Cuban Workers Discuss Reforms in Factory Management

By Jonathan Silberman and Mary-Alice Waters

[This article appeared in the June 5, 2000 issue of the Militant]

HAVANA—A lively discussion on wages, working conditions, and enterprise management took place at an assembly of workers at the Asticar shipyard in the port on the east side of this city. Asticar repairs oil tankers, as well as refrigeration, cement, and roll-on/roll-off cargo ships. In addition to working on Cuban vessels, the yard repairs ships from other countries, including Japan, Russia, China, Germany, and from elsewhere in the Caribbean.

The 65 workers at the assembly, held February 17, were representatives elected on a ratio of about 1:10 by co-workers in their respective work areas. Prior discussion had been held in individual workshops at the yard, in work teams known as brigades, and on each shift. Members of the Communist Party and Union of Young Communists (UJC) had also held meetings prior to the assembly.

There are 127 CP and 18 UJC members at the plant, whose current workforce is some 625.

With ups and downs, "efficiency assemblies" like this one have been a regular feature in Cuban factories for many years. Generally they are held each quarter. Meetings with similar-sounding names are sometimes organised in companies in capitalist countries to press workers to intensify their labor in order to boost the bottom line of the owners. In Cuba, efficiency assemblies are one of the ways in which workers bring their weight to bear in influencing the economic and industrial policies of what is genuinely their government.

Hated by imperialism, that government of the toilers was the most important instrument conquered following the successful revolutionary war and mass popular insurrection that brought down the US-backed dictatorship of Fulgencio Batista more than 40 years ago. It has been defended by Cuban working people ever since in face of Washington’s unrelenting determination to overthrow it in order to crush them.

Organisation of management

At the efficiency assembly at Asticar, the chief topic of discussion, and controversy, was a proposal for a major change in the organisation of management of the enterprise. The proposal was presented by the plant director, Jorge Muñoz, on behalf of the plant management and the leaders at the yard of the Central Organisation of Cuban Workers (CTC) and of the Communist Party. Muñoz proposed that Asticar adopt a set of reforms known as Perfeccionamiento Empresarial, or "improved management," as provided for by the National Assembly’s decree-law 187 adopted in August 1998.

That new law followed the adoption in October 1997 of an Economic Resolution by the fifth congress of the Communist Party, which emphasised boosting labor efficiency in order to reduce state subsidies to enterprises and produce more of the essential goods needed by the Cuban people.

Under the decree-law, a number of important management policies that up till now have been determined by national legislation, or are subject to strict regulation by the responsible government ministry — such as wage scales, the number of workers employed, the hours worked, and enterprise responsibility for training — will be determined to a greater degree enterprise by enterprise. These policies will be subject to discussion and agreement between management and the union at the workplace, Noel Carrillo of the CTC’s international relations department told the Militant. Eliminating government subsidies to inefficient enterprises — what the legislation refers to as "self-financing" — will have great weight in determining production and trading decisions.

According to a March 1999 CTC document "Improved Management and the Trade Union Movement," the reforms build on the revolution’s long-standing "premise that state enterprises constitute the fundamental links in the economy; what is posed is strengthening the level of efficiency, authority, and the way they run." The union leadership will strive to become "a driving force within enterprise management," the document says, converting itself into "a factor of economic efficiency."

As the CTC organises preparations for its national congress in 2001, Carrillo said, the initial experience of enterprises that have adopted the reforms will be a prominent issue under review.

According to the CTC, six enterprises had begun to function under the new guidelines by mid-February and an additional 895 were at some stage of preparing to do so. Before the changes can be implemented, we were told, they must be agreed to by both the enterprise management and the workers. Discussions are organised in union meetings at the brigade, workshop, and plant level, as well as at meetings of the CP and UJC in the workplace. A vote must then be taken following discussion at an enterprise assembly.

