Cuba Grapples with New Payment Scheme

Cuban workers stopping for a cool fresh sugarcane juice.  Photo: Caridad
Cuban workers stopping for a cool fresh sugarcane juice. Photo: Caridad

HAVANA TIMES, August 18 (IPS) – The reorganization of the procedures and systems of payment contained in legislation adopted last year in Cuba has unleashed numerous controversies in the hallways of Cuban workplaces and in union meetings.

At one of the jobsites of a construction crew in Havana, the back-to-work bell at the end of lunch came late, maybe more so than usual.  Forming carpenter Ismael Bastardo, with hammer in hand, was taking nails out of wood so as to “use them again on whatever,” he told Bohemia magazine.

The workers had been there since 7:00 a.m., but “the Service Engineers Company, which is the group that supplies us, supposedly comes at 9:00.  And right now, look how long lunch has been over and they still haven’t come,” Bastardo complained.

Electrician Gilberto Montero is a member of the same construction crew, which is eligible for the new form of payment whereby a line worker’s wages are not restricted; instead, they depend solely on the amount of quality work done.  However, he commented, “What affects us are the issues of supplies and other problems like inappropriate protection equipment and transportation.”

In a study carried out by Bohemia, the head of the slaughter house crew of a Sancti Spíritus meat company pointed out that although the new salary system is still under study by the management there, “They haven’t discussed it with the workers.”

More Complicated Than It Sounds

Foreman Carlos Acosta indicated that the greatest obstacle is an assured supply of animals for slaughter.  “On one day 450 pigs are delivered, but on another day they might only send 180,” he said.  To institute a system of progressive pay based on piecework, the daily supply must be guaranteed.

The new regulation on procedures and payment systems (known as Resolution 9 of 2008), issued last year by the minister of Labor and Social Security, introduced new elements to the output-based payment system.

According to the Cuban press, the objective of this legislation is to balance the salary policy between companies in which the Managerial Improvement System is applied – aiming for greater efficiency – and those companies that are not formally included in this process.

Deputy Minister Carlos Mateu indicated that the resolution requires eligible companies to have as many systems of payment for output as there are different activities of that firm; that is to say, in accordance with the nature of the work that the employee carries out.

This includes payment by piecework, either by direct indicators specific to production and services, or by general indicators and rates of efficiency.

For many years, the tendency was to maintain the output-based payment system on the basis of a general indicator, sales or revenues.  The worker, be they an operative or a director, received pay for the execution or over fulfillment of these measures, Mateu explained.

“Someone who works in an area that produces a certain article will get paid for the production or over fulfillment of that product,” he specified.  “If they provide a service, they get paid for the quality of that service.  Concerning management personnel,” he elaborated, “their pay is linked to certain general or specific indicators but not to direct parameters.”

The resolution states that “workers who are covered by payment systems linked to the direct results of the production of goods and services are not limited in what their wages can yield for over fulfillment of established indicators anticipated in the payment system.”  These will be honored as long as they do not negatively impact on other indicators of planned efficiency incorporated in the salary system.

Differing Conditions

Lazaro Gonzalez, a tenured professor at the University of Havana, said the salary system “demands changes in labor policy” due to the following current conditions that cannot remain outside any analysis:

– The disappearance of the socialist camp and disintegration of the USSR

– The tightening of the economic embargo by the United States

– The economic, food and climatic crises

– The fall of the level and quality of life of people

– A higher educational and cultural level

– Influences of tourism and Cubans overseas

– The existence of joint venture companies and foreign representatives

– The promotion of consumerism on the part of the United States

– The development of communications over the Internet

– A double currency and family remittances from abroad

– Payments in Cuban Convertible Pesos (CUCs) in some sectors

– Other models of the construction of socialism

– The decline in values among the population

– Excessive prohibitions and proliferation of bureaucracy

Identifying more general and significant characteristics of the economic situation among important groups of workers, Professor Gonzalez lists the following challenges: low efficiency, poor levels of productivity, low capacity utilization, waste, and deficiencies in the quality of products, a decline in ethical-moral values, irresponsibility, illegal activities, theft, and corruption.

He underlined the special problem of the insufficient realization of workers when they are treated like merchandise and do not have a sense of ownership… when there is no real participation.  “They see the company as being something alien, something external to the worker,” commented Gonzalez.

Bureaucracy and Centralization

The scholar pointed out in his study that “every day there are more central regulations, rules, procedures and reports; more prohibitions and, therefore, less participation from below.”

