The crisis associated with COVID-19 is linked to other pre-existing crises on global and national scales: economic, political, care, demographic crises. Dependent, marginalized, deformed economies because of internal and/or external reasons, are in worse conditions to face this present and the future. Highly unequal and fragmented societies have additional challenges. Although the virus can nest in all bodies, not all bodies (individual and collective) are in the same conditions to survive its multiple effects.
For the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), in economic terms the crisis will be greater than that of 2008: a deep global recession, with more acute consequences for previously impoverished regions and countries. That organization expects the GDP to decrease by at least 1.8 percent in this region. Unemployment will increase by 10 percentage points. Approximately 33 million people will join the poverty groups that were already numerous.
ECLAC has forecast an economic contraction of 3.4 percent for Cuba. The number could be higher. The impact is and will be as inevitable as it is acute.
There are already notable consequences in the economy’s state sector. In the private sector, too. Up to mid-May, 35 percent of self-employment (SE) licenses had applied for suspension. We are talking of 222,723 persons, now potentially without income. Of these, only 130 family units have availed themselves of social assistance, but that can speak more about the Pyrrhic amount of the pension and the difficulties in accessing it, than about the ability to survive without income.
A fertile economic debate has been activated in this situation. Economists have provided relevant analyses on what are the solutions to the crisis. Its purposeful emphasis is one of the greatest virtues of these contributions.
One issue is having the widest audience: the relevance of, now, thinking in depth about a restructuring of the economy based on the program of the Conceptualization of the Cuban Model and the Update of the Guidelines (2017) and the demands and alternatives of the present. To do so, one of the fields to consider is that of the economy’s private sector, ensuring its operation and not its suffocation, as it has been until now.
The focus on the private sector as a change agent is right. It is a long-delayed path and undertaking it has the legitimacy that popular reason also grants it. It would make it possible to revitalize sectors of the economy and domestic economies. It would contribute to mitigating the enormous loss that the national budget is having due to the debacle of this sector in the months of the health emergency. Until April 15, the Ministry of Finance and Prices had calculated an effect on the State budget of around 101 million pesos due to the suspension of SE licenses and the reduction of monthly tax fees. From that date to the present, the suspended licenses have doubled. The effect, then, is greater.
The resizing of the place of the private sector in the economic field will have to be an essential step. Whoever reads a capitalist restoration in that program will be out of ignorance or interest. The Cuban economic and social model is far from being read in terms of neoliberal austerity. If there is any danger of this, it comes from other places; as Professor Oscar Fernández has said: of the immeasurable power being acquired by some enterprises, groups and supra groups that have nothing to do with the private sector and that do so without any “public scrutiny.”
But in the concert of the debate there is a missing subject: labor rights.
Labor rights and private sector
If in this crisis a sector is unprotected in terms of labor rights, it is those who work in the private sector and, above all, in the category of “contracted workers” who, on the other hand, are in better conditions in relation to the many people who work informally, without contracts.
In this crisis, the Ministry of Labor and Social Security has implemented a range of protective measures for those who make up the state sector. For the private sector, the situation changes dramatically. The possibility of suspending licenses has been the established path. However, this interrupts the payment of taxes but does not ensure income.
According to the aforementioned ministry’s program, if a business with hired people continues to operate, employers must remunerate those hired workers based on the time actually worked and that amount cannot be less than the country’s minimum wage. If the business doesn’t work anymore, there is no additional protection. The only way is to take advantage of social assistance, which, as we saw before, doesn’t seem a feasible way for the majority potentially in need. Autonomous workers (true self-employed) also have no protection.
A report by the consulting agency AUGE systematized the information from 20 interviews with employers in the private sector in Havana who do business in high-performance activities within the private sector. The source reports that they implemented measures to protect hired workers: 1) reorganize the job content of each position so that it is not necessary to fire hired employees who no longer have work functions in the business, 2) maintain the business operating even if the level of income and profits is low, because this allows at least continuing to pay the hired workers, 3) payment of compensation to the interrupted workers, which could cover a maximum of two months, 4) sale of food to the hired workers at cost price or donation thereof to help cover basic needs.
Those minimal responses are unlikely to be implemented by those engaged in activities less prosperous or more affected by this crisis. But, more important than that, is the fact that nothing forces them to do it. Those who do it, is out of conscience. But workers should not aspire to “good employers.” They should have rights, regardless of the good or bad will of those who employ them.
The situation of greatest helplessness for this sector is not determined by the COVID-19 crisis but by prior irregularities. The current Labor Code Regulations –which covers both sectors– have not equated the rights and obligations associated with employment in the state and non-state sectors. The former have “labor rights and broad social benefits; the latter, with minimum standards.”
In the private sector, contracts are determined (and not indeterminate, like most in the state sector), and this allows employers some flexibility in managing “human resources” and has different consequences. The contract may be terminated individually by the employer before the end of the established legal term and with only fifteen days in advance. It is not specified how the vacation days are accumulated or how they are paid. The right to vacation is left to free negotiation and, as the negotiation is unequal, it ends up affecting rights or depending on the good will of whoever has more power. Furthermore, contracted persons in the private sector are not entitled to social security payments in the event of illness lasting less than six months.1
The conflicts that may arise between those who have a contract and those who own the business are resolved, in practice, in a personal way2 and their result depends more on employees’ previous economic conditions (the degree of vital dependency on the employer). and of their individual competences, rather than on a regulation that assures rights.
