“It is assumed that there are no big losers,” “there can’t be unprotected people,” “no one will be left unprotected,” are some of the official statements of January 2021. They are enunciated in relation to “the reorganization task” of the Cuban economy.
At the same time, it has been stated that it is necessary to “promote a greater interest in work,” that “now people and families have to do the math.” There is also talk of “the need to work” that is driven by the “reorganization task.” It is assured, loud and clear, that “living without working is over.”
In relation to this, the two types of headlines suggest that the reorganization will not only try to resolve —again— the distortions of the economy, produced by bad designs and inefficient internal implementations and by the U.S. administrations’ asphyxia of Cuba and its people. The reorganization will also promote a kind of correction of the conception citizens have of work, and of the arrangements that until now had to be made in order to live.
“No one will be left unprotected”
The reference to “no one will be left unprotected” is a continuity of previous processes and discourses. In the 1990s, Fidel Castro affirmed in the 5th Congress of the Federation of Cuban Women (FMC) that whatever there was would be shared “among all.” That crisis transformed the socio-class structure. In 1984, the poverty rate was 6.6%1 and in the early 2000s there was 20% urban poverty.2 The impoverishment was inevitable, although there was no institutional distancing regarding the search for certain buffers. The cost of living and the amount of work (paid and unpaid) that families had to put in to ensure subsistence also drastically increased. Meanwhile, the real value of wages plummeted.
More recently, when Cuba initiated another reform through the Guidelines for the Updating of the Economic Model and Social Policy (2011), then-President Raúl Castro affirmed what has already been said: “no one will be left unprotected.” In mid-2020, when the COVID-19 pandemic was raging in the world, Miguel Díaz-Canel, current president, announced economic reforms that again promised to resolve the distortions of the national economy; in his speech he reiterated: no one will be left unprotected.
On January 1, 2021, a new stage began: the “reorganization task.” In the field of monetary economics, it is probably the most anticipated, manipulated and profound change: monetary, exchange rate and wage reforms. A new program to eliminate the so-called “undue subsidies and gratuities” has also been deployed.
Between the “updating” (2011) and the “reorganization” (2021), a decade has passed in which the distortions of the socioeconomic system have ensured an increase in inequality and poverty.
For citizens, this has had dramatic costs. Family, collective, individual effort has not diminished; quite the opposite. Subsidies have progressively decreased and so has what state wages—and income in general—represent for families and individuals.
The day-to-day stunts have had to be riskier, more uncertain, they have become structural. “The struggle,” “the fight,” “the invention” and “the creative way of living” are nothing other than the people’s motley of survival strategies, fragmented but persistent. Some of them work within structural networks of corruption that don’t exist because “people are bad and aren’t deserving.” There is an order, also institutional, that produces them in the form of guarantees for the “black market” (second economy), bribes, perks, powers exercised against other powers, reciprocal relations that are possible because there has been theft, corruption or “diversion of resources.”
These are not citizen atavisms. The possibility of ensuring sufficient income and resources through formal channels has become rickety over the years. The partial expansion of the non-state sector, and specifically self-employment, failed to contain the precariousness of state wages or the deployment of masses of people from formal employment to other better paid jobs. The numbers help you see it clearly.
In 2010, Raúl Castro stated in the closing speech of the 9th Congress of the Union of Young Communists:
“If we maintain inflated payrolls in almost all areas of national endeavor and pay wages that are not linked to results, raising the mass of money in circulation, we cannot expect prices to stop their constant rise, deteriorating the purchasing power of the people. We know that there are hundreds of thousands of surplus workers in the budgeted and business sectors, some analysts calculate that the excess of posts exceeds one million people and this is a very sensitive issue that we must face firmly and politically.”
He immediately clarified that “the Revolution will not leave anyone unprotected.” Five months later, the Central Organization of Cuban Trade Unions (CTC) announced that in the following six months, 500,000 people from the state sector would be available—laid off—; the figure would double at the end of 2011 and would reach a total of 1.3 million in 2014. This process was essential to correct the distortions in the Cuban economy, but it had high social and political costs. The flexibility of the non-state sector of the economy was expected to contribute to job creation.
