Tag Archives: Labor Rights

HUMAN RIGHTS WATCH: CUBA: EVENTS OF 2021

Posted on January 15, 2022 by Arch Ritter

Original Document: HUMAN RIGHTS WATCH, 2022 REPORT, Cuban Country Chapter

https://www.hrw.org/world-report/2022

January 14, 2022

The Cuban government continues to repress and punish virtually all forms of dissent and public criticism. At the same time, Cubans continue to endure a dire economic crisis, which impacts their social and economic rights.

In July, thousands of Cubans took to the streets in landmark demonstrations protesting long-standing restrictions on rights, scarcity of food and medicines, and the government’s response to the Covid-19 pandemic. The government responded with brutal repression.

Arbitrary Detention and Short-Term Imprisonment

The government employs arbitrary detention to harass and intimidate critics, independent activists, political opponents, and others.

Security officers rarely present arrest warrants to justify detaining critics. In some cases, detainees are released after receiving official warnings, which prosecutors may use in subsequent criminal trials to show a pattern of what they call “delinquent” behavior.

Over 1,000 people, mostly peaceful demonstrators or bystanders, were detained during the July protests, Cuban rights groups reported. Officers prevented people from protesting or reporting on the protests, arresting critics and journalists as they headed to demonstrations or limiting their ability to leave their homes. Many were held incommunicado for days or weeks, violently arrested or beaten, and subjected to ill-treatment during detention.

Gabriela Zequeira Hernández, a 17-year-old student, was arrested in San Miguel de Padrón, Havana province, as she was walking past a demonstration on July 11. During detention, two female officers made her strip and squat naked five times. One of them told her to inspect her own vagina with her finger. Days later, a male officer threatened to take her and two men to the area known as the “pavilion,” where detainees have conjugal visits. Officers repeatedly woke her up at night for interrogations, asking why she had protested and who was “financing” her. Days later, she was convicted and sentenced to eight months in prison for “public disorder,” though she was allowed to serve her sentence in house arrest. She was only permitted to see her private lawyer a few minutes before the hearing.

In October 2021, Cuban authorities said that a demonstration being organized by a group of artists and dissidents for November 15 was “unlawful.” Later that month, the Attorney General’s Office released a statement “warning” people that they would face criminal prosecution if they “insisted” on carrying out a demonstration on November 15.

Cuban officers have also systematically detained independent journalists and artists. Victims include members of the coalitions of artists known as the “San Isidro,” “27N,” and “Archipelago” movements, as well as those involved in “Motherland and Life” — a viral song that repurposes the Cuban government’s old slogan, “Motherland or Death” (Patria o Muerte) and criticizes repression in the country.  In many cases, police and intelligence officers appeared at critics’ homes, ordering them to stay there, often for days or weeks, in what amounted to arbitrary deprivations of liberty.

Officers have repeatedly used regulations designed to prevent the spread of Covid-19 to harass and imprison government critics.

Freedom of Expression

The government controls virtually all media in Cuba and restricts access to outside information. In February and August 2021, the Cuban government expanded the number of permitted private economic activities, yet independent journalism remained forbidden.  

Journalists, bloggers, social media influencers, artists, and academics who publish information considered critical of the government are routinely subject to harassment, violence, smear campaigns, travel restrictions, internet cuts, online harassment, raids on homes and offices, confiscation of working materials, and arbitrary arrests. They are regularly held incommunicado.

In 2017, Cuba announced it would gradually expand home internet services. In 2019, new regulations allowed importation of routers and other equipment, and creation of private wired and Wi-Fi internet networks in homes and businesses.

Increased access to the internet has enabled many to communicate, report on abuses, and organize protests in ways virtually impossible a few years ago. Some journalists and bloggers manage to publish articles, videos, and news on websites and social media, such as Twitter and Facebook. Yet the high cost of—and limited access to—the internet prevents all but a small fraction of Cubans from reading independent news websites and blogs.

The government routinely blocks access to many news websites and blogs within Cuba and has repeatedly imposed targeted restrictions on critics’ access to cellphone data. On July 11, 2021, when the protests began, several organizations reported countrywide internet outages, followed by erratic connectivity, including restrictions on social media and messaging platforms.

On August 17, the government published Decree-Law 35/2021 regulating the use of telecommunications. The decree, which states its purpose is to “defend” the Cuban revolution, requires providers to interrupt, suspend, or terminate services when a user publishes information that is “fake” or affects “public morality” and “respect for public order.”

A “cybersecurity” resolution accompanying Decree-Law 35 contains sweeping provisions labeling protected speech—including publications that “incite protests,” “promote social indiscipline,” and “slander that impacts the prestige of the country”—as “incidents of cybersecurity” that authorities are required to “prevent” and “eradicate.”

Pre-existing Decree-Law 370/2018 still prohibits dissemination of information “contrary to the social interest, morals, good manners and integrity of people.” Authorities have used it to interrogate and fine journalists and critics and confiscate their working materials.

Political Prisoners

Prisoners Defenders, a Madrid-based rights group, reported that, as of September, Cuba was holding 251 people who met the definition of political prisoners, as well as 38 others for their political beliefs; another 92 who had been convicted for political beliefs were under house arrest or on conditional release.

Cubans who criticize the government risk criminal prosecution. They do not benefit from due process guarantees, such as the right to fair and public hearings by a competent, independent and impartial tribunal. In practice, courts are subordinate to the executive branch.

Many people who protested peacefully in July were sentenced through “summary” criminal trials that lacked basic due process guarantees, including the right to legal representation. Protesters were often tried for vaguely defined crimes, such as “public disorder” and “contempt.” In August, authorities said 66 people had been convicted in connection with protests; most did not have a lawyer. Some were acquitted on appeal.   

In some cases, authorities sought or imposed disproportionate prison sentences against protesters whom they accused of engaging in violence, often by throwing rocks during protests.

On July 11, officers arrested José Daniel Ferrer, leader of the Cuban Patriotic Union, the main opposition party, as he was heading to a demonstration. On July 17, a prosecutor sent him to pre-trial detention, charged with “public disorder” for “deciding to join” the demonstrations. In April 2020, Ferrer had been arbitrarily sentenced to four-and-a-half years of “restrictions on freedom,” for alleged “assault.” On August 14, 2021, a Santiago de Cuba court required him to serve 4 years and 14 days in prison, ruling he had failed to “strictly respect the laws” and “have an honest attitude toward work,” legal conditions for people sentenced to “restrictions on freedom.”

Several artists, including Luis Manuel Otero Alcántara and Maykel Castillo, both of whom performed in the music video for “Motherland and Life,” remained in pretrial detention, facing arbitrary prosecution, at time of writing.

Travel Restrictions

Since reforms in 2013, many people who had previously been denied permission to travel to and from Cuba have been able to do so, including human rights defenders and bloggers. The reforms, however, gave the government broad discretionary power to restrict travel on grounds of “defense and national security” or “other reasons of public interest.” Authorities continue to selectively deny exit to dissenters.

In March 2021, Cuban authorities denied Karla Pérez, a Cuban journalist studying in Costa Rica, the possibility of returning home. An airline employee informed her during a stopover in Panama City that the Cuban government was refusing her admission. Pérez returned to Costa Rica, where she was granted refugee status.

Prison Conditions

Prisons are often overcrowded. Detainees have no effective complaint mechanism to seek redress for abuses. Those who criticize the government or engage in hunger strikes or other forms of protest often endure extended solitary confinement, beatings, restriction of family visits, and denial of medical care. The government continues to deny international human rights groups and independent Cuban organizations access to its prisons. In April 2020, to reduce the risk of the Covid-19 virus spreading in prisons, the government suspended family visits. This, coupled with authorities’ refusal to allow detainees to call their families, left many arrested during demonstrations incommunicado for days and, in some cases, weeks.

Labor Rights

Despite updating its Labor Code in 2014, Cuba violates International Labour Organization standards it has ratified on freedom of association and collective bargaining. While Cuban law allows the formation of independent unions, in practice the government only permits the operation of one confederation of state-controlled unions, the Workers’ Central Union of Cuba.

