Employment and new labour code

The current labour conditions referred to in the new Labour Code will only be real opportunities for persons if they are coordinated with other policies that must accompany the implementation of this labour regulation. The active and promoting policies of innovation must be directed at both the state-run and non-state sectors, as dynamic and innovative economic spheres. They must also focus on the optimum use of the Cuban population’s qualification, in three basic directions: increase the remuneration in a segment of excellence linked to strategic objectives, expand the wage differentiation with greater emphasis on work complexity and results; make more flexible the labour mechanisms in the state-run sector and other forms of ownership.

Foto: Jorge Luis Baños_IPS

The Cuban economy received the international crisis with a weak macroeconomic situation as a result of the accumulation of a group of domestic and foreign imbalances. It is expected that this 2016 will continue the structural tendency toward a slowdown of the Gross Domestic Product (GDP).

During the last session of the National Assembly of People’s Power (parliament), held last July, some macroeconomic results about the Cuban economy during the first semester of this year were announced. It was reported that there had been a bigger slowing down than expected and, as a consequence, the economy grew one per cent in the first six months of this year, which is why a significant reduction in the GDP is expected for 2016, with effects not planned for 2017.

As was pointed out, the economic tensions the Cuban economy is subject to are motivated by the drop in export incomes and limitations in ensuring fuel. As has been announced, the country will face restrictions in the second semester and a group of emergency measures were presented for this.

Every time adjustments of this type are announced, one thinks about one of the most sensitive topics for the population: the purchasing power of wages and the implications of the economic situation on the workers’ standard of living.

The problem nowadays is that, despite the group of measures implemented in favour of workers, the state-run sector’s real incomes have not been able to recover and the purchasing power of state wages is barely 27 per cent of that in 1989, which it is worthwhile asking oneself: in what conditions do the workers find themselves, especially those in the state-run sector (enterprise or budgeted) to face a more complex scenario? How will the cost be paid of a new economic crisis?

Let us recall that the new Labour Code was approved in the middle of an economic context in which the country demanded new forms of studying and projecting the employment problem, and also demanded a theoretical and methodological approach to make visible the diverse situations being presented as opportunities and threats for the equity levels achieved in preceding decades. The Labour Code must be the foundation of the employment policy in the country, from which the rest of the labour legislation emanates.

Since 2007 Cuba has started undergoing a process of changes that has generated, among other impacts, profound transformations in terms of employment. This process has been driven by the low levels of efficiency and productivity affecting the sustainability of the project of equity and social justice conceived since 1959. These problems, in a context of technological undercapitalisation, population aging (18.1% of the population aged 60 and more) and a trained labour force (an average of 10.1 years of education), strains the social policies and especially those related to unemployment. This is why one of the principal cores of the transformations led by the State lies in modifications in the employment policy, which stand out for: a process of resizing the state-run employment, for which 1.5 million persons have to leave that sector, and because of the diversification of non-state employment.

This supposes the withdrawal of the principle of full employment and the loss of the State’s leading role as creator of sources of employment and incomes, which imposes new opportunities as well as new challenges to achieve equity, since the State passes on part of its responsibilities to private and family management. In this sphere, however, the starting conditions are not homogeneous to take advantage of the opportunities and decrease the impact of the adjustment process, thus the in-depth study and emergence of new inequality spaces are expected

The general objective of this article is to systematise and characterise the substantial changes in the employment policy between 2011 and 2016, as well as the principal modifications incorporated to the recently approved Labour Code.

The article comprises four parts: a first one is a summary of the principal characteristics of labour relations in the country; then it refers to the transformations that have occurred related to the labour subject, based on the national and academic debate that led to the new Labour Code. In a third chapter the principal modifications incorporated to this regulation are analysed and, finally, it concludes with the analysis of the implications and contradictions of these changes in labour relations and specific population groups.

Composition by sector of the labour force

The structure of the Cuban GDP has favoured, historically, the services sector. This is due to two principal factors: on the one hand, a deliberate policy of assigning resources to those sectors; on the other, it is also the result that the social improvement derived from that allotment did not result in increasing productivity and yields in the productive sectors.

Regarding supply, the amount of labour force is closely linked to the working-age population and, therefore, to the demographic tendencies of a society. Meanwhile, they are mainly subject to two opposite forces: the mortality rate and the fertility rate, which together determine the growth of the population. According to the National Statistics and Information Bureau (ONEI), in 2015 the working-age Cuban population was 7,202,800 persons, with an active population of 4,979,500 persons, of which 4,860,500 were employed, while the rest, 119,000 persons, was unemployed.

The economically active population includes all persons meeting the requirement to be included among the employed or unemployed persons; that is to say, it refers to the employed and the unemployed in the period set as reference for the study. While all persons who are 17 years old or over and those who are 15 and 16 years old who, exceptionally, have been authorised to work by the competent authorities are considered employed, and at the close of the study maintained formal labour ties with a wage-earning job in cash, in kind, or an independent job.