In principle, the plan announced by the CTC was postponed. But a decade later, we are in a position to assess what has truly happened.
Between 2010 and 2019, the Cuban economic activity rate decreased considerably: from 74.9 to 65.2. This means that, before the “reorganization task,” the relationship between the working-age population and the economically active population narrowed by almost 10 percentage points. The decrease in the indicator may be due to at least four reasons.
First, the state’s own payroll reduction program. Second, the reflection in the statistics of the elimination of forms of study that were considered a job and no longer are (social workers, emerging teachers and others, received remuneration during their professional training period, as part of the programs of the Battle of Ideas). Third, to emigration abroad: people who live outside the country but maintain their resident status and, therefore, are counted as a working-age population but are neither employed nor unemployed. Fourth, the private sector’s inability to absorb the surplus labor force from the state sector. None of the factors is explained by the lax attitude of the people or by the existence of a “father state” that allows earning income but living without working.
But there is more. In 2010, 4.178 million people were employed in the state sector. In 2019, they were 3,078 million. The data reports a fact: 1.1 million people left the state sector between 2010 and 2019. Then, and after all, the announced plan to reduce employment in the state sector was fulfilled. However, the deformities of the socioeconomic system were not corrected. The problem, which we know is the result of different factors, was not “corrected” with the change in one of the indicators, quite the contrary. Starting 2021, there will probably be more state unemployment, now due to the “reorganization task,” since a still uncertain number of enterprises in this sector will not survive the reform.
Where did those more than a million people go? Some 629,800 went to the private sector in a formal way; that is, with licenses. But another 470,200 people were left out of both the state sector and self-employment.
There are three options (not excluding) for this group: a) they went to do informal work in the private sector (without a contract and, therefore, without labor rights), to informal self-employment, or to directly illicit activities, b) they went to unpaid work at home (“housewives”), c) they left the country keeping their residence.
If we take into account that in the decade there has been a progressive rise in the cost of living, the scarcity of basic goods has increased and subsidies have decreased, it is likely that at least a very important part of that group has joined the mass of male and female workers that swell the informal work sector. There they seek—and eventually achieve—income from the margins of what is regulated and, also, from the framework that provides labor rights.
The plate on the table is still essential and, for that, the vast majority of the people have always needed to do the math. Saying the opposite interestedly blurs the gaze.
The pandemic… and what isn’t
In 2021 the situation is more serious. The pandemic has made chaotic what was already a difficult scenario to manage. The global impact of COVID-19 and its strangulation of tourism and other sectors of the economy has negatively impacted the country and citizens. The intensification of U.S. sanctions against the Cuban government and people has added fuel to the fire.
The private sector, which had employed hundreds of thousands of people, has become dramatically narrow. In February 2021, 250,000 self-employed workers had suspended their licenses (45.5% of the total). They have lost their income, they don’t have unemployment insurance and today they live on savings or have joined an informal sector that could also be precarious because the shortage continues to escalate.
In this context, one of the official invitations is for citizens to “take an interest in work.” But which job?
Part of the communications on the “reorganization task” has celebrated that people are going to the local offices of the Ministry of Labor and Social Security in search of employment. Figures from Cubadebate report that, at the end of February 5, 92,651 people had gone to seek employment. Of them, about 52% had accepted some of the available offers.
What does that number represent compared to the 400,200 people who in the last decade have been left out of the formal labor market? What does it represent with respect to those who were already looking for a job before the crisis without finding one? And what does it represent compared to the 2.481 million people who are of working age but who don’t have formal employment nor have they sought to have it and part of whom might want to do so now? It represents little. The 48,000 job offers that different employer agencies have registered in the channels available by the Ministry of Labor and Social Security to date also represent little, as well as the 33,796 available posts reported by official media.
Therefore, rather than celebrating, what is necessary is to calibrate possible solutions with the lens of political economy and with adherence to certain principles of social justice.
If we take into account that in the last decade the state sector has dispensed with workers rather than welcomed them, and that the “reorganization task” is likely to continue that course, there is no reason to think that the same sector will generate enough employment while the cost of living rises and the social arrangements that made it possible unravel.
