Friday, October 17, 2008

New Wage Policy by 2009

Same wage for all setup abandoned by Cuba

Cuba is pushing state-run companies to adopt new wage policies by 2009 that would allow workers and managers to earn as much as they can, local media said Thursday, as President Raul Castro seeks to improve economic performance.

The labour ministry, in conjunction with Castro's closest military economic advisers, issued instructions to managers this week on how to design the new system. He ordered it be fully discussed with workers and ready by December, after they failed to meet an August deadline, said Ariel Terrero, Cuba's most popular economic commentator.

There is little difference in wage scales set by central planners so someone who does little earns almost as much as someone who works hard, including managers.

The plan would replace the current across-the-board egalitarian system with one based on piece work and concrete conditions in each workplace.

Cubans make an average salary of about $17 per month but they receive subsidized food and utilities, transportation, health, education and, in some cases, collective bonuses. The Cuban state controls more than 90 per cent of the economy.

"The goal is to put an end once and for all to these egalitarian concepts that are so damaging for the economy and socialism and that have done more harm than good during these years," Terrero said.

© The Calgary Herald 2008

Thursday, October 9, 2008

Economic experiment in Bayamo

Print This Article

One town's experiment gives Cuban peso value

A communist experiment is letting average government workers in this eastern city enjoy a few things only foreigners and monied Cubans can usually afford: a good burger, a kicking jazz bar and stiff cocktails.

Across the rest of the island, average monthly government salaries of 408 pesos, about $19.50, don't cover grocery bills, let alone a night out. But in Bayamo the central government has made a special effort to support peso businesses, giving the lowly currency actual buying power.

Along the stylish pedestrian mall known as Paseo or ''The Boulevard,'' six blocks of restaurants, barber shops, ice cream parlors and department stores give Cubans a taste of tourist life at local prices.

Jazz bands jam for free until 2 a.m. at the Piano Bar, where mojitos go for just 5.50 pesos, or 30 U.S. cents. A 1950s-style diner serves up tasty meatball sandwiches for about half a peso -- the equivalent of three cents -- and four scoops of the richest ice cream in Cuba for about the same price.

''Almost everyone who comes in is surprised at first. The music is good. The cocktails are strong,'' said Ernesto Aldana of the Piano Bar, where the Cuba Libre -- copious rum pours with ice and splashes of cola and lime -- costs 4.80 pesos, the equivalent of less than 25 cents.

''It's like you're paying in dollars,'' Aldana said. ``But you're not.''

Under the country's dual currency system, most things Cubans want and need are not available in the money they earn -- the regular Cuban peso which is worth a little more than 4 cents. Virtually all upscale businesses across the island are priced for foreigners in so-called convertible pesos worth $1.08 each, 24 times as much.

Cuba has had two currencies since the collapse of the Soviet Union wrecked its economy and spurred its turn to tourism. Tourist businesses took U.S. dollars and charged U.S. prices, while the peso was maintained for everyday transactions.

The convertible peso, also called hard currency, was born around the same time but took on its current value in 2004, when the government banned the use of the U.S. dollar.

Cubans have long hoped the government would merge the two pesos and close the gap between the goods and services they and foreigners can afford. But so far, nothing has changed under Raúl Castro, who took over as president from his ailing brother, Fidel, earlier this year.

Cuba's government historically has chosen provincial areas to test potential economic policy changes. In Bayamo, a city of 140,000 and the capital of Granma province, leaders of the regional Communist Party began expanding peso businesses in 2005.

''Normally, there's a gap between quality of service to foreigners and service to Cubans,'' said Isidro Alonso of Bayamo's Communist Party's Committee on Ideology. ``We are working to erase that.''

Huge government subsidies are needed. Paseo businesses here take in only 1,000 to 1,700 pesos a day, or $50 to $80. And the program only took shape after Bayamo communists asked central government planners for special autonomy and won the right to sell regionally produced items such as rum, seafood, beer, yogurt, beef, ice cream and cheese to local residents, rather than shipping them elsewhere on the island.

''We would see products like powdered milk made here and sold somewhere else and we said, 'How is this possible? If we make it in Granma, we should be selling it in Granma,''' Alonso said.

However, rising global commodity prices have made Bayamo's government subsidies more costly, while hurricanes Gustav and Ike in recent weeks dealt serious blows to Cuban food production.

The government recently ordered all provinces to contribute more food to all parts of the country and reduce Cuba's dependence on foreign imports, said Humberto Rondon, technical director for production at a state cheese and ice cream factory outside Bayamo. In Granma's case, officials will now have to ship about 80 percent of its cheese to points elsewhere in Cuba.

Despite the hurricanes and rising food prices, the Bayamo experiment is so successful that the central government in Havana is continuing to devote $10 million this year to reopen some peso businesses and cover operating expenses of those already established, Alonso said.

There are ordinary peso businesses all over Cuba, but the products are shoddy and service is mediocre. Shortages of everything from potatoes to pasta mean most of the dishes listed on peso restaurant menus aren't available, while peso stores have long lines of customers for mismatched inventory on largely empty shelves.

Contrast that with Bayamo, where the raw juice bar offers freshly squeezed mango or papaya juice for the equivalent of less than a nickel. The fully stocked dairy stays open until 11 p.m. on Saturdays. Ground beef is often hard to come by elsewhere, but here two hamburger joints serve up double patties heaped with ham for about $0.40 in pesos.

There's an office supply store, a flower shop, two beauty parlors, a pair of seafood restaurants, a Spanish eatery and a place offering passable vegetarian dishes.

''Usually, without hard currency, you never go to restaurants, you never go out on Friday nights. But here you can,'' said Vilna Lopez, who rents rooms in her home three blocks from Paseo.

Out-of-towners even brave long bus rides to spend their pesos in Bayamo.

''I would like to take this place home with me, and I'm from Havana,'' said Alexey Rodriguez, visiting from the capital 460 miles to the northwest.

But the Bayamo experiment is too expensive to work on a larger scale. And it has not done enough to soften the sting of the dual currency system for many.

Ana Luisa Gonzalez earns 225 pesos a month as a street sweeper on Paseo. Her son works at a tampon factory. A portion of his pay comes in convertible pesos.

''We live on that,'' Gonzalez said. ``Salaries in (regular) pesos have no value.''

When asked about all there is to buy along Paseo, the 50-year-old shook her head and said even here, her salary isn't enough. One large block of cheese is 80 pesos.

''If I buy two cheeses and two yogurts here, there goes all my salary,'' she said. ``Then what?''