Qualification, labour productivity and labour incomes: In 2013, the agricultural sector, with only 3.5 per cent of the GDP, employed 18.6 per cent of all the employed persons in the economy, while public administration, which includes communal, social and personal services (where bureaucratic work and low productivity are concentrated) in 2013 reached 40.8 per cent of all the jobs. In short, two sectors with low work productivity today concentrate 59.4 per cent of all employed persons.

The country’s labour force has a high level of qualification (an average of 10.1 years of education). Between 2000 and 2008 work productivity grew 42 per cent, while the mean wage increased 74 per cent. That tendency continued in 2009 and only started to discretely revert in 2010. Objective as well as subjective factors intervened in the growth of labour productivity. In the first case, the shortage of available resources to increase the investment rate in relation to the GDP – a measure through the gross formation of capital – has caused it to decrease in recent years to around 10 per cent, a level that represents 50 per cent of the calculated needs. With respect to the subjective factors, work organisation can play an important role in the workers’ performance.

In 2015, through forms of ownership, the non-state employment (includes the cooperative, private farmers and the self-employment) already reached 24.3 per cent of the total of employed persons in the country, as compared to 16.2 per cent in 2010 and to six per cent in 1989. This expresses the deep transformation in production relations being registered in recent years. Meanwhile, the state-run sector (made up by state-run enterprises and public services institutions), as employer, takes up close to 76.7 per cent of the total.

The importance given to the proliferation of the non-state forms of production is such that it was announced that its contribution to the GDP would increase by 2015 to 40 per cent, a notable contrast with a panorama in which close to 95 per cent of the GDP was generated in the state-run sector.

Regarding the performance of wages, according to ONEI data, in 2015 the monthly mean wage in the country was 687 pesos, which represents a 14.5 per cent increase compared to 2013, with a maximum level of 1,147 pesos in the sugar industry sector and a minimum 435 pesos in restaurants and the hotel industry.

Sectors like communal, social and personal services, in which women’s employment predominates, classify as sectors whose wage is lower than the national mean.

According to ONEI data, the wage inequalities have a territorial expression, given that there are provinces where the monthly mean wage is inferior to the national average. Individually, the provinces of Ciego de Ávila, Matanzas, Cienfuegos and Havana are the only ones with a record of mean wages above the national mean. Santiago de Cuba, Guantánamo and Isla de la Juventud are below that mean.

By territories, the lowest wage is received in the state-run entities of the province of Guantánamo, while the highest corresponds to the state-run entities of the province of Ciego de Ávila, followed by Matanzas.

There are historical and administrative reasons that explain the differences in incomes and economic opportunities of the country’s provinces. The amount of investments and mercantile production per capita are the main deciding factors in the quality of life and resources of each territory.

Forty-eight per cent of the country’s mercantile production was carried out in Havana, the only province whose per capita levels are located above the national mean, which was 5,224 pesos per inhabitant. The headquarters of all the state-run enterprises and foreign companies are mainly located in the capital, as well as the fundamental junctions of land, maritime and air transportation. Moreover, it is an important tourist, scientific and cultural hub.

Together with Havana, according to the volume of investments, only Matanzas, Holguín and Artemisa are above the national mean. Matanzas and Holguín are two very important economic hubs, with a considerable weight in the production of hydrocarbons, electric power, mining and tourism. These four provinces represented almost 70 per cent of all the investments in 2013. Moreover, the existence of economic hubs is a decisive factor to attract new investments and the expansion of the private and cooperative sector, which find in these territories wide-ranging markets in expansion.

Labour market and gender-related differences

Given the fact that the State cannot keep up with the pace of creation of new Jobs, according to the dynamics of the economically active population, and that there was a 50 per cent reduction in work payrolls, the unequal distribution of the male and female labour force in the country must be taken into account.

Official ONEI data reveal the inequality between men and women in the economically active rate. The tendency of its magnitude is of special importance since it indicates the possibility of the extensive and intensive use of human resources. The performance of activity rate by sex, taking as reference 2015 ONEI data, shows the predominance of the men in the economically active population, with marked higher values of the economic activity rate among males (82.9%) as compared to the females (54.2%).

By sectors, 58.2 per cent of the women are concentrated in the communal, social and personal services sector, and if we take into account the irregular weight of services in the formation of the Cuban GDP (76%) and that this structure of the services is negatively affecting the industries and agriculture, it is expected that the largest reduction in work payrolls will take place in that sector, which would affect women’s employment much more.

A reduction in payrolls in the civilian state-run sector affects the sector that absorbs the greatest amount of female employment. Women represent 46 per cent of wage-earning jobs in the civilian state-run sector, 65.6 per cent as professionals and technicians, 72 per cent of workers in education and 70 per cent in public health.

