The mass layoffs will take place between now and the end of March, according to a statement issued Monday by the Cuban Workers Federation, the island nation's only official labor union. Workers will be encouraged to find jobs in Cuba's tiny private sector instead.
"Our state can't keep maintaining...bloated payrolls," the union's statement said. More than 85% of Cuba's 5.5 million workers are employed by the state.
"This is survival economics," says Jaime Suchlicki, director of the Institute for Cuban Studies at the University of Miami. "They don't have liquidity, and have a lousy economy."
Laying off government workers, however, is unlikely to do much to solve the country's problems, Mr. Suchlicki and others warned, since let-go workers have no where else to turn to earn a living. "They won't be absorbed by the private sector because there is no private sector to absorb them," he said.
It remains to be seen, however, just how many private-sector jobs Cuba can create. Cuba now has only 591,000 people working in the private sector, most of them family farmers, as well as another 143,000 workers classified as self-employed, according to government figures.
Since Cuba first allowed self-employment in the early 1990s, thousands of Cubans have gone into business, often catering to tourists. Privately owned restaurants, known as paladares, emerged to serve visitors, usually in the crumbling but grand old homes of Havana. But restrictions on the paladares were so strict in recent years that many have since closed their doors.
Cubans who decide to go into business for themselves will find a series of obstacles, including very high taxes, lack of access to credit and foreign exchange, bans on advertising, limits on the number of people they can hire, and a litany of small-print government regulations, experts say.
Cuba's government has a list of 124 "authorized" activities for people who want to employ themselves. Among them: Toy repairman, music teacher, piñata salesman and carpenter. Carpenters are allowed only to "repair existing furniture or make new furniture upon the direct request of a customer." They cannot make "furniture to sell to the general public."
Carmelo Mesa-Lago, an expert on the Cuban economy who is emeritus professor of economics at the University of Pittsburgh says: "The question is how many obstacles [the government] will place in front of these people?"
A government attempt this year to get Cuban farmers to produce more by allowing them to lease land, has been hampered by an acute lack of fertilizer, farm machinery and herbicides. That has made it difficult to cultivate land overrun by a thick, thorny scrub brush called Marabu. And earlier this year, Cuba announced big drops in agricultural production despite the land reforms
Comment: The WSJ article fleshes out what was posted yesterday. If there is any doubt of the viability of communism, this should erase it!