August 2, 2010 / 10:34 PM / 9 years ago

SCENARIOS-Many unknowns about Cuba private employment plan

HAVANA, Aug 2 (Reuters) - President Raul Castro has announced that more Cubans will be allowed to work for themselves and to hire employees as the government looks for ways to put up to 1 million state workers in more productive jobs on the communist-ruled Caribbean island.

He made the announcement in a stern speech to the National Assembly in Havana on Sunday in which he told Cubans: “We have to wipe out forever the notion that Cuba is the only country in the world in which one can live without working.”

Much remains unknown about this work plan, and the devil will be in the details in terms of its impact on a state-dominated society and economy long accustomed to all-encompassing socialist welfare.

The following is a look at some possibilities:

HISTORY AS A GUIDE?

The Cuban government adopted a similar measure in the 1990s when Cuba’s economy plummeted after the fall of the Soviet Union, its top ally and benefactor. To stimulate economic activity, licenses were handed out for enterprises ranging from restaurants to clowns, which helped Cubans survive that deep economic crisis known as the “special period.”

But as the economy recovered, the government returned to its old ways and many licenses were not renewed.

At the end of 2009, out of 11 million Cubans, there were only 143,800 registered self-employed workers or “cuenta propistas,” as they are known.

Will the same thing happen this time? Will the government pull the plug on the self-employed once the Cuban economy, which has been in crisis again the past two years, improves?

Nobody knows, of course, but one difference is the government’s new goal of redeploying those 1 million “excess” workers over the next five years. If it sticks to that plan, it should give the move toward self-employment more staying power, because all those individuals will have to work somewhere.

LOT OF UNKNOWNS

President Castro gave few details about the labor plan, including whether the government would limit the number of licenses or give them out freely. Obviously, the more licenses, the broader the impact, especially to the extent that licensees may hire others to work for them.

There are already many people in Cuba illegally working privately, but the total is unknown, although it is believed the number could be tens and possibly hundreds of thousands.

Analysts are divided on the importance of Castro’s announcement, with some saying it does not address the basic inefficiences of Cuban communism or the economic needs of many Cubans. Others say it represents the government’s recognition that some things are better done by private workers.

It is not a panacea for Cuba’s economic problems, the analysts say, but if nothing else it should enable the licensees to make more money, the lack of which is the principal complaint of most ordinary Cubans who rail against low average salaries equivalent to $18 a month.

Some see it leading towards wider changes.

“It will be very difficult to reverse the process,” dissident Cuban economist Oscar Espinosa Chepe said.

“This opens the possibility of creating small- and medium-sized companies in fields like gastronomy and construction. This can give tremendous agility to the Cuban economy,” he said.

POSSIBLE POLITICAL CONSEQUENCES

There is also the possibility that the changes could have political implications as more people — in a country where the state has traditionally controlled 90 percent or more of the economy — grow accustomed to operating outside the system.

But the government is likely to keep a close eye on the private workers, if for no other reason than it views them as a source of tax income. It is perhaps indicative that Castro gave as many details about how the newly self-employed will be taxed as he did about the rest of the program.

Some analysts believe that allowing more people independent sources of income, and reducing the number of those who are dependent on state jobs, could also encourage more dissidence and open criticism of the government.

But Castro and other Cuban leaders have repeatedly made clear the idea is to “update” Cuban socialism, not switch to capitalism. (Additional reporting by Esteban Israel; Editing by Pascal Fletcher and Cynthia Osterman)

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