BY CHRISTOPHER PALAMO – Beginning in 2010, Cuba began passing a series of legislation targeted at modernizing the country’s socialist economic model. Specifically, the legislations were changes to the Cuban Labor Code, which loosened the regulation on trabajo por cuenta propia[1] (self-employment). The changes, while viewed by some as only gradual legislative efforts[2], are symbolic of a fundamental shift in the Island’s economic model.[3] From a Soviet-style system where the state controls nearly every economic activity, to one where the economic production is divided between the state and private sectors.[4] While to date the Cuban economy remains a state dominated enterprise, these legislations are the beginning of a national policy shift toward privatization.[5]
While Cuba has technically had a private sector since the early 1990’s, this sector has been heavily circumscribed.[6] Government restrictions have limited Cuban entrepreneurs (cuentapropistas) to only 158 lines of work and forbid them from hiring employees.[7] As a result, Cuba’s private sector has essentially been negligible in terms of employment and contribution to the Island’s gross domestic product (GDP).[8] In 2010—the first year of the new labor regulations—93% of the population was employed by the state, which produced 95% of the country’s GDP.[9] The changes to the Cuban Labor Code are meant to address this over-nationalization, by gradually shifting segments of the economy into the private sector. While altogether over 101 articles of the Code have been modified to date,[10] some of the key legislative changes are as follows:
- Self-employed may now hire employees[11]
- Health and safety standards extended to private sector[12]
- Non-discrimination in hiring[13]
- Expanded seating in restaurants from 12 to 50 persons[14]
- Expanded private employment to 181 lines of work [15]
While there is little debate over whether the new regulations are a step in the right direction, critics of the new legislation argue that it leaves unaddressed important issues such as labors rights, wage negotiation, and conflict resolution.[16] While Cuba has attempted to address these issues with trade unions,[17] skepticism remains.[18] Unlike unions in the United States, the Central de Trabajadores de Cuba (Cuba’s national labor union, CTC) does not participate in collective bargaining over wages or hours.[19] The CTC is largely a political organization that makes recommendations to Cuban legislators about the needs of workers.[20] For this reason, critics feel that the legislation’s failure to address collective contract negotiations in the private sector,[21] leaves workers without sufficient recourses in negotiations. If unaddressed, competition for employment may place workers at an increased risk of exploitation.[22]
Additionally, the new labor regulations raise concerns about the social cost that may develop as the Island attempts to create a substantial private sector.[23] As more workers trade state employment for private entrepreneurship, they puts at risk the modest wages sustaining them. The challenges of private enterprise, especially in an island with poor infrastructure and supplies, creates substantial uncertainty about the success these entrepreneurs will have. As competition on the island creates winners and losers, it is unclear how Cuba plans to respond to the rising financial inequalities.[24]
While many questions remain about the future of a private sector in Cuba, much hope remains as well. Ultimately, the changes to the Cuban Labor Code are merely the early efforts of legislature that intends to create a fundamental change to the Island’s economic model. Although today some concerns remain unaddressed, this is to be expected. The most significant aspect of these legislations, are that they are symbolic of shift in Cuba’s support of a privatization. As a result, it is likely that new legislation will follow these changes, as Cuba’s history of socialism continues to adapt to the inclusion of a private sector.
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[1] Philip Peters, Cuba’s Entrepreneurs: Foundation of a New Private Sector, Lexington Institute (Jul. 2012), http://www.american.edu/clals/upload/LexingtonCubaEntrepreneurs-1.pdf.
[2] Geoff Thale, Labor Rights and Cuba’s Economic Reforms, Washington office on Latin America (Dec. 2013), http://www.wola.org/sites/default/files/Labor_Rights_and_Cubas_Economic_Reforms.pdf.
[3] Id.
[4] Philip Peters, Cuba’s Entrepreneurs: Foundation of a New Private Sector, Lexington Institute (Jul. 2012), http://www.american.edu/clals/upload/LexingtonCubaEntrepreneurs-1.pdf.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id.
[10] Geoff Thale, Cuba’s New Labor Code and Foreign Investment Law: Implications for Workers, Washington office on Latin America (Jul. 10, 2014), http://www.wola.org/commentary/cuba_s_new_labor_code_and_foreign_investm ent_law_implications_for_workers.
[11] Philip Peters, Cuba’s Entrepreneurs: Foundation of a New Private Sector, Lexington Institute (Jul. 2012), http://www.american.edu/clals/upload/LexingtonCubaEntrepreneurs-1.pdf.
[12] Steve Ludham, Economic Changes in Cuba-What About the Workers?, Morning Star (Jul. 2014), http://www.morningstaronline.co.uk/a-3736-Economic-changes-in-Cuba-What-about-the-workers.
[13] Id.
[14] Philip Peters, Cuba’s Entrepreneurs: Foundation of a New Private Sector, Lexington Institute (Jul. 2012), http://www.american.edu/clals/upload/LexingtonCubaEntrepreneurs-1.pdf.
[15] Id.
[16] Geoff Thale, Labor Rights and Cuba’s Economic Reforms, Washington office on Latin America (Dec. 2013), http://www.wola.org/sites/default/files/Labor_Rights_and_Cubas_Economic_Reforms.pdf.
[17] Steve Ludham, Economic Changes in Cuba-What About the Workers?, Morning Star (Jul. 2014), http://www.morningstaronline.co.uk/a-3736-Economic-changes-in-Cuba-What-about-the-workers.
[18] Geoff Thale, Labor Rights and Cuba’s Economic Reforms, Washington office on Latin America (Dec. 2013), http://www.wola.org/sites/default/files/Labor_Rights_and_Cubas_Economic_Reforms.pdf.
[19] Id.
[20] Id.
[21] Geoff Thale, Cuba’s New Labor Code and Foreign Investment Law: Implications for Workers, Washington office on Latin America (Jul. 10, 2014), http://www.wola.org/commentary/cuba_s_new_labor_code_and_foreign_investm ent_law_implications_for_workers.
[22] Geoff Thale, Labor Rights and Cuba’s Economic Reforms, Washington office on Latin America (Dec. 2013), http://www.wola.org/sites/default/files/Labor_Rights_and_Cubas_Economic_Reforms.pdf.
[23] Id.
[24] Id.