They have a low presence in other sectors of economic activity, like agriculture (7.7%) and construction (1.8%). They make up 17 per cent in the cooperative sector and 21 per cent in the private sector.

By territory, for example, a woman who works in Ciego de Ávila earns 18 per cent more than a woman in Guantánamo. Based on unequal conditions, the women in the eastern regions (especially in the eastern provinces) will be more affected. Perhaps this could explain the migratory flows of women from the most depressed provinces to more dynamic provinces like Matanzas, Ciego de Ávila and Havana.

This shows us that women employed in this sector have an initial disadvantage with respect to their male peers. If to this we add that the women present higher absence indexes than the men – especially because of absences linked to their roles as caregivers and responsible for domestic activities -, the wage gap becomes wider. If there were a restructuring in these sectors, the majority of the women would be in a vulnerable situation in terms of incomes.

These wage gaps also have an influence on the existence of lower pensions for women, with the aggravating circumstance that their retirement age is five years less than that of the men and their life expectancy is higher than the men’s. This implies that women contributors to the provisional system must live longer with a lower pension and with a precarious quality of life.

Why a new Labour Code?

In the 1990s and up to the 2000s, the 1984 Labour Code was in force. One of the characteristics of this Code is that for a long time it remained disconnected from the economy’s transformations, without being considered an integral part of it, which caused a delay with respect to the effects and consequences of the policies outlined in other spheres. In this way the systematic performance of the economy and the important impacts of the socioeconomic policies on the wage and level of workers’ incomes were ignored.

During the last decades, the Cuban economy has experienced an acute depression of the wage-productivity relation which could be linked to different causes:

Evil effects of the policy of full employment and consistent overemployment.

Restriction of the country’s liquidity and economic-financial situation to maintain a wage and active incentives policy.

Gulf in productive results, beyond the labour force’s yields, due to the technological backwardness and shortage of productive investment.

Over-qualification of the labour force, loss of effectiveness of the spending in education found in the qualified labour force not linked to work and migration abroad.

Mechanisms of distribution and redistribution of egalitarian incomes subsidised by the State and through the social consumption funds.

Rigid wage policy based on a preestablished and unmovable wage scale.

Currency duality that distorts economic incentives and loss of purchasing power of the wage and its role as a source of incomes.

This is why one of the principal core elements of the transformations led by the State lies in modifications to the employment policy, which is distinguished for a process of resizing of state employment – which is why 1.5 million persons must leave this sector – and diversification of sources of non-state employment.

In September 2010, the Central Organisation of Cuban Trade Unions (CTC) announced that a plan would be implemented to reduce 500,000 job posts in the state-run enterprises and institutions, approximately 10 per cent of the state job posts, before the end of March 2011. This decision, announced in the daily Granma of September 13, pointed out that a large part of these persons had to be absorbed by the “non-state” sector, that is, cooperative and private: self-employment and small enterprises hiring labour force or private workers, in addition to foreign joint ventures

The need to “deflate” the state payrolls and expand the non-state employment has been reiterated in the Project of the Economic and Social Policy Guidelines of the Communist Party of Cuba (PCC). At present, the State provides 75 per cent of the employment in Cuba. The unemployment rate stands at 2.4 per cent, one of the lowest in the world though with very low levels of productivity partly due to “inflated” payrolls, which guaranteed full employment.

However, in the new conditions of the economic model, the abandoning of the principle of full employment and the loss of the State’s leading role as creator of sources of employment and incomes impose new opportunities as well as challenges to achieve equity, since the State transfers part of its responsibilities to individual and family work. In this sphere, however, the conditions to start are not homogeneous to use the opportunities and decrease the impact of the process of adjustment, which is why the depth and emergence of new spaces of inequity are to be expected.

The emergence of new productive organisations (small private enterprises, self-employment, non-agricultural cooperatives, among others), together with processes in which one tends to give greater autonomy to agricultural cooperatives and state-run enterprises – which in addition are resized in the search to increase productivity – are having an influence on the composition of a work market in which access to decent employment will become a focus of attention of academicians and decision makers.

The experience indicates that a first motivational factor is adequate pay for work. Until the 1980s, the ascending social mobility was accompanied by higher wages, at the same time as it made it possible to cover, with certain ease, consumptions beyond vital needs.

However, the limitations imposed by the Special Period (severe crisis that began in the 1990s) dissociated wage from the possibility of meeting a group of vital needs, which increased the role of non-related work incomes, be they legal – like the remittances – or illegal, like speculation in the underground economy.

The deterioration of the real wage that took place starting 1990 has not been able to be reverted and this is the fundamental lack of encouragement for the increase of work productivity at present. However, schemes for supplementary incentives that operate in convertible pesos, in a group of sectors of the economy, have been created to attenuate the negative effect of low wages.1 Additionally, the inadequate management of the political mobilisation factors, like emulation and moral incentives in general, led to reducing their role as a social compulsion element.