It is very likely that the flow is towards the enlargement of the informal sector. But this implies the absence of labor rights (there are no contracts that guarantee stability or guarantee of decent employment conditions) and, on the other hand, the informal sector can be a source of corruption networks that they want to deactivate because they drain the national economy. That the informal sector is intended to solve real unemployment in the country is nonsense.
One of the most logical and feasible ways is to definitively unblock the functioning of the non-state sector of the economy (cooperative and self-employment). The last decade has shown that self-employment can energize the socioeconomic system, and that it has done so under unfavorable conditions. A step in this direction was announced on February 5, related to the much requested reform of authorized and unauthorized activities for the implementation of self-employment.
For its part, the cooperative option has practically failed to assert itself; ignorance of the legal status of non-state productive efforts has also systematically affected this form of ownership in its exercise outside of agriculture. In fact, in 2019, rather than increasing, the number of non-agricultural cooperative members decreased, and clear barriers to their exercise have been identified, which have to do, among other issues, with the lack of training in these more horizontal forms of management and with the emergence of part of them as directed “from above.”
At the same time, the expansion of the non-state sector of the economy requires a strong boost in labor rights. Right now, labor rights in the self-employed sector are fragile and systematically violated. There are no regulations or institutional mechanisms that guarantee rights for those who work there under contract. The Labor Code has little operation there. An ethics of the legal system is necessary to affirm a legal program that considers decent work, also in the private sector.
The state sector also needs to produce better incentives and become democratized. For example: to cushion the “reorganization task” an amount of one thousand pesos has been advanced to workers who request it; it is an amount refundable in four months. Given the current situation, this return period is extremely short. A commendable gesture would be the extension of the repayment term for that money for enterprises. In the country there are labor compensations but no unemployment insurance; that worrisome and could aggravate the situation for those who work in enterprises that eventually declare themselves without profitability. There is more time for the latter, counting on the fact that there is a state fund to sustain them for a specified period. While this is going on, could we consider instituting fair unemployment insurance?
Finally, incentives are essential to employ social groups that tend to be left out of the world of formal salaried work, especially women. The labor force activity rate for Cuban women was 53.3 in 2019, according to information from the 2020 Statistical Yearbook. That means that almost one in two women of working age doesn’t have a formal job or is not looking for one. Approximately 382,784 women left the state sector between 2010 and 20193; that is equivalent to 21.12% of those that were considered “employed” by the statistics in that last year. The private sector welcomed a part of them, but there they continue to be a large minority (just over 30%). In general, the gap in salaried labor participation between men and women is large, close to 20%, despite the fact that in Cuba women are the majority among university students and at higher educational levels. This is to the detriment of their economic autonomy, conditions the impossibility of exiting cycles of violence and doesn’t recognize that in the country, as is the case in other territories, households headed by women are on the rise.
Exactly the same gap that is sustained in the general employment figures in the country is being reproduced in the statistics of those who are looking for work in the institutions: 60.8% of those who go to the offices of the Ministry of Labor and Social Security seeking a job are men, compared to 39.2% of women. It is quite possible that this difference is defined, among other factors, by the scarcity of care services (children, the elderly or chronically ill). Many women have to wait for their sons and daughters to grow up or for their fathers and mothers to die before, if they still can, they can seek paid employment. Expanding the possibility of employment for them supposes, at the same time, placing care at the center of politics, also as part of the “reorganization.”
However, it is true, there is an imperative to stop the “creatively living”. But this is a different thing if it is observed with political commitment, aspiration for justice and recognition of the injustice that really exists. Doing the math helps us to see a different side of the story, and to rewrite it in a better way.
1 Andrew Zimbalist and Claes Brundenius: “Crecimiento con equidad en una perspectiva comparada” in Cuadernos de Nuestra América No. 1, 1989.
2 Ferriol, Ángela (2004), “Política social y desarrollo,” Política social y reformas estructurales: Cuba a principios del siglo XXI (LC/L.2091), E. Álvarez and J. Mattar (eds.), Mexico DF, Economic Commission for Latin America and the Caribbean (ECLAC). United Nations publication.
3 Calculation by the author based on the analysis of data from the 2011 and 2020 Statistical Yearbooks of Cuba.