Cuba deploys tens of thousands of health workers abroad every year to help tackle short-term crises and natural disasters. They provide valuable services to many communities but under Cuban rules that violate their rights, including to privacy, liberty, movement, and freedom of expression and association. In 2020, Cuba sent some 4,000 doctors to help nearly 40 countries respond to the Covid-19 pandemic; they joined 28,000 health workers already deployed.

Human Rights Defenders

The government refuses to recognize human rights monitoring as a legitimate activity and denies legal status to local rights groups. Authorities have harassed, assaulted, and imprisoned human rights defenders attempting to document abuses.

In August, two officers appeared at the Havana home of the mother of Laritza Diversent, a human rights defender living in the United States, and threatened to prosecute Diversent and seek her extradition to Cuba. Diversent heads Cubalex, one of the main rights groups documenting abuses against people who demonstrated in July.

Sexual Orientation and Gender Identity

The 2019 constitution explicitly prohibits discrimination based on sexual orientation and gender identity. However, many lesbian, gay, bisexual, and transgender (LGBT) people suffer violence and discrimination, particularly in Cuba’s interior.

Early drafts of the constitution approved in February 2019 redefined marriage to include same-sex couples, but the government withdrew that proposal following public protests. The government said it would introduce a reform to the Family Code, which governs marriage, for legislative review and later carry on a referendum. In September 2021, the government made public a draft of the reform, which included a gender-neutral definition of marriage. It had not been approved at time of writing.

Sexual and Reproductive Rights

Cuba decriminalized abortion in 1965 and remains one of the few Latin American countries with such a policy. The procedure is available and free at public hospitals.

Key International Actors

The US embargo continues to provide the Cuban government with an excuse for problems, a pretext for abuses, and sympathy from governments that might otherwise more rigorously condemn repressive practices in the country.

In June 2021, the United Nations General Assembly voted overwhelmingly to condemn the embargo, for the 29th consecutive year; 184 countries supported the resolution, while the US and Israel opposed it, and Brazil, Colombia, and Ukraine abstained.

Under former President Donald Trump, the US government limited peoples’ ability to send remittances to Cuba from the US and imposed new restrictions on travelling to Cuba, banning cruise ship stops, educational trips, and most flights. In January 2021, the Trump administration designated Cuba as a State Sponsor of Terrorism, arguing that it had refused to extradite to Colombia members of the National Liberation Army (ELN) who had travelled to Havana to conduct peace talks with the Colombian government and stayed there.

In July 2021, the administration of US President Joe Biden condemned Cuban government abuses against protesters and imposed targeted sanctions on several officers credibly linked to repression against demonstrations. However, as of September, the US had not taken significant steps away from the broader policy of isolation that was entrenched during the Trump era and has failed to improve human rights conditions in Cuba.

In February, the European Union held a human rights dialogue with Cuba. EU High Representative Josep Borrell said in July that demonstrations in Cuba “reflect[ed] legitimate grievances.” He expressed concern about government repression and urged Cuba to release all arbitrarily detained protesters. The European Parliament adopted resolutions deploring Cuba’s human rights violations in June and September.

The Lithuanian legislature voted in July to oppose ratification of the EU’s Political Dialogue and Cooperation Agreement with Cuba, signed in 2016 but never ratified, because of Lithuania’s human rights concerns.

Since being elected to the UN Human Rights Council in 2020—its fifth term in the past 15 years—Cuba has opposed resolutions spotlighting human rights abuses in Eritrea, Ethiopia, Syria, and Nicaragua, among other countries.

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HUMAN RIGHTS WATCH 2017 REPORT on CUBA

Posted on January 13, 2017 by Arch Ritter

Original Article: Human Rights Watch 2017 on Cuba:

Summary:

The Cuban government continues to repress dissent and punish public criticism. It now relies less than in past years on long-term prison sentences to punish its critics, but short-term arbitrary arrests of human rights defenders, independent journalists, and others have increased dramatically in recent years. Other repressive tactics employed by the government include beatings, public shaming, and termination of employment.

On November 25, Fidel Castro, who ruled Cuba from 1959 until handing off the presidency to his brother, Raúl, in 2006, died in Havana.

In March, US President Barack Obama visited Cuba, where he met with President Raúl Castro, as well as with representatives of Cuban civil society. President Obama gave a nationally televised address and held a joint press conference with President Castro in which he urged the Cuban government to lift restrictions on political freedoms and reiterated his call for the US Congress to end the economic embargo of the island.

Arbitrary Detention and Short-Term Imprisonment

The government continues to rely on arbitrary detention to harass and intimidate critics, independent activists, political opponents, and others. The Cuban Commission for Human Rights and National Reconciliation, an independent human rights group that lacks official authorization and is therefore considered illegal by the government, received more than 7,900 reports of arbitrary detentions from January through August 2016. This represents the highest monthly average of detentions in the past six years.

Security officers rarely present arrest orders to justify the detention of critics. In some cases, detainees are released after receiving official warnings, which prosecutors can use in subsequent criminal trials to show a pattern of “delinquent” behavior.

Detention is often used preemptively to prevent people from participating in peaceful marches or meetings to discuss politics. Detainees are often beaten, threatened, and held incommunicado for hours or days. The Ladies in White (Damas de Blanco)—a group founded by the wives, mothers, and daughters of political prisoners also, like the Cuban Commission on Human Rights, lacks official authorization and is therefore considered illegal by the government. Its members are routinely harassed, roughed up, and detained by either police or state security agents before or after they attend Sunday mass.

Prior to President Obama’s visit in March, police arrested more than 300 dissidents as part of a crackdown on opposition leaders.

Freedom of Expression

The government controls virtually all media outlets in Cuba and restricts access to outside information.  A small number of journalists and bloggers who are independent of government media manage to write articles for websites or blogs, or publish tweets. However, the government routinely blocks access within Cuba to these websites. Moreover, only a fraction of Cubans can read independent websites and blogs because of the high cost of, and limited access to, the internet. Independent journalists who publish information considered critical of the government are subject to smear campaigns and arbitrary arrests, as are artists and academics who demand greater freedoms.

Lazaro Yuri Valle Roca, a blogger and videographer who often covers the Sunday demonstrations of the Ladies in White, was jailed for five days after trying to cover a protest on March 20, the day of President Obama’s arrival in Cuba. Police officers apprehended Valle Roca, beat him, and took him to a nearby police station, according to Aliuska Gómez García, a member of the Ladies in White who witnessed the beating and arrest and spoke afterwards to the Committee to Protect Journalists. Valle Roca was later accused of attacking an official. While he did not face charges on this occasion, officers warned him that he might if arrested in the future.

In May, police detained journalist Daniel Domínguez López in his office at the Cuban Institute for Freedom of Speech and Press (ICLEP) after he wrote an article about a deprivation-of-property case involving a member of the National Revolutionary Police Force. Police ultimately took him to a “criminal instruction unit,” where he said that they threatened to imprison or kill him and his family. Officers reportedly warned him against further distribution of his bulletin and told him that they were determined to destroy ICLEP.

Police in October detained Maykel González Vivero, a reporter of the news site Diario de Cuba, while he was reporting on the damage caused by Hurricane Matthew. Three days later, police arrested Elaine Díaz, director of the independent news site Periodismo del Barrio and four of her colleagues when they traveled to Baracoa, eastern Cuba, to report on the storm’s effects. She and her team were released a few hours later, as was González, but authorities reportedly confiscated their laptop computers, cameras, and other equipment.

The government harasses artists as well. Police detained Danilo Maldonado, a graffiti artist known as “El Sexto,” during a march led by the Ladies in White movement shortly before President Obama’s visit in March 2016, but released him the following day. The day after Fidel Castro’s death in November, police arrested Maldonado again after he posted an online video mocking Castro’s death and spray painting “se fue” (he’s gone) on a wall in downtown Havana. Police held him incommunicado for 72 hours, inflicting a beating that triggered an asthma attack. After his mother brought an inhaler, his detention continued. He was still detained at time of writing in early December. Two years earlier, Maldonado had been charged with “contempt for authority” for attempting to stage a satirical performance with two pigs daubed with “Raul” and “Fidel.” He served 10 months in prison.

