July 20, 2010 / 2:27 PM / 9 years ago

Cubans brace for "reorganization" of labour force

HAVANA (Reuters) - Cuba is moving up to a million employees, or a fifth of its workers, off bloated public payrolls and into jobs where they actually have to work, according to Communist Party and government sources.

The goal is to boost the island’s struggling economy by targeting what President Raul Castro has called “unnecessary workers” in a five-year project to reorganize its labour force in tandem with some economic liberalization.

“We hope to eliminate 200,000 jobs per year, as much as 100,000 of them over the coming year in the capital alone,” a Communist Party economist said, like others asking that his name not be used.

Castro said in a speech to young party supporters in April that payrolls would be cut to help modernize the economy and that there were possibly more than a million excess workers.

All state agencies were ordered in January to review payrolls with an eye to trimming unneeded positions, apparently with dramatic results.

“We have 304,000 employees, of which it is necessary to reorient 79,000,” Domestic Trade Minister Jacinto Angular Pardo said in an interview in the latest edition of Bohemia magazine.

“We will do this gradually over five years as part of a reorganization of the company system, distribution networks and forms of administration that rid the state of unnecessary burdens and improve efficiency,” he said.

The plan is just getting under way, so there have been few layoffs so far, sources said. They said those being let go are offered other jobs when available.

Hundreds of employees at the SEPSA security service in Havana were recently given the choice of jobs in agriculture, construction or the local version of the FBI, a worker said.

LIMITED OPTIONS

“The plan is that those over retirement age will be let go and the rest offered up to three possible jobs,” said a former party leader in eastern Holguin, with similar reports coming from various other provinces.

Options are limited because the state employs about 85 percent of the work force of 5 million and claims an unemployment rate of only 2 percent.

Those who do not accept initial job offers will have to look for work at the Labour Ministry, get land through the government’s agriculture land-lease program and take up farming, or live off family remittances and illegal activity.

They will get unemployment benefits for just six weeks, but will not be totally out in the cold because all Cubans receive free health care and education, subsidized utilities, a subsidized food ration and automatic adjustment of mortgages to 10 percent of the top breadwinner’s income.

Still, said an employee at the state-run telephone company, “everyone is nervous, and in particular those above retirement age.”

Because of the job shakeup, the government is likely to accompany the plan with economic reforms that will allow more self-employment and other schemes, most of which are currently prohibited, analysts said.

“This plan probably signals additional policy reforms, because current policies are not generating new jobs,” said Phil Peters, a Cuba expert at the Lexington Institute in Virginia.

“There are lots of options: foreign investment, self-employment, cooperatives, or small- and medium-sized businesses. All would yield more jobs and tax revenue, a lower social welfare burden, and less black market activity,” he said.

The government’s plan in Havana calls for issuing more licenses for self employment in various trades that were frozen a number of years ago, the party economist said.

He said it also appears probable the state-run retail sector will be liberalized, which could absorb some of the extra workers.

Editing by Jeff Franks and Doina Chiacu

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