Cuban workers celebrating on May 1, 2009 – Photo: Elio Delgado
Cuban workers celebrating on May 1, 2009 – Photo: Elio Delgado

Gonzalez stressed that “participation is not solely one’s being informed, it is not just giving your opinions – these are often lost in the void.  Participation, more than anything, is to take part in making the decisions that are adopted.  We have not been able to formulate the design of a labor policy that integrates all aspects of participation.  This must be based on the existing reality and making projections to achieve short, medium and long term objectives on technical and consensual bases,” he said.

“The decisions of this period have been scattered, stopgap and in no way participative.  It is necessary to succeed at the worker being satisfied in and with the work they perform,” he indicated.  In his opinion, “Over this past decade, growth in productivity has not been very significant, the median wage has seen greater increases, but a better use of the work day has not been achieved; discipline is faulty and fluctuations in performance is widening.”

“There is a proliferation of regulations, instructions, memos, verbal orientations – often concern the same issue, on occasions contradictory, issued by the agency’s management and supplemented by the central organizations of the State, unions, inspectors, etc.  These are used in a changing process together with statistics and reports, plus constant inspections carried out by under-qualified and dogmatic personal.  All of this is what impedes the actual work that should be carried out by companies in this field,” the professor underlined.

“In terms of the organization of work – which is the fundamental factor for the increase in productivity and the true basis of the system of the orientation of people in the labor process -nothing has been done.  Antiquated norms, exaggerated plans, the lack of specialized technicians, the nonexistence of a methodological base, undefined content and scope, among other weakness, are the situations that characterize it,” he remarked.

Gonzalez believes that “it is impossible to understand how in a country where technicians are trained in all types of specialties and where work is the basis of the society, there does not exist institutes for mid-level technicians and university degrees labor studies.  At this time we do not have the quantity of technicians needed, and those that do exist, lack the knowledge necessary to confront the tasks that we face at this time.”

Technical training and economic needs

According to the professor, there is no relationship between the training of mid-level technicians and university professionals with the sectoral and local demand of the country.

Gonzalez commented that, when analyzing this problem, President Raul Castro pointed out in a speech on July 11, 2008:

“The slots that are granted to educational centers must be proportional to the future needs and possibilities of employment in each specific place…  They also must be filled by people who are truly interested in putting that knowledge into practice… There are people who graduate from one program and three months later they’re enrolled in another one – and that costs.  There are also those who go to one place and enroll in a technology program and later find a way to end up in another field.

However, according to data from the National Statistics Office, between 1998 and 2006 occupied educational slots grew by 29.7 percent.  However, if those sectors that received the employees are observed, marked variance appears between the specialties of the graduates and the degree to which the country’s economic needs are addressed.

– Agricultural and livestock sector (one percent)

– Mining (52 percent)

– Manufacturing Industries (9.3 percent)

– Construction (8 percent)

– Finance (85 percent)

– Community and social services (70 percent)

– Commerce (37.4 percent)

– Electricity (46 percent)

– Transportation and communications (44.5 percent)

“It is impossible to advance without modifying this situation,” the Cuban academic affirmed, noting President Raul Castro’s emphasis on “turning toward the land,” when mentioning the need for greater agricultural production.  This would allow the country to reduce expenses on the import of foods at a time when much of the island’s land remains idle and food prices on the international market have risen markedly.

The reorganization in the forms and systems of payment expressed in Resolution 9/08 would benefit those who work in agriculture, because they would achieve a balance with that being produced, although producers sometimes confront deficiencies in assuring the availability of equipment and supplies needed to perform their jobs, such as machetes, seeds, gloves and other farm tools that are indispensable for working the land.

Alfredo Vazquez, head the Department of Economic Affairs of the Cuban Workers Federation (CTC), said, “If a company cannot produce on a piecework basis because there are no raw materials, the conditions do not exist for any other type of output-based payment system.”  In this case, the plan would be deficient because it would be paying “for a financial economy and not for a real economy.”

These problems once again confirm the urgency of perfecting the planning and organization of labor in Cuba, said Vazquez.

A Havana Times translation of the original article published in Spanish by IPS.


One thought on “Cuba Grapples with New Payment Scheme

  • I’m no economist; but I am a life-long communist with a deep experience of lifetime under capitalism. & therefore I well-understand the incredible wastefulness of actual capitalist methods, whatever the propaganda line they put out about their so-called ‘market efficiency’. Don’t feel intimidated by it at all: because they are phony, murderous liars, OK? Just try to solve your own problems using socialist methods — whatever those turn out to be. Money should not be the (sole) means by which you organize & control people.

    But certainly: managers who do not consult workers are being anti-socialist. In fact all managers should simply be elected workers: who can be fired at will by a vote-call, if they don’t perform satisfactorily. There is clearly a real democratic deficit in Cuba that simply must be immediately addressed, whatever those comfortable with past stalinist practice happen to think about it. Good for your website to keep revealing this to us.

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