Political Prisoners

Despite the release of the 53 political prisoners in conjunction with the agreement to normalize relations with the US, dozens more remain in Cuban prisons, according to local human rights groups. The government denies access to its prisons by independent human rights groups, which believe that additional political prisoners, whose cases they cannot document, remain locked up.

Cubans who criticize the government continue to face the threat of criminal prosecution. They do not benefit from due process guarantees, such as the right to fair and public hearings by a competent and impartial tribunal. In practice, courts are subordinated to the executive and legislative branches, denying meaningful judicial independence.

Travel Restrictions

Reforms to travel regulations that went into effect in January 2013 eliminated the need for an exit visa to leave the island. Exit visas had previously been used to deny the right to travel to people critical of the government—and to their families. Since then, many people who had previously been denied permission to travel have been able to do so, including human rights defenders and independent bloggers.

Nonetheless, the reforms gave the government broad discretionary powers to restrict the right to travel on the grounds of “defense and national security” or “other reasons of public interest.” Such measures have allowed authorities to deny exit to people who express dissent.

The government restricts the movement of citizens within Cuba through a 1997 law known as Decree 217, which is designed to limit migration to Havana. The decree has been used to harass dissidents and prevent those from elsewhere in Cuba from traveling to Havana to attend meetings.

Prison Conditions

Prisons are overcrowded. Prisoners are forced to work 12-hour days and punished if they do not meet production quotas, according to former political prisoners. Inmates have no effective complaint mechanism to seek redress for abuses. Those who criticize the government or engage in hunger strikes and other forms of protest are often subjected to extended solitary confinement, beatings, restrictions on family visits, and denied medical care.

While the government allowed select members of the foreign press to conduct controlled visits to a handful of prisons in April 2013, it continues to deny international human rights groups and independent Cuban organizations access to its prisons.

Labor Rights

Despite updating its Labor Code in 2014, Cuba continues to violate conventions of the International Labour Organization that it has ratified, specifically regarding freedom of association, collective bargaining, protection of wages, and prohibitions on forced labor. While the formation of independent unions is technically allowed by law, in practice Cuba only permits one confederation of state-controlled unions, the Workers’ Central Union of Cuba.

Human Rights Defenders

The Cuban government still refuses to recognize human rights monitoring as a legitimate activity and denies legal status to local human rights groups. Government authorities harass, assault, and imprison human rights defenders who attempt to document abuses.

In September, police raided Cubalex, a six-year-old organization that investigates human rights violations and provides free legal services to free-expression activists, migrants, and human-rights defenders. Officers confiscated files, strip-searched four men and a woman, and arrested two attorneys, one of whom was still in detention at time of writing.

Key International Actors

In December 2014, President Obama announced that the United States would ease decades-old restrictions on travel and commerce, and normalize diplomatic relations with Cuba. In return, the Cuban government released 53 political prisoners and committed to allowing visits by international human rights monitors. The two governments restored diplomatic relations in July 2015, but at time of writing, no international human rights monitors had visited Cuba.

In January 2015, President Obama called on the US Congress to lift the economic embargo on the island that had been imposed more than four decades earlier. In October 2016, he used executive orders to end a few trade restrictions, including the longstanding $100 import limit on two of Cuba’s signature products: cigars and rum.

In September 2016, the European Union approved an agreement with Cuba that would strengthen economic and political ties and bring an end to the EU’s 1996 “Common Position on Cuba,” which conditions full European Union economic cooperation with Cuba on the country’s transition to a pluralist democracy and respect for human rights. In October, the UN General Assembly adopted a resolution—for the 25th consecutive year—calling on the US to end the embargo. Only the US and Israel did not vote in favor, but for the first time, they abstained instead of voting against.

As a member of the UN Human Rights Council from 2006 to 2012 and from 2014 to the present, Cuba has regularly voted to prevent scrutiny of serious human rights abuses around the world—opposing resolutions spotlighting abuses in North Korea, Syria, Iran, and Ukraine. However, Cuba supported a resolution adopted by the council in June 2016, establishing the post of an independent expert to combat violence and discrimination based on sexual orientation and gender identity.

In October, Cuba was re-elected to the Human Rights Council for the 2017-2019 term.

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¿Resurgirá el mercado laboral en Cuba?

Posted on June 17, 2014 by Arch Ritter

Karina Gálvez, La Habana | Junio 16, 2014

Original here: Mercado Laboral, in http://www.14ymedio.com/

El mercado laboral es la dinámica de la oferta y la demanda de fuerza de trabajo. Si la fuerza de trabajo es una mercancía, el salario es su precio y se fija según el comportamiento del mercado. Mientras los trabajadores se esfuerzan en presentar una oferta atractiva para el mercado, los empresarios procuran comprar lo mejor al precio más bajo. En un ambiente competitivo, el trabajador no depende de la bondad de su empleador. Si su trabajo sirve, encontrará varias ofertas. La competencia asegura mayor aproximación a la justicia en el pago de salarios.

Pero la mercancía “fuerza de trabajo” se diferencia de otras. Tiene alma, dignidad y valores, además de necesidad de venderse. Por eso su precio se puede alterar sin lógica alguna. Salarios muy atractivos no logran estimular la violación de principios éticos y pueden realizarse grandes obras sin un pago justo. Es importante crear condiciones, por un lado, para que los ciudadanos puedan elegir un trabajo acorde con su vocación y talento, con salarios justos; y, por otro lado, para que los empresarios puedan escoger los trabajadores en función de las exigencias del puesto. Esto garantiza el buen funcionamiento del mercado del trabajo.

En un ambiente de mercado laboral libre, la nación gana porque la población económicamente activa debe esforzarse para conseguir un empleo, lo que implica esfuerzo por estudiar, por prepararse integralmente, por realizar el trabajo con calidad, por actuar con responsabilidad. En Cuba el Estado ha mantenido el monopolio sobre el empleo y su remuneración. Depender de un solo empleador impide la competencia y facilita la explotación de la fuerza de trabajo.

Ahora, ¿resurgirá el mercado laboral?

Las disposiciones recientemente publicadas otorgan a las empresas facultades para establecer la forma y la cuantía de los salarios, sin límites. No basta pedir un esfuerzo más para aumentar la productividad.

El Congreso de los Trabajadores anunció que no se aumentaría los salarios hasta no aumentar la productividad, pero hay que invertir los términos: no se incrementará la productividad si el salario no se acerca más a los resultados del trabajo. Habrá que competir por plazas en empresas más productivas y lograr buenos resultados para alcanzar mayores ingresos.

Por otra parte, aumenta el nivel de calidad en los negocios por cuenta propia. Mucho han influido las salidas al exterior de productores y consumidores, además del aumento de la competencia. Se contrata a los mejores. Hay que competir por plazas en paladares, zapaterías, cafeterías.

¿Qué lo frena?

En primer lugar, la competencia se desarrollará en la esfera no profesional. Para médicos, maestros, periodistas o ingenieros, las plazas siguen dependiendo de las necesidades del país. Los salarios insuficientes pueden entorpecer el renacimiento del mercado laboral. Si no sube el nivel de vida, no habrá estímulo suficiente para elevar la productividad ni para competir por una plaza.

Además, para los responsables es una nueva experiencia. Puede salir mal. Ellos también deben “luchar” por sus ingresos. Si los trabajadores se sienten víctimas de una mala distribución salarial o de los beneficios, ya sea por mal desempeño de los directivos o por corrupción, no se esforzarán al máximo por aumentar la productividad ni por mantener su empleo. Conjuntamente con estas medidas “liberales” en la empresa estatal, se mantiene la bolsa de empleo para empresas con capital extranjero. ¿Quién determina el salario de los trabajadores en ellas? Según la ley, parece que va a ser mejor trabajar en una empresa estatal que en una mixta.

