GO
Loading...

Cubans Face New Reality as Job Cuts Begin

Cubans faced a harsh new reality this week—the dismissal slip —as the government began slashing state payrolls in a cost-cutting move that has created job insecurity for the first time in years in the Communist-run country.

The Cuban flag flying in Park Central in Havana.
Buena Vista Images | Getty Images
The Cuban flag flying in Park Central in Havana.

Everywhere from hospitals to hotels, workers were being laid off, and in the biggest known move so far, employees at state-owned Special Protection Services Company (SEPSA) were told the firm was being shut down and 23,000 people let go.

It was the beginning of President Raul Castro's plan to cut 10 percent of the state's labor force, or about 500,000 workers, by April in the biggest reform since he succeeded older brother Fidel Castro in 2008.

The layoffs, aimed at boosting efficiency and slashing Cuba's budget deficit, are the first major job cuts since the 1960s.

About 85 percent of the Cuban labor force, or over 5 million of the nation's 11 million population, work for the state, many of them in unproductive jobs.

Not all Cubans, accustomed to guaranteed employment in the socialist system, took the news in stride. At the Havana Libre Hotel, where a large number of jobs are being eliminated, Communist Party officials had to be brought in to calm workers down, hotel employees said.

A nurse said she was shocked at the magnitude of layoffs in her Havana hospital. "I expected some job cuts, but not 500 out of our 3,000 employees," she told Reuters.

Employees at SEPSA, which provides armed guards and other security services nationwide, said they were told of the cuts Tuesday.

"They said the entire company was being closed and we were offered jobs in the prison system, police and traffic," said one SEPSA employee who asked that her name not be used.

The government has said laid-off workers would be offered other jobs, but would have to seek work on their own if they did not take them.

Fearful For Jobs

It has said it will begin issuing this month 250,000 licenses for self-employment to create new jobs and shift many workers off state payrolls to leasing and cooperative arrangements.

Still, said one Havana resident, Cubans are facing something they have not seen for a long time.

"I understand the need to improve the economy, but it's hard to take after 50 years of job security," said the woman whose family members work for SEPSA.

"It will be hard to get another state job as they are cutting everywhere, and many older workers are used to a desk and might have a hard time adjusting to doing something else," she said.

One immediate effect appears to be that workers, suddenly fearful for jobs they once took for granted and often neglected, are taking them more seriously, a local family doctor said.

"People used to stay home if they had a sniffle and now they are going to work even if they are really sick, spreading their colds around," the doctor said.

The layoffs are not based on seniority, but an evaluation by workplace committees of each worker's ability and productivity.

At the Havana hospital a committee made up of administrators, Communist Party members and trade union members are deciding workers' fates in a process viewed as open to the vagaries of office politics.

"Ability means friends and influence," one employee quipped.

Local economists said that, despite the accompanying unease, the cuts were long overdue.

The Cuban system, modeled after the Soviet Union, has been based on each employee doing a single task and refusing to do more, even if it meant sitting around all day, they said. This resulted, for example, in state taxi garages employing three support staff for each driver.

In a pilot project leasing the cabs to drivers, only four support staff are needed for 30 drivers, a garage manager said. "Workers will now be expected to do more, but will also receive a higher salary," one economist said.

The government has said that after the first round of cuts, another half-million workers will be laid off in the future.

Featured

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Don't Miss

U.S. Video