Cuba's 500,000 Layoffs Could Lead to Social Unrest

Cuba announced Monday it will cast off at least half a million state employees by mid-2011 and reduce restrictions on private enterprise to help them find new jobs -- the most dramatic step yet in President Raul Castro's push to radically remake employment on the communist-run island.

The layoffs will start immediately and continue through the first half of next year, according to the nearly 3 million-strong Cuban Workers Confederation -- the only labor union allowed by the
government.

To soften the blow, it said the government would increase private-sector job opportunities, including allowing more Cubans to become self-employed, forming cooperatives run by employees rather than government administrators and increasing private control of
state land, businesses and infrastructure through long-term leases.

"Work in what?," Andy Gomez of the University of Miami's Institute for Cuban Studies wonders. "[The government is] telling these guys to work, work in what? Set up a barber shop? There's no structure."

The union did not say which parts of the economy would be retooled to allow for more private enterprise. The union said that the state would only continue to employee people in "indispensable" areas where the labor force is historically insufficient, such as in farming, construction, industry, law enforcement and education.

"Our state cannot and should not continue supporting businesses, production entities and services with inflated payrolls," the union said, "and losses that hurt our economy are ultimately counterproductive, creating bad habits and distorting worker conduct."

It added that Cuba would overhaul its labor structure and salary systems since it will "no longer be possible to apply a formula of protecting and subsidizing salaries on an unlimited basis to
workers."

Instead, Cubans will soon be "paid according to results," it said, though few details were provided. Castro has said repeatedly he sought to reform the pay system to hold workers accountable for their production, but the changes have been slow in coming.

Currently, the state employs 95 percent of the official work force. Unemployment last year was 1.7 percent and hasn't risen above 3 percent in eight years -- but that ignores thousands of
Cubans who aren't looking for jobs that pay monthly salaries worth only $20 a month on average.

In exchange for the low salaries, the state provides free education and health care and heavily subsidizes housing, transportation and basic food.

Gomez says that while this new development may not persuade Cubans to flee to the U.S., something has to give. 

"Social unrest," Gomez suggests may be coming soon. "First [the state] can't provide breakfast and lunch for their employees, now they're laying off half a million people? Wow. It indicates the predicament that the Cuban economy is in."