Finalmente

Depende mucho de nosotros. Nuestra tradición de creatividad ha sido reprimida por la política, pero sigue ahí, latente. Las nuevas medidas, por lo menos, no constituyen un paso atrás en la liberación de las fuerzas productivas de la nación. Confiemos en que las leyes del mercado funcionen por encima de ataduras que hacen inviables la sostenibilidad y la prosperidad de Cuba.

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Bicitaxis, La Habana; foto por Arch Ritter

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Reordenamiento Laboral: Quién se queda, quién se va?; Labor Force Down-Sizing in Cuba’s Medical System

Posted on April 9, 2014 by Arch Ritter

By Archibald Ritter

On April 7, an article in Trabajadores stated that 109,000 workers in the heath sector were to be declared redundant, generating an expected 2 billion pesos in savings in the national budget, ostensibly without damaging the quality of health care services.

The newspaper where the article was published: Trabajadores ;

The original article is  here: Trabajadores, 7 de abril de 2014, Quien se queda, quien se va

This is  an ambitions action. Indeed, it is draconian. It seems to be well beyond the legendary “shock therapies” or “structural adjustment” programs once promoted by the International Monetary Fund that have been criticized vigorously in Cuba and elsewhere in the past.  

Apparently such a down-sizing is necessary due to the over-staffing of the health care system that seems to have built up over the years. This may be the case, as Cuba continued to judge its medical performance partly on numbers of doctors and medical personnel per thousand population and number of hospital beds – quantitative success indicators that probably contributed to an excessive expansion of the system.

However, the personnel of the Ministry of Health already had been cut back significantly from their peak of 335,622  in 2008 falling to 265,617 in 2011.  This was a personnel reduction  of 23.5%, with a 37% reduction of pharmacists, a 10.5% reduction of nurses, and a 45.4% reduction in auxiliary and technical personnel.  Presumably there are many more employees in the medical system not included in the numbers of the Table, people such as custodians, secretaries, receptionists, administrators, drivers, information technologists and tradesmen, but how many of these were employed in the system is not indicated in the ONE Anuario Estadistico.

Were further cuts required after these reductions? Apparently so.

Personal facultativo, Ministerio de SaludIs the Cuban government expecting that the numerous Cuban medical personnel abroad, and mainly in Venezuela will be returning to Cuba so that cut-backs will be necessary in order to accommodate them in the medical system?  Indeed, with Venezuela teetering on the brink of serious conflagration and economic melt-down, it may well be the case that Cuban medical personnel may not be in Venezuela at current levels for much longer. Is this the expectation of the Cuban government?

It is of interest to note that as was the case with the announcement of the 500,000 target for layoffs in the state sector in 2010, , the announcement of the job cuts were published in the workers’ newspaper, Trabajadores, and the person explaining the cut-backs was a certain Rafael Guevara Chacón, an employee of the Central de Trabajadores de Cuba (CTC), the labour federation. Is this how Cuba’s labour movement defends workers’ interests?

It will not be easy determining who is and who is not redundant in the medical system. What will be the criteria for determining the redundancies? Will favoritism or a person’s political record be significant factors?  What will be the job prospects for the medical personnel that are being poured out of the educational system?

Then there is the question of where the displaced workers are to go. Some will retire, but others will have to be absorbed elsewhere in the system.

Is the cuenta-propista or self-employment sector capable of creating an additional 109,000 jobs without further liberalization of the policy environment within which it operates?

Can personnel cut-backs of this amount actually avoid damaging the medical care system?

All in all, implementing labour force cut-backs in the medical system of this magnitude will undoubtedly be a major challenge for the government.

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Maternity Hospital, Avenida G Vedado, in process of reconstruction, 2012-2014; Photo by Archibald Ritter

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Cuban Workers, Strikes & the Socialist State: Workers do not strike in Cuba – or so it seems

Posted on September 26, 2013 by Arch Ritter

Rogelio Manuel Diaz Moreno, Havana Times, September 13, 2013 |

HAVANA TIMES — In the years immediately following the triumph of the Cuban Revolution (in January 1959), the island’s trade union leadership undertook to do away with the strike as a mechanism for asserting worker demands.

The Cuban Workers’ Federation (CTC) was absorbed by the State apparatus, regulated by the government and controlled by the single-party system which came into being at the time. The government assumed the commitment of brining economic and social progress to the country.

The CTC did its part, and did it well. Though it is true the revolutionary government helped the majority of the population living in abject poverty, putting behind their deplorable living conditions, it is also true that it lost its direction somewhere down the road. This, at least, is the view expressed by Raul Castro, who went as far as saying the country had been taken to the edge of a precipice.

Thus, we have arrived at a situation in which working people do not receive enough, in wages, to be able to get by. That is another statement made by Cuba’s president. Lacking an institution that can organize and represent them, Cuban workers have no means of making any kind of labor-related demands.

They look on the CTC as a mere appendage of their company’s management and of State institutions. Union meetings, for them, are basically an occasion to express support for government and Party directives, calling for more work, less earnings, accepting a lay-off without protesting, etc.

Defending worker rights or calls for public protests, which earn one the reputation of being a troublemaker and pave the road to unemployment, is, of course, out of the question. The State / government is free to do whatever it pleases.

¿Or is there another side to this?

A responsible and courageous attitude on behalf of the CTC’s representatives and members, and an attitude of respect from the State, would be a means of channeling tensions and difficulties and of working towards a consensus around the solutions ultimately imposed on us by reality.

All societies have a rebellious lot. Cuban construction workers may not have approached the CTC to express their grievances, but they did, at one point, stage a de facto strike. In the 1990s, Cuba’s construction companies were practically left without employees. The State had no choice but to substantially improve wages, accommodations for employees, food, and other conditions, in order to repopulate the industry with part of the lost labor force.

A similar situation arose in connection with another difficult job, that of maintaining public order. The government had to re-locate police officers from the eastern provinces to Havana en masse, as nearly no one in the capital was willing to do such a thankless job for the low wages the State was offering. Once again, the State, faced with an inexorable need, had to give in and began paying police officers more decorous salaries.

State farms in Cuba’s countryside also witnessed an exodus of workers. Here, the State didn’t respond by raising salaries but by distributing idle lands to those willing to make an honest living with the sweat of their brows. In the long run, workers again had their way.

Of course, these aren’t “strikes” in the strictly theoretical or academic sense of the word. The loss of teachers, qualified health specialists and high-performance athletes, who either change professions or countries, also does not fit nicely into the Marxist paradigm of proletarian struggle. The theft of goods, raw materials, fuels and other products from any workplace that isn’t rigorously monitored fits this paradigm even less.

When those at the bottom perceive that the strongest and less scrupulous of the lot are the ones who come out on top, they do what they can, even if it’s not in the textbook and isn’t exactly heroic. The dominant class, at the top, tightens the screws in response, and the result is a kind of arm wrestling match where the one who can hold out the longest wins.

The Party bureaucracy and its servile underlings still find it hard to accept that working people have rights and value. They squeeze as much as they can out of them in every sphere. They try different strategies to ride out the storm or confuse their opponents, depending on the sector: they mobilize workers through the Food Program, launch intensive teacher training courses, re-locate construction workers, police officers and teachers to other regions and tolerate or encourage the broadcasting of alienating and superficial videos through the mass media.

Unfavorable productivity rates are hidden behind a thick curtain of demagogy and flattering figures are extolled without limits. All the while, workers are required to show their unconditional support for the government if they have any hopes of getting ahead, working abroad or earning a very limited bonus.

A string of tiresome political campaigns – as oppressively dense as they can be thrown together – are used so as to drain people of the energy or will to think about changing the (dysfunctional) way in which things work in the country.

At certain points in time, more material incentives are made available in given jobs and, when a more or less precarious stability is achieved, they are taken away. Where none of this can be put into practice, or where it fails beyond any hope of recovering the sector, or where the government cannot afford to lose the profits to be gained there, they liberalize the sector and make concessions to foreign capital.

The CTC is the most conspicuously absent organization throughout these processes. So much so, that it is evident that Cuba suffers from a degeneration of supposedly grassroots organizations, those which ought to organize and defend the workers.

