April 10, 2008 / 4:42 PM / 12 years ago

Cuba removes wage limits in latest reform

HAVANA (Reuters) - Communist Cuba is revamping the state wage system to create more incentive by allowing workers to earn as much as they can, local media said on Thursday, in the latest sign new President Raul Castro wants to improve the country’s economic performance.

Men work in the fields in Quivican, south of Havana April 4, 2008. REUTERS/Enrique De La Osa

Under Labor and Social Security resolution nine, and for the first time in decades, there is no limit on a state employee’s earnings, state-television reported.

“For the first time it is clearly and precisely stated that a salary does not have a limit, that the roof of a salary depends on productivity,” economic commentator Ariel Terrero said.

The Cuban state controls about 90 percent of the country’s economic activity and employs the vast majority of the labor force, often setting wages from central offices in Havana.

Cuba has always prided itself on its limited range of salaries, while at the same time some jobs do have perks and in the past bonuses were available for some workers.

However, the egalitarian approach has come under fire in recent years for holding back production.

“One reason for low productivity is there is little wage incentive and this breaks productivity and stops bigger salaries,” Terrero said.

He said the resolution, signed in February but yet to be published in the official Gazette, is aimed at breaking the cycle.

Terrero said it corresponded with the socialist slogan, “to each according to his work, from each according to his ability.”

Raul Castro, upon taking over from his ailing brother Fidel Castro in February as Cuba’s first new leader in almost half a century, promised to make wages better reflect one’s work, a major complaint of the population.

“It is our strategic objective today to advance in an articulate, sound and well-thought-out manner until the wages recover their role and everyone’s living standard corresponds directly with their legally earned incomes,” he said.

Raul Castro has also launched a major reform of the agricultural sector to create conditions for state and private farmers to legally earn as much as they can from their efforts after meeting state quotas.

In addition, since taking office, Raul Castro has lifted bans on the sale of computers, DVD players, other consumer goods, cellphones and on Cubans staying at tourist hotels, though prices remain out of reach for most Cubans.

“It is an old problem. There is no reason to fear someone earning lots of money if it really is due to their work,” Adalberto Torres, a Havana retiree, said.

“It is the same with farmers. Give them land, let them work, it is not important how much they make. It is good because it means they are producing,” he said.

Editing by Michael Christie and Bill Trott

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