A festival of new terms in the official discourse: wealth generation, layoffs, free wages, red tape
HAVANA TIMES – The Cubans who tuned in to state television last night to watch the Roundtable program were able to listen to a revision of all the socialist economic policies that Cuba has followed in the last 65 years. The discussion was not so surprising, since citizens are seeing for themselves the reconversion of the Island’s system towards a capitalism of oligarchies, as well as the public recognition that what has been done for decades does not work.
Professor Ileana Díaz Fernández, invited this Wednesday to the program to talk about state companies, put on the table concepts until recently almost entirely prohibited: the generation of wealth, layoffs, free wages, bankruptcy, debureaucratization and even the harmful effects of capped prices.
“The mechanism that exists in the country is that when there’s a problem you have to handle it. And when you have to be handling every problem until it’s resolved, another one comes along,” she began. She went on to explain that the economy is distorted, especially the micro enterprises, and she blamed their problems on price controls.
“When you begin administratively to say you can’t raise salaries here and you have to lower them there, and you begin to establish a set of elements, salary scales or whatever, you begin to interrupt the logical and normal process that must be maintained to have a virtuous circle for the company,” she argued. The specialist, who believes that it is the businessman who should make the decisions, enunciated what until now was anathema.
“We don’t have to be afraid of the market (…) You have to access the market, and the market begins to see signs: if you have the money to access the market, you will be able to buy into the market; if you don’t have the money, you will not be able to enter. If a company is more efficient, it will have better conditions for that access,” she added.
Without departing from the path she had taken, she continued to talk about the relative freedom of wages. “What if I want to increase the salary of my workers? If we’re afraid of that, what will happen?” she said, acknowledging, however, that this situation has limits, due to the resulting increase in prices. Díaz Fernández then continued with another topic that has been such a taboo in Cuba that there are special concepts for workers who are dismissed, calling them “interrupted,” or in the “process of availabiliy.”
“The businessman also has to make decisions about whether he has enough staff, and of course he has to protect that staff, no one can deny that,” she argued. “He has to get the company to create wealth, with a higher percentage of profitability. Why? Because to the extent that he creates wealth, he not only meets the needs of the population but also those of the State, since he will pay more taxes and make greater contributions to the State budget,” she said.
According to this same logic, she considered that it is perfectly admissible for a company to disappear. “Can you go bankrupt? Yes, because some companies are born and others die. In human life it happens and in companies the same,” she concluded.
In the midst of all this ideological introduction to capitalism, the professor finally explained a practical measure that the future Law of Businesses — the reason for the issue to be addressed in the program — will introduce, which is the classification of them into three types.
The regulation will provide for a first group, composed of about a thousand companies with autonomy. “The Constitution of the Republic says that the State company is autonomous and in reality it is not completely autonomous, because many times it has to wait for countless authorizations for the management and search for markets, although it will have to yield results,” she added.
Another type will be the subsidized businesses, fundamentally those that are linked to the ’basic consumer basket’ [rationed goods]. Finally there are the monopolies, strategic sectors that are especially dedicated to supplies such as water, electricity, gas and fuels, among others.
Díaz Fernández wanted to make it clear that the changes will be gradual and that necessary markets will first have to be created, including inputs, labor, and especially foreign exchange. This lowered the expectations of the viewers, but the discursive change was noteworthy. “Changing the rules of the game is imminent, because a macroeconomic stabilization program won’t work if we don’t have a program of structural transformation of the economy,” she emphasized.
Her speech was preceded by that of Johana Odriozola Guitart, Deputy Minister of Economy and Planning, who spoke of the steps that preceded the future law, such as the creation of the SMEs and the transition to a less administrative and more financial economy, and she presented some data about the State sector, the protagonist of the night.
Currently, there are 2,417 State enterprises, of which 1,872 are “traditional” and the rest are newly created: State SMEs (116) and subsidiary companies (159). The deputy minister said that State companies contribute 92% of sales, 75% of exports and 87% of the Gross Domestic Product (GDP), in addition to employing 1,431,000 workers (compared to the 200,000 of private ones).
The disproportion, generated by decades of exclusivity, does not make them more important, defended Odriozola Guitart, but it does explain that it is urgent to make decisions, because of the weight they pose in the national economy.
Surprisingly, the situation in terms of losses has improved in the last two years, since there are 278 companies with losses, compared to 500 in 2021. In any case, she indicated that in 309 entities the profitability on net sales is less than 2 cents. “They are not at a loss but they really exist in a miraculous static state and are very susceptible to any increase in costs.”
The Round Table was also attended by the director of Aica Laboratories, belonging to BioCubaFarma, Antonio Vallín García, who spoke at length about the difficulties of working at the international level. He praised some of the measures taken to date and called for more progress, including the creation of professional regulatory entities, instead of ministerial ones. “I think the first thing we have to do is deregulate,” he said.
In this context, the ministry plans to launch the new law this year, and although the deputy minister pointed out that it will not be enough, yesterday’s session made it clear that the language, at least, is moving ahead.
Translated by Regina Anavy for Translating Cuba