 

A responsible and courageous attitude on behalf of the CTC’s representatives and members, and an attitude of respect from the State, would be a means of channeling tensions and difficulties and of working towards a consensus around the solutions ultimately imposed on us by reality.

This would pave the way towards a possible raise in worker salaries and the implementation of measures and plans aimed at increasing production, improving services, taking better care of the environment, satisfying community needs and other improvements.

One is more likely to see an apple tree sprout oranges than a privileged class give up its benefits willingly. We probably won’t be able to avoid an intermediate stage of chaos in which the country’s productive structures and services infrastructure are worn down, when hard facts will force many to change their way of thinking.

Those who have stifled, or stood by as others have stifled the ability of Cuban workers to self-manage and organize, bear a heavy burden of responsibility for the incalculable damage to the nation and the people this has brought upon us.

I say this so as not to come off as too much of a radical, and affirm that, since we aspire to build a socialist system, where the means of production are controlled by the workers, what we simply need to do is do away with the country’s bureaucracy in one fell swoop and let the workers manage their workplaces, and the country, as they see fit.

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Prison workers used in many Cuban government enterprises

Posted on May 25, 2012 by Arch Ritter

By Juan O. Tamayo, Miami Herald, Posted on Mon, May. 21, 2012

Combinado del Este

 The Cuban government-owned enterprise Provari is known on the island for making everything from bricks and construction blocks to mattresses, tourist handicrafts and the insecticide Lomaté — I Killed It.

What is less well known is that the vast majority of its workers are prison inmates — what dissidents denounce as “slave laborers” who work with few safety protections and receive meager wages or are not paid at all.

Prison labor in Cuba is extensive yet “like the dark side of the moon, not well known at all,” said Elizardo Sánchez Santa Cruz, head of the Cuban Commission for Human Rights and National Reconciliation.

A Provari business prospectus claimed it had 150 production facilities around the island in 2001. Sánchez said it operates in virtually all of the estimated 200 prisons and labor camps in Cuba.

Prison labor is common around the world. In the United States, prisoners make license plates, government furniture and much more. Florida state prisons require inmates to work unless they are exempt for medical or other reasons. Most earn nothing, and canteen workers, barbers and a few others get only $50 a month.

“There’s no objection in principle to companies managing factories in prisons,” said Andrew Coyle of the International Centre for Prison Studies in London. But inmates should have equal salaries and work conditions. “This should not be forced or slave labor.”

But Cuba is a dictatorship, Sánchez argued, where the communist government can do anything and keep it secret. That includes exploiting inmate workers at will and punishing anyone who complains.

He added that he was specially concerned about the safety conditions in prison factories and singled out the Lomaté insecticide, manufactured in Havana’s Combinado del Este and other prisons around the island.

Farm workers seldom get special clothing to protect them from chemicals, and cane cutters rarely get proper boots to protect their feet from their machetes, said Joel Brito, a former safety expert in the island’s lone labor union, the Cuban Workers’ Central.

The Interior Ministry (MININT) and Ministry of the Armed Forces, which own a large number of manufacturing and construction enterprises, do not report industrial accidents to the National Statistics Office, Brito noted.

“There are no protective measures because there’s always a shortage of money. And if that’s the case in the general economy, imagine what it’s like for prisoners,” added Brito, who now heads a Miami group that monitors labor abuses in Cuba.

Questions about prison labor in Cuba arose recently amid reports that the IKEA furniture chain and an East German firm had hired the Cuban state-owned company EMIAT to use prison labor to manufacture tables and sofas in 1987.

One Cuban business report says EMIAT imports supplies and commercializes products for government-owned companies, including Provari. EMIAT and Provari — Enterprise for Various Products — share a Havana address in some of the reports.

A man who answered the phone at Provari’s Havana office, asked if the company uses prison labor, said, “Yes, the work is by prisoners.” He also confirmed the firm is owned by MININT, which is in charge of prisons, but declined further comment.

A Cuban government radio report on Provari’s work last summer said it was established 20 years earlier “principally with the objective of offering work to prisoners … and integrating them into work useful for society.”

Many prisoners work for the chance at fresh air and perhaps better food, and to avoid having their records marked “refused to work,” which would dash any hope for an early release, said Luis Enrique Ferrer, a dissident who spent eight years in prison.

Authorities allow only common criminals to work, fearing that political prisoners would publicize the work conditions, he added. Ferrer, who did not work in prison, was freed in 2010 and now lives in Miami.

But dissidents and independent journalists in touch with prisoners have published several reports over the years alleging problems at Provari’s prison workshops.

Journalists Jorge Alberto Liriano Linares reported in 2010 that 16 inmates suffered serious accidents at a Provari factory for construction materials at the Kilo 8 prison in eastern Camaguey Province, where he served part of his own13-year sentence.

Inmates in “this killer factory” are forced to work without salary, clothes, shoes or gloves, he wrote for the news service Hablemos Press. They work 10 hours a day and handle toxic chemicals “and because of that they suffer respiratory and skin diseases.”

Brito’s International Group for Corporate Social Responsibility in Cuba reported in 2010 that a factory in Prison 1580 near Havana was forcing inmates to work up to 12 hours a day making construction blocks and seldom paying the promised $10 a month.

Its 2009 annual report included complaints that inmates at the Nieves Morejón prison in Sancti Spiritus were paid a mere $2 per month, and that prisoners in Boniato in eastern Cuba were paid $1 per month — plus a promised bonus that was never paid.

Dissident Felix Reyes reported last year that prisoners at the Canaleta prison in eastern Ciego de Avila had complained that the gloves bought for them by the Provari factory there “were rotted and were missing fingers.”

Independent journalist Dania Virgen Garcia, who has written often about prison conditions, told El Nuevo Herald that she knew of prisoners who worked up to 16 hours a day, six days a week, and were paid nothing.

Sanchez and Ferrer said most of the overall prison labor in Cuba involves agricultural work like weeding fields, harvesting vegetables and picking fruit — some for sale, some for the prisons’ own consumption.

Provari uses the prison labor more for manufacturing, said Sánchez and García. It also has subsidiaries that build roads and government buildings, although it is not clear if they use prison labor.

A report last year in the government’s Guerrillero newspaper noted that the Provari branch in the western province of Pinar del Rio had the equivalent of $200,000 worth of sales in 2010, “mostly for products sold locally rather than export.”

The branch’s production included bleach and muriatic acid, beach chairs, cribs and playpens, clay and concrete construction blocks, paint and paint brushes, plastic tubes and ornamental plants, according to the report.

A large shop in a Havana women’s prison sews jeans for export under several brand names, as well as uniforms for the police and the military, García said. Sánchez said the Boniato prison, where he spent time in the 1990s, makes metal chain link fencing.

Other Cuban news reports noted that a Provari unit in eastern Ciego de Avila made 20,000 plastic molds, and that the enterprise and the Ministry of Construction were to provide the materials for a 2010 campaign to step up home construction.

The company also manufactures the Lomaté insecticide as well as lice and tick killers “and other products “for sanitary hygiene,” and was planning to build a 170-liter solar water heater, according to other media reports.

A business prospectus issued in 2001 listed some of Provari’s activities as carpentry using precious woods as well as textiles sold under the OESTE and HERCULES brands and the upholstery of office furniture sold under the brand name of OFIMAX.

The prospectus also said the enterprise was ready to do business “with foreign and national companies,” though the deal with IKEA appeared to have run into trouble.

The first sofas made for IKEA in 1988 reportedly had “quality problems,” and it was not clear if any part of the deal was ever carried out.

 

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Esteban Morales Domínguez, “FRENTE A LOS RETOS DEL COLOR COMO PARTE DEL DEBATE POR EL SOCIALISMO” and Commentary by Juan Tamayo

Posted on May 13, 2011 by Arch Ritter

In his personal Blog, http://estebanmoralesdominguez.blogspot.com/, Esteban Morales presents an analysis of the place of Afro-Cubans in Cuban society entitled .”FRENTE A LOS RETOS DEL COLOR COMO PARTE DEL DEBATE POR  EL SOCIALISMO.”

