuba and the United States will channel the migratory pressure.
Bill Duryea can be reached at duryea@sptimes.com or (727) 893-8770.
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