This situation cannot be read without considering the countless obstacles to the management and survival rate that small and medium-sized enterprises in the country have had and still have and that, however, do not have legal status. High tax burdens, the impossibility of directly importing and of managing external and internal sources of financing, the absence of wholesale markets and the narrow list of activities that can be carried out have persisted in preventing any possibility of dynamism. At the same time, the State, which must ensure compliance with labor rights, cannot demand that actors who don’t have legal status guarantee rights to those they hire. The formula has been sordid. Although authorized by the State, the private sector has suffered from hyper-bureaucratization and suffocation, which prevents its development. At the same time, as a counterpart, employment remains with wide margins of deregulation and weak labor rights. The higher incomes that those who are employed in this sector can receive compared to the state sector, come at a cost: greatly reducing their rights and, in effect, being subordinated to the employer. The results of that formula are dire.
In a necessary and desired scenario of greater openness in the private sector, it is essential to regulate labor rights in more efficient and fairer ways. And to do it at the same time―not later―than eliminating the bureaucracy in the possibilities of the sector’s life and air.
Labor rights, women and private sector
Women enter, remain and leave the labor markets in worse conditions than men. When labor markets transform, they face greater difficulties in integrating with change.
In Cuba, women continue to have a lower presence than men in the Economically Active Population (EAP). In 2019, only 49.48 percent of Cuban women of working age were part of the EAP, compared to 76.87 percent of men. The gap is notable and comparable with that of the other countries in the region, which is around 30 percent.
Women’s entry into wage labor rose rapidly during the second half of the 20th century. There was a similar process in Latin America. But it had a cap, around 1990, which has been maintained until today.
In the non-state sectors of the economy (which include the private, cooperative, and foreign investment), women represent 17.99 percent. The number, resounding, shows that we could be having more difficulties inserting ourselves in that field.
Specifically, in SE we represent 34 percent. There are no clear data, but it seems that we integrate into this sector more as hired than as business owners, where men predominate.
The lower participation of women in the private sector could be related, among other factors, to the social norm according to which we are mainly responsible for care work at home. And in a labor market with weak labor rights, it is very difficult to combine one role and another.
Consider, for example, maternity leave, which is one of the flagship labor protection policies of the Cuban social security system. The new Constitution of the Republic (2019) eliminated the mention of maternity leave as a right, but the current Labor Code continues to endorse it. In addition, Decree Law 222 of 2017 established the state interest in encouraging maternity for women workers in the private sector, ensuring discounts in taxes according to the number of children. However, the reality is different.
In the SE there are persistent obstacles (regulatory, in the Special Social Security Regime that regulates that sector and also in its real dynamics) to the guarantee of working women’s rights to maternity. Although they are entitled to economic benefits for eighteen weeks (shared in the pre and postnatal time), they don’t have the guarantee of being able to return to their job or receive remuneration until the child reaches 1 year of age, among other limitations.
At the same time, the fact that the accumulated vacation time regime is not clear for certain contracts that characterize the private sector poses complexities for women workers. As we care for the children, sick people or dependents at home, being absent from work in situations of need is more difficult if there are no procedures and clarity about the accumulated vacations.
Something similar occurs in relation to the number of working hours, which is not unusual for the private sector to exceed the maximum established by law. For those who are in charge of minors in school, for example, it will be a parameter of difficult compliance, in addition to contravening labor rights in general.
The labor market in the private sector is designed for those who have few care responsibilities. And those people are not women.
The pattern of “racial” and gender discrimination to which attention has been repeatedly called deserves special mention. And this applies to women in general as well as racialized women and people. Differentiated roles for each one within the services and the exclusion of people to bars or recreation centers due to their skin color or presumably economic income, have transcended.
Labor rights in the private sector need to be resolved urgently, even more at this time, even more to face the new crisis, the new normality, not including old problems. Also the suffocation to which the sector is subjected and its lack of knowledge as legitimate actors in the Cuban economy.
State actions are necessary to regulate and ensure compliance with labor rights, limit discriminatory practices and increase the possibility that women participate in all labor markets, in favor of their economic autonomy.
Affirmative action policies and actions could contribute: prioritized credits for female entrepreneurs that compensate for their disadvantage in asset ownership or initial capital for economic ventures, greater redistribution of care (that encourage, for example, the use of the existing paternity leave or that compels businesses with more than a certain number of employees to ensure day-care centers) and to ensure labor rights, for example.
The urgency of guaranteeing rights and policies that face existing inequalities are more legitimate than the bureaucratic and fragmented control that private enterprises have been subjected to until now.
To cope with the crisis, we need both: trust in those who start small and medium-sized enterprises and fair and efficient regulation of labor rights. Both steps at the same time.
1 See: Izquierdo, Osnaide, and Jenny Morín. “El modelo económico y social de desarrollo socialista y los actores laborales no estatales: La participación laboral y el sistema político en el contexto de la actualización del sistema económico y social cubano.” In Trabajo decente y sociedad: Cuba bajo la óptica de los estudios sociolaborales, compiled by Osnaide Izquierdo Quintana and Hans-Jürgen Burchardt, 133–164. Havana: UH publishing house, 2017.
2 In accordance with article 180, there is a legal way to ensure the rights of the self-employed: the municipal courts. However, the steps to undertake these claims are not clear in that sector’s regulations. For the state employee, the procedure for a labor complaint is regulated in detail (art. 165–179 of the Labor Code and art. 187–217 of the Regulations).