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Cuban workplace productivity – another thought

November 13, 2011

One additional matter I forgot to add about the seemingly low productivity in Cuban workplaces is (what seems to me) fairly clear overstaffing, in some sectors of the economy at least. I have observed a number of times in service industry and museums what appears to be an excess of people and a shortage of work. There seems to be that extra person, or 5, more than there are things to do. Spend long enough in a state run restaurant or museum and you will probably observe what I am talking about. Now I certainly don’t know full details. I have never worked in a Cuban workplace and neither do I have a range of statistics to back up my contention. This is merely my explanation for observed practices.

Here is some theory behind the thought. In New Zealand staffing levels are dictated by the discipline of the market – supply and demand. A business doesn’t often employ more staff than they need. Hiring and shedding of staff is determined, ultimately, by economic activity. The workers employment relies on economic activity and the viability and profitability of the business. Similar arrangements exist within the state sector. The ‘discipline of the market and competition’ has been inserted into many parts of the state sector. Staffing levels are tied to levels of work. As an example, the number of teachers the state will fund per school depends on the number of children attending the school. Year by year the school roll may fluctuate and along with it the teacher numbers. Parents have the freedom to choose which school their children attend. Schools to an extent must compete for children. Teaching jobs are determined by which school parents choose to send their children.

The discipline of the market does not have the same affect in Cuba. Work is a central part of socialist ideology, the right to work and the (therapeutic) benefits that work provides both to the individual and society. The state guarantees employment for everyone who wants it, and perhaps compels some to work who may not otherwise wish to. The fluctuations of market activity and economic growth do not matter so much in this equation. The state occupies so much of the formal economy (accepting that there is also the informal or black economy) that it acts as a buffer against profitability. Because a workplace is not profitable does not mean the workers will find themselves out of work. The state spreads the effects from a lack of economic growth throughout the economy. Rather than some workers losing their jobs due to the lack of profitability in capitalist economies, the lack of profit is spread throughout society and everyone might make do with a little bit less.

In capitalist economies the right to work is premised on economic growth and profitability. Market activity determines who has work and who doesn’t. Failing profitability within a company places jobs at risk. In Cuba the right to work is a social matter and given to all people by virtue of them being Cuban. The state provides this guarantee irrespective of economic growth and profitability. A lack of profitability is spread throughout society and ‘absorbed’ by everyone. Jobs are at risk only at the point that the finances of the state are unviable and it cannot carry the economic costs any longer.

That point seems like it may have arrived. The lingering turmoil from the 2008 global economic meltdown is still touching Cuba, as it is with much of the globe, along with several costly hurricanes in 2009 ($10 billion in costs perhaps). The state has started a process of redeploying hundreds of thousands of workers.  People are being encouraged to run formerly state owned enterprises as co-operatives or go into business for themselves. Some workers, if able, might be redeployed into areas of need such as agriculture or construction. Licenses are being granted in dozens of occupations for the newly self employed. This process has apparently already had some effect of bringing activities, which formerly operated in the balack economy, into formal economy. One advantage to the state is that taxes can be levied on these now legal and recognised activities. where taxes can be levied. Licenses apparently have had fewer ‘known’ workers than licenses granted suggesting perhaps that formerly ‘black’ traders have sought legitimacy. As of January 2011 of the 114,000 licenses granted 68% were to people with no prior ’employment status’. Drawing some conclusions, perhaps a number were doing the same work but under the table, whereas now they might be above the table.

 

NB Along with the redeployment of state workers and issue of licenses for the self employed, various other reforms have taken place in the past 3 odd years including the handing over of vacant land to collective and private farmers, allowing Cubans to purchase cellphones and other shiny comsumer items and most recently permits to buy and sell houses and cars. The first reform seems to be all about improving self sufficiency in food. The second reform helps satiate the demand for shiny consumer items but also allows the state to mop up some of the money (particularly black market and foreign remittance funds) floating around in peoples pockets. The third reform provides some basic freedoms Cuban people might be wishing for but also shifts activities into the formal economy and allows economic activity to be taxed.

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