Finally, the absence of effective participation of the workers in economic management and decision making is a factor that reduces their commitment to society and deteriorates social solidarity. Thus, the restitution of the mechanisms of incentives and the active participation in economic management are at present a vital need to boost the growth of production and work productivity.

The country is immersed in a process of updating of the economic and social model that is still not reflected in wages and is living the ravages of the 1990s crisis. The economic base of incomes has weakened and the differentiation of the incomes between sectors and workers does not favour the state-run sector and does favour the private and cooperative sector (see chart 1). The average income of private workers is 2.3 times that of the mean state wage; remittances from abroad and payments in hard currency are widening the gap.

This situation worsened by 2011 as a consequence of the combination of the contraction of rationed products – which now must be bought in the “supply and demand” markets – and an increase in mean wages and pensions, which are not enough to compensate for the increase in the cost of living. In 2012, out of a total of 60 items with available data, 17 per cent was offered on the ration book (covering 10 days in the month) and the remaining 83 per cent by the agricultural markets and the Hard Currency Collection Shops – TRD.2

In studies carried out by González-Corzo M and Susel Pérez3 the number of average working days a state worker needs to buy a pound of food is estimated: powdered milk, 14 days; butter, 5.3; pork, 2,6; chicken, two; cheese, 1.6; potatoes, 1.1; beans, 0.7; rice, 0.4; and a dozen eggs, 0.8. Based on the average monthly wage of 448 CUP, the estimate to buy in the TRDs certain products would take the following time: 11 months of work for a microwave oven, 13 for a gas stove, 13-19 for a TV set and 27 for a small refrigerator. One gallon of gas takes a third of the monthly mean wage.4 The state-run sector’s real incomes have not been able to recover and the purchasing power of the state wages is barely 27 per cent compared to 1989. The most recent measures implemented to contribute to the increase of the purchasing power of the Cuban peso are insufficient and are hindered by the existing currency and exchange rate duality.

Chart 1  Variation of indexes related to income and standard of living

 

1990 or before 2011 forward
Average wage 189.00 pesos 687.00 pesos [2015]
Weight of wage in relation to the income of persons 75% [1980s] 46.8% [2012]
Family expenditure on food (in relation to their incomes) 37% [1952] 60%-75%
Gini coefficient of inequality in distribution of incomes 0.25% 0.40% [estimate]
Share of amount of pensions (in relation to population’s incomes) 9.8% 12% [4.5 billion pesos a year][2011]
Share of payments for social assistance 0.7%-0.8% 0.7%-0.8%
Incomes of farmers owners of land (in relation to population’s incomes) 2.7% 12.5% [2011]
Incomes of private sector in general (in relation to population’s total incomes) 3.4% 16.3% [2011]
Other incomes 10% 30.4% [2012]

 

Drawn up by the author based on Rodríguez José Luis Anaya Betsy¸”Notas sobre la economía cubana,” in magazine Temas, no. 70, October-December, 2013.

One of the most complicated distortions for the workers’ movement has been the dissociation between consumption and personal effort and, above all, the severe impact on the system of values that used to characterise the population before the 1990s crisis. The increase in inequality, dissociated from wage and work effort, has been a recurrent question in trade union debates: the workers see the deterioration of the purchasing power of the nominal wages, in the midst of a wage and contracting rigidity that made it impossible to break away from inequality’s hard cores.

Previously unacceptable, socially negative behaviours started being legitimised. The growing number of youths that show a total lack of interest in studying or working in the country is worrisome, and they consider migration to other countries as the best option to carry out their individual projects.

Though statistics on income distribution are not published in Cuba, some foreign academicians5 estimate that the Gini coefficient increased 64 per cent between 1989 and 1999 (from 0.250 to 0.407) and only based on CUP, excluding the CUC6 and the remittances. If these were included, the Gini would be higher.7 There are no recent figures, but there is consensus on the fact that inequality has aggravated and will increase with the structural reforms.

For example, the average income of private farmers was 1.56 times that of the state mean wage, while the average for the self-employed was 2.28 times that of the state mean, according to ONEI data. Several authors estimate that the monthly mean incomes between 1993 and 2009, at 1997 prices, almost came to a standstill in the state-run sector, while in the cooperative and private sectors they increased and were 2.5 times that of the state mean. In 2004, 15 per cent of the higher income stratus received the latter in hard currency, another 21 per cent earned tips in hard currency and 39 per cent received remittances from abroad.8 According to Pérez Villanueva, 13 per cent of the bank accounts in 2001 concentrated 90 per cent of the deposits and some of them had between 160,000 and 200,000 CUP or between 6,667 and 8,333 dollars, a fortune in Cuba.

