78. Cuba Is Organizing a Formal Labor Market

The future of our world lays in the future of labor and nature, for they are the sources of our sustenance and happiness.  They are also central to the problems we face worldwide; the economic crisis and the ecological/environmental.  The rise and spread of the capitalist mode of production is the immediate cause of this crisis, which has been in the making since the dawn of class society.  That is why large-scale social experiments, like the Cuban socialist revolution, matter not just to those immediately involved but to the working people of the entire world.  It is from these large-scale, society-wide experiments that humanity as a whole can learn how to emerge from the burden of crises capitalist system has imposed on it.

A Major Decision

In a major policy decision, the Central Trabajadores de Cuba (CTC), Cuba’s labor federation with over 3 million members, has announced that 500,000 government employees would be laid off by next March, and over a million in the next few years.  The great majority of Cubans work for the government. According to the Cuban National Statistics Office (ONE), only 591,000 Cubans currently work in the private sector, a number that includes mostly small farmers and agricultural cooperative workers as well as 143,000 self-employed.  A small percentage of Cuban workers are employed by foreign companies, e.g. in tourism, through an employment agency run by CTC.

The Layoff Process

The CTC statement does not indicate how the decision was reached and how it will be carried out.  It does not say who will make the layoff decisions and what sectors will be affected. But it says that to ease the blow for laid off workers “[j]ob options will be increased and broadened with new forms of non-state employment, among them leasing land, forming co-operatives and self-employment, absorbing hundreds of thousands of workers in the coming years.”

An online PowerPoint presentation, entitled “Process of Reduction of Payrolls”, that outlines the planned reorganization of the economy for the Communist Party members (posted on Penúltimos Días web site), offers more detail.  According to the presentation, eventually the state will only employ workers in “indispensable” areas such as farming, construction, industry, law enforcement and education. The presentation says workers at the Ministries of Sugar, Public Health, Tourism and Agriculture will be let go first, with layoffs having already begun in July.  It contains a list of "ideas for cooperatives" including raising animals and growing vegetables, construction jobs, driving a taxi and repairing automobiles, but acknowledges that "many of them (new enterprises) could fail within a year."

According to Marc Frank, a long-time reporter based in Havana who spoke to “Communist Party sources”, geographical limitations on self-employment and prohibitions on obtaining bank credits, doing business with state entities or hiring labor outside the family, will be eliminated along with some other regulations.

The government's definition of self-employment includes many entities that are essentially small businesses, including such things as family-run restaurants and cafeterias, auto repair shops and jobs in the building trades.

The non-state jobs will include, among other things, workers hired by the small businesses, taxi drivers who will now lease their cabs from the state and employees of small state businesses that will be converted to cooperatives.

Frank explains the process of layoff as follows. Laid-off state workers will be offered at least one other state job.  If they do not accept it they will receive unemployment benefits, equal to 70 percent of their wages, for up to three months. It must be noted that even after this period the laid off workers like all Cubans receive free health care and education, subsidized utilities, a subsidized food ration and automatic adjustment of mortgages or rent to 10 percent of the top breadwinner's income.

AFP reports of anxiety among Cuban workers.  Reuters reports similar emotions while stating that others are embracing the idea of working for themselves. Associated Press spoke with many people already involved in the private sector who were encouraged by the announcement, but also reported talking to workers who are nervous about the uncertainty of the future.

The Broader Significance of the Reorganization

The CTC supports the planned layoff because "Our state cannot and should not continue maintaining companies, productive entities, services and budgeted sectors with bloated payrolls [and] losses that hurt the economy....” The CTC states that the massive reduction of the government labor force is part of “the process of updating the economic model and the projections for the economy for the 2011-2015 period.”

However, the proposed significance of the lay-offs goes well beyond the goals of the next 5-year plan; they will have much longer-term effect.  One, that the CTC has not expressed any misgivings about, is that it will potentially reduce national union membership by almost a third. Some unions in the sectors more affected by lay-off will lose even more. There will be a corresponding lose of social power for CTC and its affiliated unions. 

There is also little public knowledge about the “economic model” that CTC is referring to, and whatever its “update” supposed to entail.  The leadership of the Cuban revolution debated what economic model to pursue in the 1963-65 period.  The two positions reflected the two tendencies within the newly constituted socialist leadership.  Those who looked to Moscow in the new leadership, represented by Carlos Rafael Rodriguez, argued for the adoption of the Soviet economic model.  Ernesto Che Guevara argued for an alternative model where emphasis would be on systematic development of moral incentive for work.  He argued that the models in use in the "socialist camp" were using administrative or material incentives and these methods would end up in capitalism.  We know now that he was correct in his diagnosis. 