"Following these discussions, a report is drawn up for submission to the relevant ministry," said Carrillo. The enterprise, he said, must demonstrate that there is a market for its products, that it has proposals in place to obtain necessary parts and materials and provide safeguards for the workers, and that its cost accounting records and procedures are in order. This third point is important, Carrillo emphasised. "In perhaps a majority of Cuban enterprises, the accounts are a fiction," he said.

Implementing strict cost accounting norms in order to put enterprise finances in order is a major objective. This includes raising workers’ knowledge and competency to review reports on the enterprise’s balance sheet.

When a manager affirms there is agreement in the plant management, union, and party leadership that the conditions to adopt the new guidelines have been satisfied, the ministry then carries out a financial inspection and audit. "Only after the enterprise has passed inspection will the relevant ministry give the go-ahead" for management to start making decisions on a range of policies that have previously been decided on a centralised national level, Carrillo said.

The reforms affect matters of vital importance to every worker, such as wages, hours, job security, working conditions, and unemployment benefits. Most workers we talked to — not only at the shipyard, but several Havana-area factories, as well — indicated they favored the reforms and expressed expectations that their wages would rise and working conditions in their plant would improve. But it is not surprising that the reforms have generated considerable discussion in many workplaces.

Special Period

The proposed changes are in line with a retreat Cuba’s Communist Party has had to lead since the opening of the 1990s, when what is known in Cuba as the Special Period began. The term refers to the economic dislocation and severe shortages that followed the collapse of aid and trade at preferential rates with the Soviet Union and countries of Eastern Europe a decade ago. Some 85 % of Cuba’s trade had been with these countries. Washington took advantage of these harsh and unexpected economic shocks to intensify its own reactionary trade and financial warfare against Cuba.

The revolutionary government recognised that objective conditions were narrowing the scope of effective economic planning and of the state monopoly of foreign trade, while increasing social inequalities in the working class and other layers of the population. And they instituted a series of measures to meet pressing immediate needs for food, industrial goods, and basic social services.

Five years into the Special Period, the CTC leadership prepared theses for the 1996 congress of the federation that were circulated and discussed beforehand by workers in enterprises across the island. The document stated that politically conscious workers in Cuba were aware of:

…our country’s need to introduce elements of capitalism, of the inequalities these inevitably breed, and of our duty to continue defending the revolution’s values and principles in this new context.

The theses continued that what:

…distinguishes our economic transformation is that [the measures implemented by the government] are being carried out under the sponsorship and control of the state, and their highest objectives are to safeguard the interests of the revolution and the workers. This includes the aspiration of resuming the construction of socialism when the conditions for doing so are created.

Through the efforts of Cuban working people and their vanguard party, unions, and other mass organisations, the most severe shortages of food and other essentials began to ease by the latter half of the 1990s, and the drop in industrial and agricultural production bottomed out (see accompanying article).

With the collapse of the Stalinist regimes in Eastern Europe and the USSR, however, Cuba faces much greater economic sensitivity to the world capitalist market. It is in that framework that further shifts in the system of management are being discussed and, in a measured way, have begun to be implemented in Cuba today.

Rectification process

Decree-law 187 traces the proposed reforms to a process initiated in enterprises run by the Revolutionary Armed Forces (FAR) more than a decade ago.

At that time the "rectification process" was in full swing in Cuba. Rectification was the name given to the policy course adopted in 1986 by the leadership of the Communist Party to reverse the spread of corruption and privileges that benefited a relatively better-off layer of functionaries and professionals, alongside a growing depoliticisation and demobilisation of working people. These were social realities that had begun to accelerate following a decade and a half of the consequences of copying the political policies and methods of economic organisation used in the Soviet Union.

Rectification was not a set of economic reforms. It constituted a change in political direction that gave more weight to politics and increased working-class mobilisation. It strengthened working people in the cities and countryside in face of growing middle-class layers.

One of the principal measures taken was the reintroduction of voluntary work to build housing, schools, child-care centers, clinics, and other much-needed social facilities.