There are no published figures on the incidence of poverty since 2002, but a more recent economic study about the poverty of incomes in Cuba affirms that the threshold stands at 841.40 pesos. However, if the monthly mean wage was 460.00 pesos in 2011 and more than 43 per cent of the employed have a lower average than this, the percentage of poverty must be higher than the one cited here.9

However, family and labour daily life dimensions were affected: real wages deteriorated; the rationed food market was reduced gradually, to the point that today the ration book on its own does not cover the basic food basket. Only some food products vital for Cubans’ food intake can be purchased through the ration book, but they do not meet all the needs; neither do the markets offer the variety of products required to cover the 2,500 daily calories for a healthy diet. According to Sandoval’s study, the ration book contributes 41.2 per cent of the recommended calories. This means that the populations must seek in other markets to complete the basic food basket and use several sources of incomes, especially in hard currency.

Changes of the New Labour Code and points of contact with the previous code

In Cuba, the principal normative foundation of the legal framework related to employment is the Constitution of the Republic, which considers work as a full right, without discrimination because of sex, race or religion.

The Labour Code and the complementary legislation contained in laws, decree-laws and other decrees that establish the general and strategic aspects in terms of employment, attribute to the government agencies functions for the execution, control and organisation of matters related to labour and social protection. The Labour and Social Security Ministry (MTSS) is the government body that has among its functions to regulate, control, organise and make for the compliance of all that is established in the country’s labour law.

One of the problems that has characterised the Cuban labour legislation has been the lack of hierarchy. As is explained in the basis of the draft Labour Code that was discussed in the last quarter of 2013 and approved by the National Assembly in December of that same year, the “legislation approved in the last two decades has modified or replaced seven of the 14 chapters of the Labour Code in force,” which had to be done after a National Assembly discussion, since the Labour Code must be the foundation of the employment policy in the country, from which the rest of the labour legislation emanates.

Also significant is the fragmentation of the labour legislation, in which it can be seen that, to deal with one same topic, there is a diversity of legal instruments. For example, there are two laws, one decree and nine resolutions that regulate the topic of the suspension of the labour relations, some of them specific for lay judges (law), mobilized to the defence (law), etc. This is repeated for the aspects of hiring (two decrees and five resolutions), labour regimen for foreign investment (one law and two resolutions), etc.

In April 2014 two important modifications were made to the legal framework related to labour relations. The first was the approval of a new Labour Code and the second is related to the modifications that have been approved on the wage policy (Res. 17/ 2014) and which replace Resolution 9/2009 of the MTSS. On the other hand, there are changes in the labour practices and/or of sectorial legal bodies that in fact modify the labour relations, but which have still not been materialized in any type of legal regulation.

The contents of the new Labour Code, according to the discussion of the draft, the approval by the National Assembly in December 2013 and its coming to light six months later recognise with greater weight the presence of the non-state sector, an element absent in the previous Code, but very necessary in the current situation.

The recognition of the figure of “employer” as individual and legal entity, subject to labour relations, expands, according to the new circumstances, the figure of “heads of labour entities” referred to in the 1984 Code. The diversity of current forms of ownership and management is also legitimised in the “special” regulations to control the work relations among individuals and with non-state forms. The work relations in Cuba for persons hired abroad, prior authorization, is also established for the first time.

The most significant modifications related to essential changes in the principles of the employment policy are reflected as follows, such as: full employment, study with economic remuneration as a new concept of employment, the relocation of available or interrupted workers and the protection of income when they cannot be relocated (see chart 2).

Chart 2 Most important modifications

1984 Code 2013 Code
Only the Heads of Labour Entities are recognised It is replaced with the Employer
Non-recognition of the non-state sector Recognition of the non-state sector
Formal contracts between state-run enterprises Formal and verbal contracts between diverse economic actors
Non-paid license is a right of the workers Non-paid license is a concession of employers

 

State’s responsibility for the placement of graduates in professional technical education and trades The State’s responsibility is modified
Women’s labour Protection of women workers
Greater wage guarantees for available workers Less wage guarantees for available workers
Centralised payrolls for budgeted enterprises and units Decentralised payrolls for business sector

 

Source: Echevarría, Dayma: “Procesos de reajuste en Cuba y su impacto en el empleo femenino: entre dos siglos y repetidas desigualdades”. In: Pérez Villanueva, Omar (compiler). Miradas a la Economía Cubana IV, Caminos publishers, Havana, 2013.

Moreover, the right to free association of workers in unions that defend and represent their interests is ratified, which is an element also demanded by self-employed workers and that was collected in the Daft in article 13. However, in the approved Code these unions must be established “according to the foundational union principles,” which is why the practice that the self-employed must be members of union organisations of the sector where they are inserted is justified. This can affect the signing of Collective Work Agreements in the non-state sector, to which now the signing of this document that regulates the commitments between employers and workers is extended and is a right of the union organisations according to article 14, paragraph d.

