Cuba has slashed 596,500 workers from its bloated state payrolls, but remains far short of its initial goals for cutting public spending and making its economy more efficient, according to official figures.
The campaign to cut back on government and state enterprise jobs, launched in earnest in 2010, has been part of ruler Raúl Castro’s efforts to make the Soviet-style economy more efficient by opening the doors to more private enterprise.
But after setting ambitious goals, Castro has slowed the reforms, recognizing that faster reforms might be risky and acknowledging resistance from bureaucrats reluctant to surrender their tight — and personally profitable — controls on economic activities.
A report submitted to a congress of the Cuban Labor Confederation (CTC) showed that jobs in the public sector fell by 596,500 since 2009, according to a report Sunday in the newspaper Juventud Rebelde, the official voice of the Young Communists’ League.
The report also noted that the number of licenses issued for small-scale private businesses like restaurants and “self-employed” jobs such as plumbers and gardeners, had increased to more than 450,000 in 2013, the newspaper said.
Castro, addressing the closing session of the CTC congress in Havana last week, warned that his government would not consider major salary increases for state workers — their average wage now stands at $20 per month — unless productivity rises.
“It would be irresponsible and counterproductive to order a generalized salary increase in the state sector, because it would only cause an inflationary spiral unless it is fully backed by a matching increase in the goods and services on offer,” he said.
“Let’s keep in mind the essential principle that in order to distribute wealth, it must first be created,” Castro said.
Nevertheless, he added, Cuba’s economy “will remain based on the ownership by all the people of the fundamental means of production, with the state enterprise as its principal form.”
Cuba has a labor force of about 5 million. Until Castro’s reforms, launched largely after he officially succeeded ailing brother Fidel Castro in 2008, the government controlled an estimated 85 percent of the economy and jobs.
The layoffs, while needed to make the economy more effective, have fallen short of goals because the opening to the private sector has been relatively slow and limited, said Carmelo Mesa-Lago, a University of Pittsburgh expert on the Cuban economy.
The Cuban government has acknowledged it has a surplus of 1.8 million workers on the state payrolls — one of the reasons behind the low unemployment rate of just 3.5 percent that it officially reported in 2012.
It initially set a goal of 1 million layoffs by the end of 2011, but the Juventud Rebelde report showed it had met a little less than 60 percent of the goal two years after the deadline, Mesa-Lago said.
The latest target set by the government is now 1 million layoffs by 2016, according to Mesa-Lago, regarded as the foremost expert on the Cuban economy.
Castro has been trying to kick the economy into a higher gear by shifting second-tier state enterprises — Fidel nationalized every single business on the island in 1968, down to shoeshine stands and sandwich shops — to the private sector and self-employed.
His government has been renting barber shops to their employees, for instance, and taxis to their private drivers. It also has been licensing private cooperatives to take over state enterprises such as restaurants.
But the Juventud Rebelde report noted that the congress of the CTC, the island’s only legal labor union, heard complaints that the government retained too many controls over the “self-employed” and needs to do more to support private businesses.
There are no wholesale markets where the self-employed can buy bulk supplies at discounted prices, the report said, and government inspectors are harassing some enterprises while turning a blind eye to the illegal work of others.
The report, nevertheless, added that CTC members at the congress “insisted that there’s much to be done to confront the violations and illegalities among members of the non-state sector, such as tax evasions and other acts of indiscipline.”