In the decade prior to the opening of the rectification process, Cuban president Fidel Castro explained in October 1987:

Voluntary work...was steadily on the decline.... The bureaucrat’s view, the technocrat’s view that voluntary work was neither basic nor essential gained more and more ground.

Thousands upon thousands of workers volunteered to be part of work brigades and construction contingents that took on even larger projects such as roads, dams, and hospitals. In the process, a genuine social movement began to develop that brought the weight of the working class to bear in advancing the revolution and solving some of the most pressing social needs working people had. The extension and deepening of this course were cut short by the sudden and severe economic disruptions of the Special Period.

Contemporaneous with the developing social movement, pilot economic reforms had been launched during rectification. One such reform was launched in enterprises run by the FAR under the designation "Perfeccionamiento Empresarial." According to Noel Carrillo, it was implemented in workplaces such as the Ernesto Che Guevara armaments plant in Las Villas, "where political consciousness and work discipline is high."

Armando Pérez Betancourt, a former colonel in the FAR, is today secretary of the government-established group that oversees the decree-law 187 reforms. Its president is Carlos Lage, vice president of the Council of State and executive secretary of the Council of ministers. Established by the decree-law, the group includes a number of government ministers as well as the general secretary of the CTC, who is invited to each of its leadership meetings. "The intention is that all of Cuba’s 3000 enterprises will eventually operate under the improved management system," Pérez Betancourt told the Militant.

The new system "means that a plant must be ‘self-financing,’" said Jeovany Cuesta Vaillant, union secretary at the main dairy plant in Havana, in an interview. Echoing views expressed by others as well, he explained:

It means producing more, and better, with less. It’s up to the plant to decide how to take the best from capitalism and apply it to the Cuban economy where we’re developing a socialist market. The measures taken must "fit the individual enterprise like a tailor-made suit."

The decree-law states that in covering annual operating costs of raw materials, parts, transportation, and wages, enterprises under the new system are to be "self-financing" — that is, they are to cover such recurring expenses out of revenues from sales. Major capital outlays for expansion and renewal of plant and equipment remain centralised through the appropriate government ministries and state banking system.

For example, Orlando Borrego, an advisor to the Transportation ministry, told the Militant that "self-financing" for the railroads did not mean the enterprise was expected to generate income sufficient to finance replacement of rolling stock or expansion of rail beds. Major investment of that character is the responsibility of the ministry.

Incentives and a stable income

The discussion at the Asticar assembly focused mainly on what the consequences of the proposed reforms would be for the wages and conditions faced by the workers employed at the shipyard, about which many workers expressed concern. One proposal was that wages be tied more directly to production goals, including through the increased use of bonus payments. Out of a total workforce of around 5 million, there are 781 000 workers in Cuba whose wages are now linked in some way to production results. Workers at Asticar are among them. Currently bonuses for meeting or surpassing production targets are paid to the shipyard worforce as a whole.

According to the proposals put forward by the management and union, such collective incentives would be replaced by production-related premiums to individual workers or smaller groups of workers. At the efficiency assembly, Felipe Hernández, a machinist, expressed strong reservations about this change. "It’s not good that one shipyard worker could earn much more than another simply because of where they work," he said.

"We’re very concerned about the proposed payments system", said David Reyes, a sheetmetal worker, who, like Hernández, spoke a number of times at the assembly. "What happens, for example, when there’s no work? You can’t have a situation whereby for a couple of weeks we get good wages but then for the next couple of weeks we’re laid off and our wages go right down."

The prospect of wage differentials according to workshop and the issue of frequent short-term layoffs were raised by various speakers at the assembly. Some pointed to the nature of shipyard production — when a workshop has completed its tasks on a ship, the workers may have no work for a while until the next ship arrives for repair. One worker recalled that there had been very little work during the last quarter of 1999.