In terms of hiring, the principal difference with respect to the previous code – in addition to the fact that it can be carried out among individuals – lies in that, in exceptional cases and that do not exceed 90 days, the contracts can be verbal, an aspect that makes this process flexible. At the same time, there should be cautiousness in that situations are not generated that make vulnerable the persons who are hired under this modality, since it is not specified how this verbal contract has legality to protect the worker, especially for the hired self-employed persons, if it is taken into account that the demands of a hired worker in the self-employed sector are settled before the judicial system.

The Labour Code approved in December 2013 modifies the State’s responsibility for the location of professional technical education and trades graduates, who will only have to comply with the stage of social service in cases previously requested. This general regulation modifies what is stipulated in Res. 9/2007 (Regulation about the treatment of the recent graduates during the process of labour training), according to which the recent graduates of this type of education would be inserted according to the centralised distribution plan approved by the Provincial and Municipal Administration Councils. In this Resolution, the wages of the graduates had to be contemplated in the training budget of the entity that received them, an aspect that is maintained in the current document.

With this modification, while the inability shown by the labour system to give employment according to the expectations and training of the technical and professional education graduates for some years and the compulsory aspect of fulfilling the time of social service in the assigned posts is made explicit, even when it were not of interest to the graduate; the responsibility of seeking a job in which they can implement the acquired knowledge is transferred to the young people and their families.

The approved Labour Code, in some of its chapters – as for example VIII, of the Organisation of Work Standardisation, and chapter XII, about the worker’s discipline – still maintains a marked accent toward the state-run sector.

The General Regulation on Labour Relations that established, among other topics, the principles of the country’s employment policy, is repealed. It is replaced with the Regulation of the Labour Code that, compared to the previous one, does not establish the aforementioned principles, but rather that directly goes to aspects related to labour relations.

The current Regulation constitutes a Decree of the Council of Ministers, while the previous responded to a Resolution of a Ministry (MTSS), with which greater hierarchy is given to the document in force. On the other hand, changes are seen in the composition of its chapters, which now generally deal with the topics and leave margins for sectorial regulations in the framework of the policy.10 Those handicapped persons or graduates from special education, persons who are serving prison sentences or measure of security while in freedom, those discharged from Active Military Service are maintained as groups of assignation in employment according to state or social interest and according to the needs of the entities.

The chapter dedicated to the arbitration of the Collective Work Agreements, as well as that of Work Inspection, both directed at settling disagreements and controlling irregularities in the compliance of the labour or social security legislation is highlighted, seeking the protection of the rights of the workers, independently of the type of property or management in which they work.

Moreover, the inclusion in the Regulation of a chapter on the protection of women workers is new, while it finds in its antecedents the 1984 Code’s Chapter VIII on Women’s Work.

However, in this chapter on the protection of women workers, only the work conditions and protection of maternity of the woman worker are actually prioritised because of their “social function as mothers,” with which the subject of protection is reduced to women in the processes of maternity and leaves out the majority of the women workers not immersed in these processes, as well as the men wishing to avail themselves of the paternity leave of absence. Moreover, the function of women is reduced to maternity, with which the social construction of maternity is strengthened, viewed as a social and not biological order.

Other significant differences that have occurred in the employment policy are related to the process of labour availability. For available workers, the wage guarantees significantly decrease in the new context since in the previous process of availability, in the 1990s, they were offered up to three work options for their relocation.

These workers had the wage guarantee of 60 per cent of their salary, according to the years worked, during a period of between six months and three years. At the end of this stage, if they were unable to be relocated, they were paid a subsidy of 60 per cent of their salary, depending on the number of years worked, which covered a period of between three months and a year and a half. Attempts were made to relocate these workers in useful jobs in which they could conserve up to 80 per cent of the previous salary or accept new types of jobs.

However, Resolution 34 of 2011 grants wage guarantees of 100 per cent of the salary in the first month and afterward 60 per cent, depending on the type of service, as long as 10 years or more of service are accumulated and under a regimen that is in correspondence with the amount of years worked in the entity.

The wage policy was modified in April 2014 with the approval of Resolution 17, in the Special Official Gazette No. 21. With this Resolution No. 9 was replaced, which was the General Regulation on the forms and systems of payment that governed in the country. It explained the different payments by yields (piecework and by results) and established the limits for the amount of incentives. Its objective was to directly link wages with the contribution of each worker. The previous resolutions link the payment to the workers with global indicators of their enterprises or workplaces, like incomes, sales and profits.

Resolution 9/2008 generally established a limit of 30 per cent of the basic wage as an estimate for the payment to the workers whose work content could not be reflected in the direct contributions of the workers, but rather by general indicators, and that the amount of payment for results must not exceed 30 per cent of the basic wage estimated.

In Resolution 17/2014 a limit to the wage to be received did not exist, as long as the wage expenditure per peso of planned gross value was not affected. If this indicator were affected, the basic wage estimated will be the country’s minimum wage, except for the workers committed to the piecework system. The aim of this resolution was to “eliminate administrative restrictions to encourage the increase of work productivity,” according to the experience in the application of the precious resolution.