Though his position and presentation seem to be well within the confines of acceptable discourse in Cuba, his argumentation is challenging. He calls for open analysis of the race issue at all levels, including the National Assembly and the Party Congress. He advocates “Affirmative Action” to rebalance the historic wrongs and injustices faced by Afro-Cuban citizens.

A.R.

Esteban Morales Domínguez

By Juan O. Tamayo

Black Cubans, already with the worst jobs and lowest salaries, will need “affirmative action” as the government tries to slash its inflated payrolls, a black Havana economist and former Communist Party member wrote Wednesday.

Esteban Morales, 68, made it clear in his lengthy essay that he supports Cuba’s “extraordinarily humanist” revolution and believes it took great pains to outlaw racism and provide equal opportunities for blacks over the past 52 years.

An economist who has written previously on race, he also attacked black Cubans who criticize the revolution as racist, saying they have embraced a U.S. strategy for sparking a “political confrontation” that would change the island’s regime.

In unusually direct language, however, Morales also complains that blacks rank at the bottom of several economic measurements, that Cuban schools do not teach courses on race, and that government socio-economic statistics should be broken down by skin color.

He was “separated” from the Communist Party last year for a similarly harsh essay in which he warned that a burgeoning string of corruption scandals was a bigger threat to the country’s stability than “the counterrevolution.”

Morales’ latest essay essentially argues that questions about race must be a priority for the Raul Castro government as it tries to fix the stagnant economy by slashing state spending – on jobs and subsidies — and allowing more private enterprise.

Blacks and mestizos “have always historically been the least qualified, the most disadvantaged in the workplace, with the worst jobs, the lowest salaries and the lowest retirement benefits,” Morales wrote in his 4,311-word essay, published in his eponymous blog.

Castro himself spoke of the need to increase the number of blacks and women in leadership positions during a speech last month to a Communist Party congress last month. The 2002 census shows 65 percent of Cubans identify themselves as white, and 35 percent as black or mestizo.

Morales went well beyond that, noting that fewer blacks than whites have relatives abroad who can send them cash remittances. He added that black Cubans in Florida also earn less – and therefore can send less to the island – because of U.S. racism.

Blacks and mestizos on the island also have a harder time finding well-paying jobs and tend to “take refuge … in illegal activities, prostitution and pimping, the illegal re-sale of products,” he noted. They make up 57 percent of the prison population, he added.

Morales’ essay notes that Cuba faces many challenges in race relations but adds that he would focus only on four, — starting with the need to create an array of school courses on modern-day racism.

“How is it possible that in a multicolor nation like Cuba … there’s no scientific treatment of those problems” he wrote . University-level education is “especially plagued by prejudices on the racial issue, weak institutional attention to it, ignorance and even fear of studying it.”

Cuba’s National Statistics Office (ONE) should include racial breakdowns when it reports economic and social data such as unemployment, salaries, housing conditions, education levels and life expectancy, Morales noted in his second challenge.

In his third, he urged Cubans to demand equal racial representation in all fields, and in his last he urged Cuba to embrace “the so-called affirmative action” as a way “to balance out the different historical points of departure for the racial groups that today make up our society.”

Cuban government officials have long cringed at the possibility of using affirmative action on the island, arguing that it would explicity admit that the revolution had failed to eradicate race-based discrimination.

Morales’ harshest criticism went to Carlos Moore, a black exile who has attacked Cuba’s leadership as almost exclusively white and argued that blacks were denied the most visible jobs when Cuba opened its doors to foreign tourism in the 1990s.

Morales alleged that some of Moore’s publications were financed by groups that received CIA money. Moore, a black rights activist now living and teaching at a university in Brazil, could not be reached immediately for comment.

Read more: http://www.miamiherald.com/2011/05/12/2213836/black-economist-says-cuba-needs.html#ixzz1MFkcZZ00

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An Overview Evaluation of Economic Policy in Cuba circa 2010

Posted on March 15, 2011 by Arch Ritter

By Arch Ritter

The essay attached and summarized briefly here was presented at a conference at CIAPA, in San Jose, Costa Rica, February 3 and 4, 2009 organized by Paolo Spadonu of Tulane University.

The full essay is entitled An Overview Evaluation of Economic Policy in Cuba, circa 2010, June 30, 2010 and can be seen “HERE”. The Introduction and Conclusion are presented below.

Hopefully, this evaluation will change considerably for the better after the Sixth Congress of the Communist party of Cuba in April.

I. Introduction

The economic development of Cuba has been characterized by high levels of investment in people with successful results, but with weak performance in terms of the production of goods and services generally. Cuba’s achievements regarding human development are well known and are epitomized by the United Nations Development Program’s “Human Development Index” (HDI). On the one hand, this index ranks Cuba at #1 in the world for the Education component (somewhat surprisingly) and #31for the Life Expectancy component. On the other hand, Cuba’s world ranking is for GDP per capita in purchasing power parity terms is #94 with an overall world HDI ranking of #51(UNDP, HDR, 2009, 271.) These rankings underline the inconsistency between the Cuba’s high level of human development on the one hand and its economic underperformance on the other. The strong economic performance of the 2004 to 2008 period appeared to constitute a rapid recovery in terms of Cuban GDP statistics. However, this recovery, while perhaps not illusory, was fragile and unsustainable, based on factors such as support from Venezuela and high nickel export prices, and indeed it has been reversed in 2009-2010.

Given the quality of Cuba’s human resources, the economic performance for the last 15 years should have been excellent. The central argument of this essay is that Cuba’s weak economic performance has been the result of counter-productive public policy. The objective of this essay is to analyze and evaluate a number of central policy areas that shape Cuba’s economic performance, including monetary and exchange rate policy, policy towards micro-enterprise; agricultural policy, labor policy, foreign investment policy, policies towards infrastructure renewal, and the policy approach to self-correction and self-renewal.

In order to present a brief overview of the evaluations, an academic style of grading is employed, with an “A+” being excellent through to an “F” representing “failure”.

This evaluation schema is of course subjective, impressionistic and suggestive rather than rigorous. It is based on brief analyses of the various policy areas. However, the schema is similar to the scoring systems widely used in academia, and is used here with no more apology than is normally the case in the academic world.

Before proceeding with the policy analysis and evaluation, a brief overview of economic performance in the decade of the 2000s is presented to provide the context for the examinations of economic policy.

II. General Economic Performance

III.  Evaluation of Some Central Policy Areas

IV.   Summary and Conclusion:

A summary of the evaluations of the various assessment areas yields an overall evaluation of   “D +”. This is not a strong assessment of Cuban economic policies.

1. Monetary & Exchange Rate Policy                  C-

2. Micro-Enterprise Policy                                    F

3. Policy towards Agriculture                              C-

4. Labor Policy                                                        D+

5. Foreign Investment Policy D+

6. Infrastructure Renewal                                   D

7. Capacity for Self Correction                            D

Overall Grade: D +

The result of such weak policies in these areas is weak economic performance. Badly conceived economic policies nullify the potential efforts of the Cuban citizenry. The major investments in human capital, while fine in their own right, are not yielding strong economic performance. Indeed, misguided policies are undermining, sabotaging and wasting the economic energies and initiatives of Cuba’s citizens.

Major policy reforms amounting to a strategic reorientation of Cuban economic management are likely necessary to achieve a sustained economic recovery and future economic trajectory. So far, writing in June 2010, the Government of Raul Castro has made some modest moves, principally in agriculture, as mentioned earlier. Other policy areas such as those relating to micro-enterprise are reported to be under discussion at high levels in the government. On the other hand, the replacement of the reputed pragmatists Carlos Lage, (Secretary of the Council of Ministers) and Jose Luis Rodriguez, (Vice President of the Council of Ministers and Minister of Economy and Planning) and the replacement of Lage by Major General José Amado Ricardo Guerra of the Armed Forces seems to suggest that the Raul Castro Government may be moving towards a less reformist approach to economic management ( Granma International, 2009.)