However, after the failure of the 1970 sugar harvest campaign, which was a volunteerist error of the Cuban leadership, a majority in the leadership opted for the Soviet model. In 1986, the Third Congress of the Communist Party criticized the the Soviet-sponsored socialist economic management system (System of Economic Management and Planning – SDPE) for fostering  inefficiency, corruption, and profit-minded selfishness. Fidel Castro called for the “rectification of errors and negative tendencies” in economic management. The campaign focused on recentralizing economic planning authority, dismantling SDPE material incentives and market mechanisms, abolishing the free farmers markets launched in 1980, and combating corruption. 


However, with the collapse of the "Socialist Camp" and its trade and credit relations with Cuba, the Rectification Campaign came to an end.  The Fourth and last Communist Party Congress held in 1997 did not decide on an economic model.   

It is true that President Raul Castro has called for conceptual and structural reform of the economy since he has assumed power in 2006 and encouraged public discussion of Cuba’s troubled economy.  It is also true that some criticisms have been aired, including in the pages of the Communist Party newspaper, Granma.

However, these could not substitute for a clear leadership proposal and a genuine mass discussion of the challenges the Cuban revolution faces and its possible remedies.   The present reorganization does not even meet the best example of previous attempts to involve Cuban working people in the discussion of major changes in the Cuban economy.  One example is the Workers Parliaments that the CTC organized in the early 1990s in  workplaces all across the country to discuss the Cuban leadership's proposed economic policies and to offer criticism and policy recommendations on how to confront the depression-like crisis. Another example is the 2003-04 reorganization of the sugar industry that resulted in closing down of half of the Cuba's sugar mills and their related cane production. Over 100,00 employees had to be transferred to other sectors of the economy and often to other geographic locations.  This was done through a similar mass discussion of the problems in the sugar industry and why the change was necessary and how it should be carried out (for a report see the Militant, number 9 and 16, 2004; Farsi readers can read my article). 

The proposed reorganization aims to deal with some of the long-term problems plaguing the Cuban economy such as labor inefficiency, bloated administrative staff, and to figure out a better mix of moral and financial, and personal and social incentives.  It deals also more directly with the small black market that developed after the legalization of small business such as “family operated” bed-and-breakfasts (casa particular), and family-operated restaurants (paladares). 

However, the proposed changes should be articulated in the larger context of how the Cuban communists propose to move the socialist project forward.  This is especially important as the announced decision signal the establishment of a formal labor market that can only weaken article 9 of the 1992 Cuban constitution.  


The constitution defines as part of the duties of the “workers state” the following:

“b) as the power of the people and for the people, (the state) guarantees

“- that every man or woman, who is able to work, have the opportunity to have a job with which to contribute to the good of society and to the satisfaction of individual needs;

“- that no disabled person be left without adequate mean of subsistence;

“- that no sick person be left without medical care;

“- that no child be left without schooling, food and clothing;

“- that no young person be left without the opportunity to study;

“- that no one be left without access to studies, culture and sports;

“c) works to achieve that no family be left without a comfortable place to live.”

However, a formal labor market can only operate if the employers can refuse to hire workers, hence leaving a section of the workforce deemed "redundant" or "unemployable" without work.  


The announced decision will move more of the Cuban families from the public sphere to the realm of the private market. It does so by formally creating a labor market and expanding markets for necessary consumer goods. Of course, these will be regulated markets. But let us recall that the black labor market has operated for some time despite the fact that it was illegal.   And the very decision to adopt the market mechanism is an admission that the state is unable to do away with the market influence. 

This process is bound to affect class structure in the Cuban society.  It will strengthen the petty bourgeois (want to be bourgeois) layers and will tend to weaken the proletarian, socialist current.  it will undermine socialist solidarity. To effectively counter its influence, it is essential to strengthen the working class in all possible manners, but first and most of all, politically. It would be essential to strengthen the unions and all mass organizations.  But to that will require a significant expansion of genuine socialist democracy in Cuba.

As the constitution states, the Cuban working people should not just be invited to “participate.”  They should gradually become the prime movers of socialist policy.  This is even more important as other "economic" important policy decisions loom on the horizon. For example, take the needed tax reform to deal with the significant expansion of the private sectors and the needed reform of retirement policy as an increasing number of retired workers live longer lives thanks to the successes of the policies fostered by the Cuban revolution.  


The socialist revolution is a worldwide process.  The Cuban working people should be at the forefront of the debate and mobilization to fight environmental/ecological crisis, in particular climate change. 


The Need for Solidarity

The organization of a formal labor market will simply recognize the status quo of the Cuban revolution.  However, a policy to expand socialist consciousness and working class power, through an expansion of socialist democracy, will gradually replace the realm of the marker and will reduce the need for the hegemony exercised by the Cuban state and the Communist Party.  If so, the decision to reorganize the Cuban workforce and economy can become a true case of one step back to take two steps forward.


Meanwhile, international labor and socialist movements need to extend solidarity with the Cuban revolution, in particular by opposing the United States embargo.