"What happens if a workshop runs out of work?" asked a machinist whose first name is Néstor. "And what will happen to bonus payments if there’s no work? Will it be up to the brigade head to decide if a worker gets a bonus?"

"What happens if we don’t reach the production targets we set?" asked another worker. "What happens if we’re off sick?" said another.

Benefits and training

Under the current laws every worker in Cuba receives 60% of wages when laid off and 80% when sick, paid by the government.

"Under the improved management system, it will be the responsibility of the enterprise to make these payments," explained plant manager Jorge Muñoz following the Asticar assembly. Workers were clearly concerned that this shift, combined with the emphasis on eliminating state subsidies, might result in pressure to curtail such benefits in some ways.

Wages at Asticar are relatively high for industrial workplaces in Cuba; they have risen substantially over the last three years with the shipyard’s improved economic performance. Three years ago there were 350 workers at Asticar with an average wage of 180 pesos per month; last year 625 workers received an average 382 pesos per month. By working longer than Cuba’s common 44-hour workweek, Asticar workers said that they can earn between 500 and 700 pesos per month, depending on their skill level and the amount of work. (By law workers are currently permitted to work a maximum of 240 hours per month, averaged over a year.)

"The heart of our concerns is that wages don’t fluctuate hugely and that there is security," said Felipe Hernández. "There is a need for guaranteed work and guaranteed wages. This must be approached from the framework of paying attention to the workers’ needs."

"I’m concerned about the training provision," said María Elvira Lozano, a representative of the National Union of Merchant Marine and Fishing Workers. Under Cuban law, CTC representatives explained, should a worker’s job be redundant, the worker is offered three alternatives by the enterprise and retrained if necessary. The quality manager at Asticar, Tomás Miguez, had reported that this guarantee will no longer apply under the new proposals. Efficient production will be given priority over retraining, he said.

In line with this goal, all skilled workers at the yard would be tested, Miguez added. "If, for example, a certified welder didn’t pass the appropriate test, they would be downgraded, given retraining, and retested. Failing the test a second time would result in the welder losing their job," he warned.

"We’re operating in an industry that has rigorous international standards," said Jorge Muñoz. "If we’re going to win more work from foreign-owned ships — we want this to be the best repair yard in the entire Caribbean — we have to be able to demonstrate good quality work, low prices, and fast turnaround. Our aim is for these changes to result in more work, not less. And we’re not looking for workers in one workshop to make a bundle while others earn nothing.

"But your concerns are normal," he told the assembly delegates.

Conceding that a recession in international shipping — something beyond Asticar’s control — would have consequences that need to be addressed, and that individual incentives could be divisive, Muñoz said these issues would be among those taken up in the coming round of discussions.

"This is very complex question," said engineer Manuel Mengano, who supported the proposed changes. "We must produce more. We should never be satisfied, with or without the new system. We need to be working eight hours, not 12. People work very hard," he said, "but we haven’t shown that we’re conscious of costs."

No vote was taken at the end of the assembly. Instead, the delegates agreed there would be a further round of seminars and brigade and workshop meetings, following which the assembly would reconvene.

Broad discussion

The same issues are being discussed at factory assemblies across Cuba. Militant reporters had an opportunity to participate in the assembly at Sigma, which does maintenance work on machinery used in the garment industry, and to talk with workers at Suchel Fragrancia, a factory producing concentrate for the manufacture of perfume.

Workers we met in a tour of the Quintín Banderas factory, which produces steam, gas, and water tanks and other equipment, were generally favorable to the reform measures proposed for their plant and had high expectations, as did workers at Sigma and Suchel. Workers and management at Quintín Banderas had been through a round of discussions and had submitted a proposal to the ministry. They were waiting for the ministerial financial inspection and audit.

Javier Williams, an operative who’s worked there for two years, said he thought the reforms would lead to an overall increase in efficiency and production. "The union in the plant will become more important, because every decision will be subject to discussion with the union," Williams said. Yoel Linares, a UJC member who started work at Quintín Banderas last November, said he thought greater input by the workers would lead to "much needed safety improvements."