The types of policy reforms that would be necessary to strengthen the policy areas discussed above would include the following:

  1. Monetary & Exchange Rate Policy: movement towards realistic and unified monetary and exchange rate systems;
  2. Micro-Enterprise Policy: establishment of an enabling and supportive policy environment rather than a punitive policy of containment;
  3. Policy towards Agriculture: further support for small-scale farmers plus a reinvigoration of the abandoned sugar fields with cane for ethanol, among other policies;
  4. Labor Policy: implement the International Labour Organization approach to fundamental labor rights;
  5. Foreign Investment Policy: establish a clearer and more unequivocal rules-based policy framework;
  6. Infrastructure Renewal: strengthening resource flows towards maintenance, especially for housing, water, and sanitation, and facilitating self-managed and do-it-yourself maintenance on the housing stock by liberalizing the trades and making repair supplies available at reasonable cost;
  7. Capacity for Self Correction: permit an authentic implementation of freedom of expression and freedom of association thereby permitting economic analysis and criticism through a free press and media and the formation of alternate “teams” of potential economic managers – some within political parties.

In sum, effective economic management requires new ideas, transparency and criticism, and, indeed, a major policy reform process in order to reverse the current wastage of human energies, talents and resources. Policy reorientations in the directions noted above are unlikely to be forthcoming from the Government of Raul Castro, which appears to be deeply conservative as well as “gerontocratic”. Cuba will likely have to wait for a “New Team” or more likely a “generational change” in its overall economic management before such major reforms can be implemented.


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Cuba’s Standings in Social, Political, Economic and Environmental Indices in Comparative International Perspective

Posted on February 3, 2011 by Arch Ritter

By Arch Ritter

In the last week of January 2011, the Heritage Foundation (HF), a conservative US “Think Tank”. published its 2011 Report on Economic Freedom. No surprise: Cuba ranks #175 of the 177 countries included in that report, ahead only of North Korea and Zimbabwe.

The concept or definition used for “Economic Freedom” is:

“Economic freedom is the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state. In economically free societies, governments allow labor, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.”

The components of economic freedom in the Heritage Foundation’s definition include business freedom, trade freedom; fiscal freedom, government spending, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption, and labor freedom.

What the HF definition misses is the capability to utilize one’s freedom, such as good health, a useful education, and a reasonable income. Presumably the HF types of freedom are more effective when people live longer, have good health so that they can work and appreciate life, and are not mired in poverty. Cuba would score better if life expectancy, health, education and income distributional measures were included in the concept and the index.

Other Measures of Human Achievement or Performance

The HF’s Economic Freedom Index brought to mind some other measures of social, economic, environmental and political performance. A listing of these and Cuba’s place therein is presented in Table 1 and hyperlinks to some basic definitions and methodological sources are summarized in the next section.

Again, it is no surprise that Cuba fares badly on the political and economic freedom rankings, coming at the very bottom in Latin America on the “democracy” and “freedom of the press” rankings.

Cuba’s high ranking for the EIU Political Instability Index – second only to Costa Rica- is unexpected. Cuba would have scored well on “ethnic fragmentation”, labor unrest (no strikes, collective bargaining or independent unions), economic growth in 2009, income inequality (as officially measured), unemployment (at least the official rate) and “status of minorities”.

Cuba’s standing in the “corruption perceptions” listing does not seem unreasonable.

Cuba’s high standing in the Environmental Performance rankings – again second only to Costa Rica-  will be a surprise to those who have spent time inhaling the exhaust of urban traffic in Havana or observing the fumes of the Havana’s thermal electric plant, pictured below.  Indeed, a close study of the Yale-Columbia-World Economic Forum calculations for Cuba would be worthwhile. One suspects some statistical creativity such as has been employed in the area of basic economic measures such as GDP, unemployment and the Consumer price Index.

Data Sources and Methodology

The full sources of the information are hyperlinked below. The methodologies can also be found at these web sites.

UNDP Measures

1, 2, 3, and 4: Human Development Index 2009, HDR 2009 Statistical Tables

Democracy Measures

5.      The Economist Intelligence Unit’s Index of Democracy 2010,  This index is based on electoral process and pluralism; civil liberties; the functioning of government; political participation; and political culture.

6.      The Economist Intelligence Unit’s “Political Instability Index”. This measure is based on   I. Underlying vulnerability: 1.Inequality Measured by Gini coefficient; 2.State history; 3.Corruption; 4.Ethnic fragmentation; 5.Trust in institutions; 6. Status of minorities; 7.History of political instability; 8.Proclivity to labor unrest; 9.Level of social provision; 10.A country’s neighborhood; 11.Regime type; 12.Regime type and factionalism and II. Economic distress: 1.Growth in incomes Growth in real GDP per head in 2009; 2.Unemployment; 3.Level of income per head

7.      Freedom House, Freedom of the Press index an annual survey of media independence in 195 countries and territories. “The index asesses the degree of print, broadcast, and internet freedom in every country in the world, provides numerical rankings and rates each country’s media as “Free,” “Partly Free,” or “Not Free.””  Freedom House, Freedom of the Press, 2010

8. Press Freedom Index 2010, Reporters Without Borders

9. Freedom House, Freedom in the World, 2010, Tables and Graphs measures freedom according to political rights and civil liberties.

(See also Wikipedia’s list of freedom indices.)

10. The 2010 ENVIRONMENTAL PERFORMANCE INDEX, of the Yale Center for Environmental Law & Policy, Yale University and Center for International Earth Science Information Network, Columbia University and the World Economic Forum. This measure includes some 25 indicators in 10 categories including Environmental Health. Air Pollution (effects on humans), Water (effects on humans), Air Pollution (effects on ecosystems), Water (effects on ecosystems), Biodiversity and Habitat, Forestry, Fisheries, Agriculture and Climate Change

11. “Index of Economic Freedom” The Heritage Foundation. (See discussion above.)

12. Transparency International. Corruption Perceptions Index Report, 2010

Havana Thermal-Electric Plant, from Edificio Fochsa, Hotel Capri on the left, 1997, Photo by Arch Ritter

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Micro-enterprise Tax Reform, 2010: The Right Direction but Still Onerous and Stultifying

Posted on January 10, 2011 by Arch Ritter

By Arch Ritter

As part of the policy reforms designed to absorb almost 1.2 million redundant state sector workers into the private sector, the Government of Cuba has modified the micro-enterprise tax regimen. Some of the modifications were positive in the sense that they will reduce the heavy tax burden on self-employment. However, the changes are modest, and the tax system will continue to limit job-creation and the expansion of micro-enterprise.

Bicitaxis, Central Havana

I. The New Tax Regime

The new taxation system, presented in the Gaceta Oficial, número 11, and Gaceta Oficial, número 12 on October 1 and 8, 2010, has five components:

1.      Sales Tax on Goods

2.      Tax on Hiring of Workers

3.      Income Tax

4.      Surtax on Services

5.      Social Security or Social insurance Payments

Taxes generally will now be payable in Moneda Nacional or “old” pesos. For purposes of tax payment, taxes owing in convertible pesos (CUCs) are to be exchanged into Moneda Nacional at the going quasi-official rate (around 22 to 26 “old” pesos per convertible peso, over the 2001-2010 period). There is a special regimen for bed-and-breakfast operations that is not considered here.

1. Sales Tax

This is a 10% tax levied on the value of sales of goods and payable by all micro-enterprises that do not qualify for the Simplified Tax Regime (See 3. below.)  While this tax in principle is reasonable and is used in most countries, the administrative cost of monitoring the value of sales and collecting the tax for the many of the smaller self-employed activities will be high.

2. Tax on the “Utilization of Labor”

This tax on the hiring of employees is set at “25% of 150%” (that is, 37.5%) of the average national wage which was 429 pesos per month in 2009 (ONE, AEC Table 7.4). The tax would thus be about 161pesos per month per employee or 1,932 pesos per year.

