The chicken and the egg dilemma of productivity and wages

Fernando Ravsberg*

Increasing productivity is not always in the hands of workers.

HAVANA TIMES — Some days ago, the official newspaper of Cuba’s Communist Party, Granma, referred to the need to improve the country’s productivity and thus increase salaries, calling on workers to make greater sacrifices with a view to creating more wealth (the only conceivable way of improving wages).

The truth of the matter, however, is that achieving greater productivity and efficiency is often not in the hands of Cuban workers, but rather depends on their company’s managers and the bureaucratic structures created by the government to control and centralize these.

Two of these nefarious institutions, Acopio and Housing, have already been dismantled. The former was renowned for its inefficient distribution of harvested products, while the latter had become a seedbed of corrupt officials who profited from the country’s housing shortages.

Much, however, remains to be done down the road of debureaucratization. It is a Gordian knot that will prove impossible to untie without the determination to implement radical measures. Without the disappearance of certain structures, it will be impossible to make any headway.

It is also advisable that everyone begin to restrict themselves to doing their jobs. I would dare say that Cuba is the only country in the world in which the Ministry of Transportation decides what brand engines the buses that transportation companies import must have.

Without ensuring farmers have the supplies they need, no substantial headway in agriculture can be expected.

Unlike in Cuba, importers in other countries do not decide what is to be bought and from whom. Their function is limited to doing the paperwork that is required to have the products or equipment that clients decide to purchase go through customs.

All the problems created by bureaucratic corruption make it very difficult for companies to operate. These suffer from such things as the import of US engines for which there are no spare parts available or because medical equipment is left to rot at Customs, waiting for importers to go pick them up.

Over the past few days, I found out that more high officials working at Cuban importing companies had been detained. At least one such official is imprisoned every month and this does not manage to put an end to the corruption that is gnawing at these companies from within, to the sale of contracts to those who pay the highest “commissions.”

The authorities have also just convicted an important foreign businessman who stole tens of millions of dollars from the country thanks to these mechanisms. How many more such detentions are needed to make them understand that the current bureaucratic labyrinth is what facilitates corruption?

Cuban companies are bound hand and foot. They have to consult nearly every decision and do not have the freedom to administer their profits as they see fit. Some even have to ask permission to hire a cooperative or self-employed businessperson for a specific service.

Those companies that are actually productive and efficient aren’t allowed to freely reinvest their profits. On the contrary, they are milked dry through the application of an arbitrarily established parity between the US dollar and Cuban peso, an exchange rate set in order to finance the unproductive companies.

Productive companies are not authorized to freely re-invest their profits.

The workers are not the ones who created these mechanisms. They are not the ones who appoint incapable or corrupt managers, nor are they the ones who invent needless bureaucratic structures, let alone the ones who decided to establish a two-currency system.

Asking farmers to increase yields without making the supplies they need available will not produce results. Nor will pressuring workers to be more productive, not when the equipment isn’t working for lack of spare pieces.

It is a question of planning the economy in such a way that productive processes aren’t halted for lack of foresight, that company managers pay for inefficiency with their jobs and legal punishment for corruption becomes more severe.

Paradoxically, a person who steals from a home can face a harsher sentence than those applied to the minister who was speculating with the food of all Cubans or those implicated in the death of dozens of patients at a psychiatric hospital in Havana.

Granma asks which came first, wages or productivity, comparing the issue to the dilemma of the chicken and the egg. This, however, is only scratching the surface, for it will be very difficult to improve results while the country’s company management structures and systems remain the same.
(*) Visit the blog of Fernando Ravsberg.


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