Jacinto Videaux, a center lathe turner, said he was very much in favor and was convinced that "wages will improve. I worked for four years in East Germany. Plants there operated under a system similar to this, and wages were quite good," he told us.

Videaux now earns a basic wage of 217 pesos per month, supplemented by an additional 10% for length of service and another 10% for special qualifications he has trained for. Like all workers in the plant, if his on-time record and work discipline are good, Videaux also receives a "bolsa de aseo," a shopping bag of goods such as detergent, tooth paste, and cooking oil frequently available in Cuba only for hard currency.

Videaux also offered the opinion that "socialism is good for things like health and education and social solidarity, but it’s inefficient economically." It is not unusual to hear such views expressed in Cuba today, including among workers. This is not only the product of capitalist propaganda, and the enormous difficulties faced in Cuba over the last decade, but also lack of clarity over what led to the fall of the so-called socialist regimes in Eastern Europe and the Soviet Union.

As shown by even the limited discussions Militant reporters had in February, a layer of workers are concerned that management reforms such as those being introduced will accentuate unevennesses in the social wage in Cuba and pit workers in one enterprise against those in others over the scramble for resources.

Communist political leadership

Unlike capitalism, however, the construction of socialism is not the product of blind laws; it is the work of conscious — and free — men and women. Communist leadership is decisive.

Speaking at a series of provincial party assemblies last fall, Raúl Castro — second secretary of the Communist Party, minister of the Revolutionary Armed Forces, and General of the Army — stressed, according to an article in the November 28 issue of Cuba’s weekly Granma International, that:

…it is not possible to move ahead on the country’s improved management plan without defining the tasks of the Party, so that it doesn’t continue to assume administrative responsibilities which hinder its true function.

The article went on to quote Raúl Castro as saying to cadres at the Guantánamo provincial meeting:

As the party’s participation in administrative tasks decreases, we will be able to devote ourselves more to political and ideological work, which is vital, has always been so, and, as Fidel has explained, is more vital today than ever. We are not playing the role of revisionists here, but making a review of errors, and we’re not discovering anything new. Look at Lenin’s work: it was he who put forward the idea that administration was not the Party’s role in society....

We’re still not accustomed to telling it like it is, looking each other in the eye, face-to-face.... I’m saying that because in the Party cells that include the head of the enterprise, a minister, or the director of an agribusiness complex, that aspect is not functioning well.

"Telling it like it is" — explaining the objective conditions that make a temporary but substantial and orderly retreat necessary; telling the unvarnished truth about the consequent social inequalities and their political dangers to the proletarian solidarity and worker-farmer alliance on which the revolution is based; advancing communist political perspectives to unify and mobilise working people in face of class enemies both at home and abroad; staying on the lookout for opportunities to reach out to revolutionary struggles elsewhere in the world that can speed the end of the retreat and a resumption of the advance toward socialism.

That was indeed at the center of Lenin’s work in the early 1920s, when the young Soviet republic and its Bolshevik leadership entered into a retreat, the so-called New Economic Policy, in the wake of their hard-won victory — at an enormous human and material cost — over imperialist invading forces and home-grown counterrevolutionaries who had killed hundreds of thousands of workers and peasants, destroyed crops and livestock, and paralyzed industrial production and both internal and foreign trade.

That’s why Lenin emphasised in 1922 that if the party "becomes wholly absorbed in administration, the result will be a disastrous one." It had to provide political leadership to the vanguard of the workers and rural toilers.

The economic reforms being tested in Cuba today are being implemented through a process of extensive, organised discussion and evaluation by the working class as well as in government ministries and institutions. The efficiency assemblies are part of that process, and one of the sources of the many corrections and adjustments necessary to protect the interests of working people.

Debate on these issues will be an important part of the preparations for the congress of the CTC scheduled to culminate on the international holiday of the working class—May 1, 2001.

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