A “Minimum” requirement for the hiring of employees for tax determination purposes is set at two employees for paladares and one for other food vendors and a few other activities. There appears to be no exception or adjustment of the tax for part-time employees.

(Note that some 74 self-employment activities are prohibited from hiring employees and another 7 can hire one employee only.)

3. The Income Tax

There are two tax income regimes, a simplified regime for lesser self-employment activities and a more complex regime for larger activities.

The Simplified Tax Regime applies to some 91 activities. In place of the income tax, sales tax, tax on public services, they instead pay a consolidated tax, constituted by the monthly licensing fee which ranges from 40 to 150 pesos per month, payable in the first ten days of each month. (It is unclear whether overpayments would be refunded – they were not under the previous system.)

Other enterprises fall under the general tax regime, and pay all of the individual taxes discussed here. These activities pay the up-front monthly tax/license ranging from 40 to 700 pesos per month.

For the determination of the tax payment, the “tax base” is defined as total revenue less a fixed amount for deductible expenses. The maximum amounts allowed for deductible expenses range from 10% for 10 activities, 20% for room rental operations, 25% for 40 activities, 30% for 10 activities and 40% for 6 food and transport activities. (Bed and breakfast operations have their own specific regimen.)

The income tax rates rise progressively from 0% for the first 5,000 pesos, through 25% for additional income between 5,000 and 10,000, 30% for income increments from 10,000 to 20,000, 30% for 20,000 to 30,000, 40% for 30,000 to 50,000 and 50% for additional income exceeding 50,000.00 pesos. This rate is high but not unreasonable in international comparison.

4. Sales Tax on Services

A 10% additional sales tax is levied on services provided by micro-enterprise. Those enterprises qualifying for the Simplified Tax Regime are exempt from this tax.

5. Social Security Payments

These payments are destined ultimately for old age support, maternity leave, disability and death in the family. They are determined according to a scale that the self-employed worker selects, and may range from 25% of 350 to 2000 pesos per month depending on the choice of the self-employed person. This is a social insurance scheme though the payments are similar to taxes.

II. Evaluation of New Tax Arrangement

This new tax regime represents a minor improvement over the previous regime. The main improvement is that it permits the deduction as costs of production of more than a maximum of 10% of total revenues as was the case previously. This is a reasonable adjustment to the tax base as most of the self-employed activities generate costs that are higher than the maximum allowable 10% of total revenues.  This is especially beneficial for activities such as gastronomic, transport and handy-craft or artisan activities for which input costs are far beyond 10% of total revenues.

The progressive structuring of the income tax regime is reasonable though stiff.

However there are a number of flaws in the taxation regimen which will continue to stunt the development of small enterprise and will prevent the absorption of the redundant workers being displaced from the public sector.

1. The Blocking of Job-Creation

First, the tax on employment is problematic as it adds to the employer’s cost of hiring a worker. The obvious impact of this tax will be to limit hiring and job creation. Or employment will be “under the table”, unrecorded, and out of sight of officialdom.

2. Onerous Overall Tax Levels

The overall tax level is punitive. The sum of the income tax, employee hiring tax, and public service surtax is high- and as noted below can help create effective tax rates exceeding 100%, as is explained on Section III. This will continue to promote non-compliance. It will discourage underground enterprises from becoming legal. The establishment of new enterprises will be discouraged.

3. Erroneous and Unrealistic Base for the Income Tax

The most serious shortcoming of the income tax regime involves the tax base which is not “net revenues” after the deduction of input costs, but an arbitrary proportion of total revenues.

The tax regime limits the maximum for input costs deductible from total revenues to 10 to 40% depending on the type of enterprise involved. When the actual micro-enterprise input costs exceed the maximum allowable, the tax rate on true net income can become very high. In the example below, the effective tax rate (defined as the taxes payable as a percentage of true net income) can exceed 100%. Obviously this would kill the enterprise and promote cheating and non-compliance. It will discourage underground economic activities from becoming legal and block the establishment of new enterprises.

4. Continued Discrimination versus Cuban Enterprise in Favor of Foreign Enterprise

The minor reforms of the micro-enterprise tax regime do relatively little to reduce the fiscal discrimination favoring foreign enterprise. (See Table 1.) The main difference is the determination of the effective tax base which is total revenues minus costs of production for foreign firms but for micro-enterprise is gross revenue minus an arbitrary and limited allowable level of input costs. The result of this is that the effective tax rates for foreign enterprises are reasonable but can be unreasonable for Cuban microenterprises. For Cuban micro-enterprises, the effective tax rate could reach and exceed 100%.

Moreover, investment costs are deductible from future income streams for foreign firms this being the normal international convention. But on the other hand, for Cuban micro-enterprise, investment costs are deductible only within the 10 to 40% allowable cost deduction levels.

III. Example: Three Taxation Cases for a Paladar or Restaurant

To illustrate the character of the tax regime, a case of a “Paladar” is examined below. It is assumed that the total revenues or gross earnings of the Paladar are 100,000 pesos per year (Row 1) or a modest 280 CUP or about $US 10.50 per day.

It is imagined then that there are three costs of production cases: Case A, B and C where costs of production are 40%, 60 and 80% of total revenues respectively. A situation where input costs for a Paladar are 80% of total revenues is reasonable, given the required purchases of food, labor, capital expenses, rent, public utilities etc. On the other hand, the 40% maximum is unreasonably low.

The differing true input cost situations (Rows 2 and 3) generate different true net income (Row 6). The tax base however is determined by the legal maximum allowable of 40,000 (Row 4 and 5) and is 60,000 pesos in all three cases (Row 7). The income tax payable is determined by the progressively cascading scale noted above and is 19,750 in all three cases (Row 8, based on calculations not shown here). The tax on hiring the legal minimum two employees is 25% of 150% (that is, 37.5%) of the average national wage which was 429 pesos per month or 161 pesos for 12 months for two employees = 3,864 pesos per year (Row 9). A guess for the surtax on use of public services is 1,200 pesos per year (Row 10). The total taxes then are the sum of Rows 8 t0 10 and are 26,614 per year (Row 11).

The effective tax rate is then calculated as Tax Payment as a percentage of Actual Net Income (Row 11 divided by Row 6). For the third case where true costs of production are 80% of total revenues, the effective tax rate turns out to be well over 100% (124.1%). This is due to fixing the maximum allowable for costs in determining taxable income at an unrealistic 40% while the true costs of production were 80% of total revenues.

The chief result of this example is that effective tax rates can be much higher than the nominal tax rates for all the activities where true input costs exceed the defined maximum. In some cases, taxes owed could easily exceed authentic net income – assuming full tax compliance.  This situation likely occurs for all activities not covered by the simplified tax regime.

Such high effective rates of taxation of course could destroy the relevant microenterprise, and block the emergence of new enterprises. While under the previous policy environment for microenterprise, this was perhaps the objective of policy. However, the objective of the new policy environment is to foster and enable micro-enterprise and to create jobs.

IV. Conclusion

Can the Micro-enterprise sector generate about 500,000 new jobs by April 2011 and 1.2 million in the next year? On the positive side, there have been some measures of a non-tax nature (e.g. the stigmatization has been relaxed, licensing has been liberalized; there has been a minor increase in legal activities; prohibitions and regulations have been eased somewhat; and improved access to inputs will likely be possible.) But on the negative side, a narrow definition of legal activities will limit enterprise and job creation; the prohibition of professional activities remains; restrictions and prohibitions on hiring workers remain; and restrictions and prohibitions remain.

The timid revisions of the tax regimen will not facilitate job creation in the microenterprise sector.

  • The high level of taxes generally will limit enterprise creation and legalization.
  • The underground economy will continue to be encouraged.
  • The tax on the hiring of employees will discourage the absorption of labor into microenterprise activity.
  • Microenterprises will remain stunted by the high effective tax rates that are incurred when costs of production exceed the minimum deductible for tax determination purposes.
  • The tax discrimination favoring foreign firms in joint ventures continues.

In order for the micro-enterprise sector is to expand so as to absorb the 1.2 million redundant public sector workers in the process of being fired, further reform of the tax system is necessary.

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