Cash-strapped Cuba moves ahead with job cuts

HAVANA, (Reuters) – Cuba began the process of laying  off thousands of workers yesterday, according to a top union  official, as one of President Raul Castro’s central reforms to  the communist island’s economy picked up steam.

It was not clear if dismissal of the state employees had  begun immediately or if several ministries were starting to  decide who should go. The government has said it plans to cut  500,000 workers from its bloated payrolls by March.

“It is up to us to be the guarantors of the labor  restructuring, which will begin (on Tuesday),” said the head of  the Cuban Workers Federation, Salvador Valdes Mesa, according  to state-run Radio Rebelde.

He said the union would oversee the layoffs, initially  targeting workers at the Sugar, Agriculture, Construction,  Public Health and Tourism ministries, to assure they are  conducted without “violations, paternalism, favoritism and any  other negative tendency.”

The job cuts are part of Castro’s overhaul of Cuban  communism aimed at ending the Caribbean island’s chronic  economic problems.

Cuba, hit hard by 2008 hurricanes and the global financial  crisis, is short of cash and has had to slash imports, freeze  local bank accounts of foreign businesses and default on  payments to creditors in the past two years.

Castro wants to reduce the state’s role while maintaining  control of an economy that will have a bigger private sector  and less state spending.

In most cases, laid off workers will be offered other jobs,  which they can accept or turn down.

Plans call for about 200,000 of the laid-off workers to  shift to employee-run cooperatives converted from businesses  currently operated by the state.

The government also has begun issuing 250,000 new licenses  for self-employment. For the first time, the self-employed will  be allowed to hire workers.

Cubans receive social benefits such as free healthcare and  education, but earn on average the equivalent of about $20 a  month. A second round of cuts will be conducted later, with at  least 500,000 more workers slated to be removed from state  payrolls over the next few years.

The union must “convince (workers) of the need for these  measures for the country’s economy, with the security that  ultimately no one will be left unprotected,” Valdes said.

Officials have said the government began cutting jobs as  early as October, shortly after Castro announced his reform  package.

It was rumoured, but not confirmed, that layoffs were  postponed for a time while the self-employment licensing  program was being set up because the government was wary of  creating too much social dislocation.

Workers at the Agriculture and Sugar ministries said on  Tuesday they had been told meetings about the layoffs would  begin this week.

The government has said ministry and labor functionaries  will determine which workers are worth keeping, based on their  productivity.

“We know that if there’s no productivity, there’s never  going to be a raise in salaries. So it’s a necessary measure  that has to be understood,” said Mayda Vega, an office manager  in the Agriculture Ministry.

“I imagine it will be a gradual process and not traumatic,”  she said.