Cuba eyes more self-employment as layoffs loom

Cuba eyes more self-employment as layoffs loom
AFP
by Carlos Batista Carlos Batista – Sun Aug 1, 9:37 pm ET

HAVANA (AFP) – With government plans afoot to slash as many as one
million jobs -- or 20 percent of communist Cuba's work force -- from
state payrolls, President Raul Castro said he would allow more small
private businesses.

The economy, 95 percent of which is currently in state hands, does not
have the ability to absorb such vast numbers of jobless. Castro's move
aims to try to reduce the socioeconomic fallout, but it will be an
uphill battle.

The Council of Ministers "agreed to expand the range of self-employment
jobs, and their use as another alternative for workers who lose their
jobs," Castro said as he gave a closing address at a biannual session of
the National Assembly.

After the crash of the former Soviet bloc, Cuba's cash-strapped
government in the 1990s approved a wide range of self-employment.
Positions such as beauticians, dog groomers, small restaurant owners and
even lighter refillers were legalized as long as workers got licenses
and paid taxes.

But social resentment spread when some workers, particularly in small
private restaurants, achieved dramatic levels of success.

The government began increasing taxation and regulation, and decreasing
license-granting, until the self-employed sector was largely rendered
paralyzed, like the rest of the economy.

Cuba has no regular access to international funding; it depends heavily
on the cut-rate oil it gets from Venezuela in order to keep its fragile
economy afloat. Tourism earnings and remittances from emigres also are
key pillars of the Cuban economy.

Inefficiency is rampant and wages are woefully low.

Cubans' hopes had been running high that some change was coming to allow
some economic opening in the Americas' only one-party communist regime.

But the Castro government ruled out the possibility of a sweeping turn
toward capitalism.

"One cannot speak of reforms," said Economy Minister Marino Murillo.

"We are studying an updating of the Cuban economic model in which
socialist economic priorities will be at the forefront, and not the
market," he stressed, in a message sure to disappoint many on the island
desperately weary after years of hardship and almost no economic or
political change.

By 2009, there were just 148,000 people out of a work force of five
million who were legally self-employed.

Raul Castro, 79, said he would launch new wage and salary practices
early next year. He did not give details.

Three months ago he gave a green light for a test-run privatization of
barber and beauty shops.

Under the limited program, the state now rents out shops to workers who
used to live mainly on tips and work at home on off hours. Now stylists
are able to set their own prices, and are working at improving service.
Stylists pay for a license, their rent, social security plus electric
and water bills.

Legislative committees have been looking at whether privatization can be
expanded in food businesses, long plagued by insufficient supply, high
prices, and major problems in the distribution chain, from rampant theft
to spoilage.

Castro took the reins from his ailing brother Fidel Castro four years
ago, saying he wanted to boost production. But the Cuban government has
not made bold policy shifts able to achieve the gains it wants.

So far the government has handed fallow land to Cubans willing to farm
it, and has ended the equal scale for salaries for all workers across
industries.

But workers still make an average of around 20 dollars a month.

http://news.yahoo.com/s/afp/20100802/ts_afp/cubaeconomylegislaturepolitics_20100802013741