However, Resolution 17 had a short life, since less than two years after its approval is showed serious limitations in its implementation and negative impacts for the workers. On the one hand, it led to imbalances between the creation of wealth and the payments made, as was mentioned by then Economy Minister Marino Murillo in Parliament; a total of 113 enterprises had exceeded the limit indicator established then by Resolution 17: spending on wage per peso of gross added value. On the other hand, it led to wage affectations up to the limit of the minimum wage, because of non-fulfilment (instability in the supplies or other reasons independent of the enterprises’ management).

Resolution 6 takes a more advanced step toward the decentralisation of the systems of payment by yields, it ratifies that the wage is self-financed by the entity and its formation responds to the level of compliance of the management’s indicators. It also offers the possibility of passing on to the form of payment by time, instead of the payment by yield. Something that affects less the pockets of workers is that this resolution establishes the wage protection of the workers included in the systems of payment by results up to the limit of the wage scale, according to the complexity and responsibility of the posts they occupy. The business management can make this adjustment once a year if the previous conditions change in the plan for reasons alien to the entity.

In short, it can be pointed out that there is a challenge at present for the legal framework related to labour relations in force in Cuba, since it must respond to the diversity of transformations happening in employment matters in labour relations. The growing presence of the non-state sector in them must be assumed and generate regulations that control it, as much as the state employment, since according to the Economic and Social Policy Guidelines of the country the latter will be an important employment sector and of supply of services in the Cuban future.

On the other hand, maintaining decent working conditions for all those participating in the labour market must remain as a principle of the current employment policy, which guarantees at the same time incomes related to the social and economic contribution produced by each occupation, related to the income-productivity relationship and that it continues being an instrument that creates spaces of equity wished for a socialist society.

However, several contradictions and economic and social implications can be identified in a changing national context, like the following:

The contradiction between the macroeconomic objectives of maintaining the domestic financial balance and the need to increase wages and incomes in the face of an environment of an increase in the cost of living.
The freezing of wages of the budgeted sector (education, health, science) to reduce the budgetary deficit, which has caused the exodus of professionals from these sectors to the non-state sector or abroad.
The emergency measures and restrictions for the second semester of 2016 will have an impact in the drop in the business average wage, with its subsequent effects on the growth of the GDP for 2017.
The abandonment of the principle of full employment and the associated process of labour availability produce the transfer of responsibilities, until now, of the State to the individual sphere.
In the new labour scenario, employment is as never before facing an individual level, for the holding of set assets or of the social networks that the persons can activate to facilitate their insertion in those state and non-state sectors economically more attractive.
The demand for labour force, which determines as a last resort the formation plans for students and that previously came from the ministries, now, when carried out from the municipalities, needs coordination between the different institutions of the territory and must respond to the economic and social development strategy, so that it combines sectorial, business and local interests.

Conclusions and recommendations

Current Cuban society is much more complex in terms of social stratification and differentiation than that of the 1990s, which is why a more renovated approach is required to the issues of employment and incomes in Cuba and its changes that the quantitative studies cannot capture with sufficient celerity.

In terms of employment, the country is characterised by a diversification of remunerated work options in the labour market, which means a current challenge for the legal framework in force related to labour relations, since it must respond to the diversity of transformations which is taking place regarding this issue.

In this sense, the growing presence of the non-state sector must be assumed and generate regulations that control it, as much as with the state-run employment, since according to the economic and social policy guidelines of the country it is an important employment and supply of services sector for the future of Cuba.

What is fundamental is the updating of the labour policies to the real times, approaching the individual and social contributions to the retributions, and that the income-productivity relationship be an instrument of efficiency and also of equity linked to productive results. The new code must allow for the flexibility of the labour legislation, in which the administration and the union of each enterprise, entity or agency have the possibility of adapting it to the specificity of its place. It should not become a straightjacket for all places, but rather it must be a means to strengthen the participation of the workers at this moment, when the process of preparation of the collective work agreements of all the institutions has started all over the country.

Better conditions are being created to make flexible the mechanisms for the hiring of the work force. The combination of short- and long-term contracts and by hour could help correct the current situations of underemployment and bad use of qualified labour force. In addition, currently inactive qualified workers could be assimilated through the temporary subcontracting of professional services.

In general it can be said that the management of employment remains behind even when faced by a changing reality, in which the non-state sector is destined to occupy 60 per cent of the Cuban workers. Neither is equity favoured in the access to employment since the jobs that tend to be more attractive in economic terms, as a tendency, are devoted to information and the influence of the available social network which can mobilise the individual.

A change in this sense could favour the increase in productivity, since while until now the self-employed who use wage-earning workers choose them through the social networks, where reliability predominates, this situation could change to the extent that certain activities become more competitive and then, among the criteria for choosing, in addition to reliability, the labour competitions predominate.

