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cuban lay offs.
looking for improvements
by gonzalo fernández
11.12.10
general

Raúl Castro, governing strongman in Cuba, recently announced lay offs to around 500,000 government employees, with another 500,000 slated for some time in the future. Government employees account for over 95% of the Cuban labor force in military corps, government offices, and all industrial, tourism, mining, agricultural and all other enterprises, including shoe shining booths.

Cuba's work force totals 5.1 million, in a population of 11.2 million. Source: Cuba's labor strife, by Anne-Marie García, The Associated Press, July 18, 2010.

At the same time he indicated that some business ownership will be allowed to individuals:

“… Titled Project for Guidance on the Economic and Social Policy, the document ticks off a long string of proposals for jump-starting an economy mired by low productivity, dismal wages, centralized planning and the theft of state resources.

Among the changes already started or proposed by Raúl Castro are an expansion of private economic activity, such as self-employment and cooperatives, and encouragement of foreign investments and tourism.
The guide added that Cuba should assure ``the strict fulfillment of contract commitments,'' referring to the 2009 decision to freeze foreign assets in Cuban banks and halt payments on some foreign debts.

Cuban ruler Raúl Castro already has launched many of the changes proposed in the document -- warning that a withering economic crisis is pushing Cuba to the edge of a ``precipice'' …”
Source: The Miami Herald, “Havana frees up markets – with a caveat,” by Juan O. Tamayo, November 12, 2010.

The major external problem for Cuba’s Castro is that they have been purchasing, but not paying, to many nations that had not adopted embargo policies against Cuba, choosing instead to provide all kind of goods on credit. Castro’s Cuba has one of the poorest credit ratings in the world. Those countries have learned that they cannot sell to Cuba on credit, (“no se puede vender a Cuba al fiado.”)

It should be noted that all these improvements will be effective “mañana,” in its traditional Latin America connotation of a tomorrow that gets entangled in bureaucracy and seldom happens.

In this regard, I remember a conversation with Ives Daude, Bureau Chief for Agence France Presse in Havana in 1965. I was the Bureau’s Accountant. He knew Latin America well as he had been to Buenos Aires and other posts in Latin America.

Ives was reserved and business-like most of the time, but in that conversation he elaborated about the Cuban situation. He made an insightful remark along the following lines: Cuba was the last colony in America to gain independence from Spain at the beginning of the last century. The Spanish colonization was highly bureaucratic, and left a profound influence in public life over all the countries under its dominance. Its imprint was freshest and most long lived in Cuba. Putting a Communist bureaucratic system on top of the Spanish bureaucratic legacy was guaranteed chaos in Cuba. Source: “Cuba’s Primer – Castro’s Earring Economy” – www.cubasprimer.com


ABOUT GONZALO FERNÁNDEZ

Gonzalo is a business consultant. He is one of the coauthors of The Handbook of Financing Growth, Wiley, Second Edition, 2009, Marks, Robbins, Fernández, Funkhouser and Williams. In Cuba's Primer, Lulu, 2009, he writes with the conviction and knowledge of a personal witness.

more about gonzalo fernández

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