So, where will the workers end up?

HAVANA — Institutional and sectorial transformations have been in vogue in Cuba for the past several months. Within that process, the fate of the workers affected by the implementation of job availability is an issue that deserves analysis.

What has happened — or what will happen — to all the workers whose jobs have disappeared because of institutional restructuring?

On March 21, 2014, an official announcement said that wages in the health-care sector would be increased, benefiting more than 440,000 workers. A detail mentioned by the chief of the Commission on Implementation and Development, Marino Murillo Jorge, went unnoticed: in three years (2010-2013), 190,000 health-care jobs were terminated as a result of the review processes, thus enabling the salary increases for the remaining workers.

But, where did those 109,000 workers end up?

On July 5, 2014, during the plenary session of the National Assembly of the People’s Power, Murillo said that “in 20 organizations of the State’s Central Administration, the entrepreneurial and state functions were separated, leading to the reduction of 22,000 jobs and the reduction, from 102 to 36, of the organizations of entrepreneurial management.”

No reference was made to the process of worker availability. Nor did the report by the Minister of Labor and Social Security offer any information to that effect.

The previous day, July 4, the Minister of Agriculture had submitted his report to the Assembly. Part of the restructuring strategy, he said, was compacting the structures, thus eliminating “41 percent of the personnel in the [Ministry’s] headquarters, provincial and municipal delegations. This translates into a savings of 15,067,007 pesos per year and the termination of 6,441 jobs.” He didn’t say where the employees would end up.

These examples show how the issue has been relegated — at least in the public discourse — to the current stage of the reform. It would seem that no one cares to give explanations to the citizenry; neither those who have a duty to inform, nor the policy makers, nor those who carry out the policy.

According to an article published in the newspaper Trabajadores on April 6, 2014, titled “Labor review: Who stays? Who goes?”, in the processes of worker availability made in 2013, only 52 percent of the workers declared to be “available” were definitely relocated.

People’s fate

Although the available data makes it difficult to prove some theories about the workers’ fate, it is possible to detect some trends that may cast light on the subject.

The first desirable fate would be for the “available” people who cannot be definitely relocated in the state rosters to find jobs in non-state employment in any of its modalities, specifically in self-employed labor, because of the dynamism that self-employment represents.

Other alternatives, such as cooperativism (specifically, in non-agricultural cooperatives), are still at an early stage. Cooperativism did not show growth until 2012 and, in fact, declined 0.5 percent in 2009-2013, a trend that should start to revert.

In the past five years, self-employment has grown at an average annual rate of 35.6 percent. The rate of unemployment shows an increase of 17.2 percent in the past five years, which, in absolute terms, means 81,100 more jobless people than in 2009.

In the same period of time, self-employed entrepreneurs grew by 280,500. By the end of 2013, the number of self-employed entrepreneurs exceeded the number of jobless individuals by 271,100.

If we analyze the behavior of unemployment and the growth of self-employment, year by year, beginning in 2009, we can see the existence of gaps, or lags. In other words, self-employment begins to grow before unemployment does, which suggests that the expansion of self-employment has been principally powered by people and businesses that

• acted informally,
• went from the state sector to self-employment without a process of worker availability,
• combine both types of employment,
• receive retirement pensions, etc.

The overall numbers indicate that the expansion of the self-employment sector is capable — only in numerical terms, mind you — of absorbing the growth in unemployment.

However, to undertake a private business is not an easy task. At least two conditions must be minimally guaranteed: material and financial resources for investment, and capabilities and skills with relation to the new enterprise.

Each social group starts from a particular situation and has unequal resources to embark in an enterprise. In that sense, some of the “available” people who come from the state sector and cannot be definitely relocated might become disadvantaged groups.

Other possible fates are voluntary unemployment and informal employment, both of which are closely linked. Some calculations show that the labor reform has caused an increase in the non-student inactive population.

This means that the population composed of disabled people, retired people still active, housekeepers, people who are voluntarily unemployed and people who work in the “informal” sector has grown in the past several years.

In 2012, according to the Census of Population and Housing, voluntarily unemployed persons and people who reported being “in another situation” numbered 149,047 and 143,903, respectively.

People who are voluntarily unemployed are those who, while of working age, say that they’re not looking for work, are not studying or performing any other activity. So, what is the source of their income? Some options are the remittances from abroad, dependence on other persons living in Cuba, and the informal sector.

By adding the thousands of people described in the situation above, we find that, in 2012, 5.8 percent of the economically active population was voluntarily unemployed and/or engaged in informal activities.

The lack of figures for other years prevents us from making yearly comparisons, but this data constitute a warning because we’re talking about thousands of people who still cannot — or won’t — apply for available formal jobs.

The latest rulings of the Council of Ministers have probably had a negative impact on self-employment and the re-creation of jobs, as they caused the elimination of activities such as 3-D cinemas, video-game arcades, and the sale of imported clothing, footwear and accessories. Moreover, they choked creativity by imposing a “list of authorized activities” for self-employed entrepreneurs.

Other negative elements are the nonexistence of a wholesale market and the design of the tax system.

In sum, the reform has doubled the rate of unemployment, which is very noticeable in our context, even though it is among the lowest rates in Latin America and the Caribbean. In addition, it has increased by 8 percent the rate of non-student inactivity, which reveals a growth in the informal sector.

To cope with the demographic challenges facing Cuba, we must utilize our labor resources to the maximum. At this moment, 27 percent of the population of working age (24 percent inactive, plus 3 percent unemployed) is not being properly utilized. Worse yet, they don’t want to be properly utilized.

The truth is that despite the advantages, possibilities and potential offered by the non-state sector, the government’s scheme is unable to deal with the need of formal employment for the people, among them those involved in the process of job availability.

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The author is an economist, a professor at the School of Economics of the University of Havana. At present, she is seeking a Master’s degree in the Economics of Developing Countries at the Latin American School of Social Sciences in Quito, Ecuador.