In terms of insertion in employment, the authorised institutions can only manage job posts in the state sector – except for business groups with specific standards – and for prioritised groups, with which a bad use is made of the potentials of the non-state sector as a source of employment.

Another aspect not sufficiently dealt with is the question of gender-based equity. Despite the unquestionable advance in the equality and incorporation of women in Cuban society, they still concentrate the greatest family responsibility in the care of children and the elderly, which is a factor of inactivity and damage to work productivity. Both effects have a cost of considerable opportunity, since women represent more than a third of the labour force and approximately 50 per cent of the qualified force.

An aspect that limits the analysis, from the gender perspective, of the impact of the employment policy followed by the country since 2008 is the scarce disintegration of data on a provincial and municipal level, according to socio-demographic variables (sex, age, skin colour, workplace, among others). This fact, which is also repeated in many of the national statistics, has been highlighted as one of the principal obstacles faced by the equity-related studies at present, since it interferes not just in the wealth of the analyses to be carried out based on this focus, but rather in the difficulty to propose alternatives that facilitate the insertion and the development of the less favoured groups.

The current work conditions offered in the new code will only be real opportunities for the people if they are coordinated with other policies that must accompany the implementation of this code. It is necessary to reflect on the active and innovative promoting policies directed not just at the state sector and that do not exclusively consider it as an “employment cushioning,” but rather as a sector with innovative dynamics.

The new code demands intentional policies for the optimum use of the Cuban population’s qualification in three basic directions: increase the remuneration in a segment of excellence linked to strategic objectives, expand the wage differentiation with greater emphasis on the complexity and results of the work; make flexible labour mechanisms in the state sector and other forms of ownership.

There still remains the challenge of the lack of motivation of many workers with their job, after several years of lack of coordination between both aspects; as well as the lack of discipline and organisation in many entities. In the next years one will be able to confirm if this code had positive impacts on the increase of wages and productivity.

Undoubtedly, the perfecting of labour relations in the transforming context of the economic model must be one of the prioritised tasks that allow for speeding up the levels of productivity and efficiency that society demands, and also to strengthen the expansion and development of new forms of non-state production. (2016)

Table 1

 

Population amount of employed and unemployed

UM: Thousands of workers

 

Total
YEAR Employed Unemployed Unemployment rate (%)
2011 5,010.2 164.3 3.2
2012 4,902.2 175.7 3.5
2015 4,860.5 119.0 2.4

 

Of them:

Women Men
Year Employed Unemployed Unemployment rate (%) Employed Unemployed Unemployment rate (%)
2011 1,876.4 68.3 3.5 3,133.8 96.0 3.0
2012 1,802.6 67.7 3.6 3,099.6 108.0 3.4
2015 1,817.8 47.6 2.6 3,042.7 71.4 2.3

 

 

Source: ONEI 2015

tabla2

Agricultura = Agriculture, livestock, forestry, fishing

Explotacion = Exploitation of mines and quarries

Industrias = Manufacturing industries

Electricidad = Electricity, gas and water

Construccion: Construction

Comercios = Shops, restaurants and hotels

Transporte = Transportation, storage and communications

Establecimientos: Financial establishments, insurance, real estate and services to companies

Servicios = Communal, social and personal services

 

 

Graphic 7 Average wage by province
Salario = State-run Enterprises Nominal Wage
Promedio = Regional average

tabla3

 

 

 

1 During the first semester of 2013, 611,976 workers received 10 CUC per month for a total of 74,466,000 CUC. These schemes are applied to 20 per cent of state workers.

2 Mesa-Lago, Carmelo: Cuba en la era de Raúl Castro: Reformas económico-sociales y sus efectos, Madrid, Editorial Colibrí, in press, 2012.

3 González-Corzo, Mario and Susel Pérez: Análisis comparativo del poder adquisitivo en Cuba, Cuba Study Group and University of Miami ICCAS, 2009.

4 Mesa-Lago: ob. cit.

5 Brundenius, Claes: “Revolutionary Cuba at 50: Growth and Equity Revisited,” Latin American Perspectives, volume 36, Washington D.C., 2009. Mesa-Lago: ob. cit.

6 One convertible peso (CUC) is rquivalent to 24 Cuban pesos

7 Espina Prieto, Mayra P.: Políticas de atención a la pobreza y la desigualdad. Examinando el rol del Estado en la experiencia cubana. CLACSO, Consejo Latinoamericano de Ciencias Sociales, Buenos Aires, 2008.

8 De la fuente, Alejandro: A Nation for All: Race, Inequality, and Politics in Twentieth-Century Cuba. Chapel Hill, NC: The University of North Carolina Press, 2011.

9 Sandoval, Raúl: La pobreza en Cuba. (Havana: University of Havana), digital, 2012.

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