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As media once again focuses on Cuba's economic developments in the wake of the restoration of diplomatic ties between Cuba and the US, we republish this 2014 article from Steve Ludlum. Published on 24 November 2014 by Morning Star


Much of the recent media commentary on Cuba’s economic reforms highlights the growing private sector, implying a transition to capitalism.

This ignores Cuba’s dominant state sector, its planning system and the role of private enterprise in socialist transition. For socialists, the defining innovation of capitalism is not private property but systematic exploitation of “free” wage labour.

The reforms give management more autonomy and diversify the world of work. So what about the workers and their unions? What is in the 2014 Labour Code and other recent legislation, and what about salaries and job security?

The New Labour Code, replacing the 1985 original, emerged from a mass consultation.

Nearly 70,000 workplace meetings discussed the draft version and the union federation, Ministry of Labour and National Assembly together analysed submissions and agreed changes before the National Assembly debate.

Over 80 substantial changes resulted. For example, the draft inserted a new stage into workplace grievance and disciplinary procedures, giving management exclusive powers previously exercised by panels dominated by elected workers. This was removed.

A proposal to permit workers to work three-quarters of their annual leave was limited to exceptional circumstances and only after consulting unions.

Written contracts for private-sector workers became obligatory rather than “preferable.” Permanent contracts for workers in seasonal work like tourism were incorporated.

The code again covers fundamentals such as the right to work, equal pay, minimum salary and non-discrimination — now including sexual orientation. It gives all workers, including the self-employed, state pensions, maternity leave, unemployment benefit, accident benefit and so on.

The normal working week is 40 to 44 hours over five days. Overtime, at premium rates, is legal only with union agreement. In the state sector, 30 days’ paid annual leave and guaranteed weekly rest days are rights.

Extensive maternity rights are further enhanced with protection from overtime or shift working during pregnancy.

On health and safety, employers must eliminate risks, provide training and adequate protective equipment and clothing. Workers and unions have the right to stop dangerous work. Workers have the right to participation at work, through workplace assembles and trade unions.

In the state sector, grievance and disciplinary cases go before labour justice panels dominated by elected workers. Private-sector workers go directly to municipal courts.

The code elaborates rights for private-sector employees for the first time. Since 2010, self-employed “contracted workers” can sell their labour in the private sector. The law treats them as employees, not civil contractors, so they have rights to written contracts, minimum salaries and maximum hours, rest periods, paid holidays and health and safety.

New laws for non-agricultural co-operatives require that, after three months employment, “contracted workers” must be offered profit-sharing membership of the co-op, or released.

Only 10 per cent of a co-op’s working time can be performed by hired labour. Cuba is not tolerating an exploitative free-for-all.

The code restates the right to form trade unions. Unions have the right to participate in company planning, sit on company boards and a new right to receive management information.

Unions are guaranteed offices and materials and facility time for representatives. The code requires union agreement to lay-offs, working hours, overtime or rest-day working, the annual safety report, and much more.

Crucially, the legally required workplace collective bargaining agreement is union-negotiated and requires the support of a majority vote of the workforce.

It covers implementation of the code’s rights and other key issues like bonus payment systems.

Cuban salaries have modest purchasing power, which is falling as workers buy more goods at unsubsidised market prices.

Salary scales are fixed by the Council of State (the cabinet), “having heard the opinion” of unions.

Nevertheless, the salary issue produced the most interventions in the code mass consultations, having earlier featured centrally in the union federation’s national congress.

Cuba’s “special period” of recovery and dual currency since the 1990s crisis undermined salaries and income distribution.

A central objective of the reforms is to restore adequate salaries, and the “socialist principle of distribution” linking incomes to output.

In March, salaries across the health service were doubled, in some cases tripled. But such increases across the board await a more productive economy.

For most, increases will come through performance-based bonus systems. These are being decentralised to company level.

Planned increases in employment in the private, co-operative and foreign investment sectors will also diversify pay. Under new legislation, Cubans in the foreign investment sector will get a higher minimum salary than elsewhere and pay will be off the national scales, negotiated locally.

Through the crisis years, Cuba protected the right to work at the cost of underemployment in the state sector.

The post-2010 labour restructuring will see a third of Cubans leave the state sector.

This is not neoliberal informalisation. All Cuban workers have legal rights to free health and education and to statutory welfare benefits.

Indeed, the reforms have reduced informalisation. According to unions, 69 per cent of the self-employed registered today were previously “off the books,” but now work with full rights.

In redeployment situations, the new code makes prior notice and consultation with workers and unions a legal requirement.

Surplus workers are identified by an analysis of qualifications conducted by a “committee of experts” dominated by elected workers.

The code reiterates the 2010 limitations on previously indefinite, earnings-related unemployment benefit. Now the maximum is five months, whereafter benefits are discretionary. This shifts the balance of responsibility for finding work from state to worker.

Far from signalling a transition to capitalism, Cuba’s new labour laws embed comprehensive worker and union rights reflecting the reformed world of work and demonstrate the influence of mass participation.

Job security and salaries will certainly be more reflective of local productivity, profitability and market forces. But if the reforms achieve the intended “prosperous and sustainable socialism,” they will bring greater prosperity for all.

The reforms are also a challenge to the unions, which are running massive training programmes on the code and on collective bargaining.

The unions have to help ensure that constitutional principles of equal pay and the “socialist principle of distribution” are not undermined by decentralisation.

And with a third of workers in non-state sectors, the constitutional “suppression of the exploitation of man by man” becomes a serious new union task. The new code gives unions real powers to manage change in workers’ interests. They deserve our support.

The challenges would be immeasurably easier to confront without the US blockade. International solidarity and respect for the sovereign choices Cubans are making to develop their “socialist state of workers” remain vital.