Reform in the Cuban public sector
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As the only socialist country in the Western hemisphere, Cuba adheres to the Soviet model in organizing its state-controlled economy. The means of production are owned and run by the government. According to government statistics, there are more than 5 million people in the labor force – and almost of all of the labor force is employed by the state or cooperatives closely connected with the state. The private sector is not only small but also tightly controlled and regulated.
In 1993 the government legalized self-employment in 150 occupations for workers laid off in the economic crisis brought on by the loss of Soviet subsidies. From 2003 to 2007, the Cuban government stopped expanding private sector activities and has tried to push the private sectors that were created out of business.
With serious economic difficulty in 2010, the Cuban government restarted its policy to reduce the size of the public sector and created opportunities for small businesses, as well as open more opportunities for self-employed workers. In April last year, President Raul Castro said that there are more than 1 million "excess" workers on the state payroll, which generated low productivity and inefficiency. To deal with these problems, the government announced that half a million state workers would be laid off from September 2010 to the first quarter of this year. These measures show economic change is gathering speed.
To absorb all the workers who are laid off, the government expects that hundreds of thousands will move into some form of private enterprise over the next few years. The government has granted new licenses to entrepreneurs, vastly expanding the kinds of businesses that can be run privately. The government has also loosened restrictions on private sector employment and expanded the scope of the cooperative sector. In October last year, it published new rules regulating the self-employment sector. This included increasing the number of activities authorized to 178 in the self-employment sectors, opening the door for self-employed workers to hire labor, and introducing a new tax scheme to include taxes on sales, profit, payroll and social security.
The openings in the private sector are welcomed by many Cubans who are hoping for new opportunities. Cuba is now in the process of massively reducing the size and participation of the public sector. The most recent data released by the Ministry of Labor and Social Security indicates that 221,839 new licenses have been awarded between October 2010 and April 2011. In less than a year since the initial announcement was made, 309,728 people have taken up self-employment.
The growth of self-employed Cubans not only marks a major shift toward a larger private sector in the socialist economy, but could lead to great changes in traditional Cuban economic and social philosophies if the government follows through on the full scale of its announcement.
The author is the director of the Center for Latin American Studies at Nankai University.
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn
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