Controversy erupts over workers from India building Cuban hotel

Manzana de Gómez building.
Manzana de Gómez building. Wikimedia

Cuba's approval for a French company to import Indian workers to build a Havana hotel has been met with disbelief, anger and complaints about a policy that usually requires foreign companies to hire local workers through state labor agencies

About 200 workers from India hired by the French Bouygues company are renovating the Manzana de Gómez, an iconic building that was Havana's first shopping mall, the Reuters news agency reported. The Swiss Kempinski chain will run the luxury hotel in a deal with GAESA, a holding company controlled by the Cuban military.

“Workers brought from far away work in Cuba and receive good salaries, while hundreds of thousands of Cubans try to make ends meet without proper salaries,” wrote former Cuban diplomat Pedro Campos. “They have no way of improving their lives or those of their families other than to leave Cuba any way they can, risking everything.”

The Diario de Cuba, an independent digital publication, also condemned the hiring in a recent editorial.

“Cuba has always been a magnet drawing immigrants from all over the world. But foreigners could not be paid more than their Cuban colleagues for doing the same work,” the editorial said. “...In any case, as one can see, all the factors that have generated this great national humiliation are the sole responsibility of the Castro regime.”

Some analysts said the case sets a precedent because the Cuban government in the past has blocked the hiring of large groups of foreign workers.

Richard Feinberg, a Cuba expert at the Brookings Institution think tank in California, noted that Havana had vetoed a Beijing request to hire Chinese workers to update a petrochemical complex in Cienfuegos, a project financed by China and Venezuela.

One knowledgeable source said, however, that Bouygues Bâtiment International, the construction arm of the French company, also imported workers to build three hotels in Cayo Santamaria, an island off the north central coast of Cuba. The company’s website says it built 17 beach hotels in Cuba from 1998 to 2012.

Feinberg said the long-running relationships between the French company, the Cuban tourism ministry and Gaviota S.A. — the island's largest hotel enterprise, controlled by GAESA — may have led to some favoritism for the company, which could have been avoided if Cuba had “a more transparent system for awarding contracts.”

Some Cubans who worked for state construction companies also may have quit to cash in on the rapidly growing number of jobs improving homes or restaurants on the island, Feinberg said, perhaps explaining the need to hire foreigners.

Other experts say, however, that the key problem highlighted by the case of the Indian workers is the Cuban government's much-criticized policy of barring foreign firms from hiring local workers directly and forcing them to hire through state labor agencies.

Cuba has 13 such labor agencies. “The idea is that each ministry has files of its best employees who can be quickly available when foreign companies need to hire,” said Emilio Morales, director of the Miami-based Havana Consulting Group.

Sources quoted by Reuters said the Indians are paid $1,500 euros per month, roughly $1,661. In comparison, Cuban construction workers hired through one of the labor agencies receive about $25 to $30 per month.

The disparity is the perfect recipe for discouraging Cuban workers, said Morales. “The problem is the labor agencies. No foreign investor is going to risk his investment and hire a worker who will not produce,” he said.

Cuban economist Omar Everleny Pérez agreed.

“If the Indians don't work on the Manzana de Gómez, it never gets done. Because of the problems with the labor agencies, no one is going to work 16 hours if they are going to be paid what they are paid now,” said Everleny, recently expelled from the University of Havana's Center for the Study of the Cuban Economy. “That's why the (French) company, to meet quality and deadlines, was forced to look for foreign options.”

Diario de Cuba reported before Reuters that the Manzana project was clearly behind schedule, and that its Cuban construction workers were paid roughly $20-$22 per month plus a “bonus” that could be as high as about $90 but often went unpaid. The digital publication also reported that the Military Construction Group was using recruits from the obligatory military service to work on the project.

The idea that Cuba offers cheap labor to foreign companies is not exactly true, however, Feinberg wrote in his book, Open for Business: Building the New Cuba Economy.

Employees receive a tiny share of the salaries paid by the foreign companies, and the labor agencies pocket the rest, significantly reducing the competitiveness of Cuban workers compared to neighboring countries like the Dominican Republic, Feinberg wrote.

The system has led some foreign companies to pay additional salaries to Cuban employees, but that's a gray-area practice that has complicated charges of corruption against foreign investors such as Canadian businessman Cy Tokmakjian.

Salary terms are more favorable for Cubans working in the new Mariel Special Development Zone west of Havana, because the labor agencies keep only 20 percent of the salaries paid by the foreign company for Cuban employees.

Cuban laws and regulations technically restrict the hiring of foreign workers to management and administrative jobs in Cuban joint ventures with foreign companies.

The 2014 Foreign Investment Law limits foreign workers to “upper management and some technical positions. The Indian workers, described as electricians, carpenters and plumbers, would hardly meet those descriptions.

The law includes one section, however, that allows joint ventures or foreign companies to hire Cubans directly in “exceptional” cases. Another section, even more vague, authorizes the use of “special labor regulations” only “as an exception.”

Diplomats from a number of European and Asian countries have said that the restrictions on direct hiring of Cuban employees has been a key factor holding back foreign investments.

The U.S. government also has urged Havana repeatedly to lift all restrictions on direct hires of workers. The first U.S. hotel chain to invest in Cuba, Starwood, has publicly promised to “promote local talent” and create job opportunities.

After the Reuters report, which included photos of the Indian workers, measures to block access to the Indian workers were tightened. They are bused daily from their dormitories east of the capital to the work site.

The Bouygues group did not respond to requests for comment for this story. But a news release by Bouygues Bâtiment International said it “recruits locally 100 percent” in Cuba and has created a school to train construction workers.

“More than 150 employees have been trained there during the last five years,” it added.