Entrepreneurs and employees: which labor relations?

(Conducted via Whatsapp on June 25, 2020)

Lea aquí la versión en español de este artículo


Caridad L. Limonta. Owner of Producciones PROCLE.

Ileana González Arteaga. Former employee of a paladar (private restaurant).

José Luis Martin. Labor Sociologist, Center for Demographic Studies, UH.

Oscar Rafael Brito. Owner of the Beauty Shop Habana Estilo.

Ramón Manuel López Alarcón. Chef.

Rafael Hernández: Welcome to Último Jueves, via online this time. Today’s topic is “Entrepreneurs and employees: which labor relations?” We’re very happy to have again our Último Jueves right on schedule despite the difficulties caused by the pandemic. Thank you very much for being here to participate, starting with the panelists. They are: Caridad Limonta, owner of a well-known dressmaking workshop, intensely engaged for some time now in the production of masks to contribute to preventing transmission. Also joining us is Oscar Brito, owner of the beauty shop Habana Estilo. Third, Ileana González Arteaga, who used to work in a paladar and will tell us about her experience. Four, Ramón Manuel López Alarcón, who despite his young age has been a chef for many years in various restaurants. And finally, we have Labor Sociologist and Researcher José Luis Martin from the Center for Demographic Studies, who has come to these meetings before.

Like we did last time, also via Whatsapp, we have here texts and voice messages of the five panelists with the answers to the questions that we asked them, focused on the issue of labor relations. We would like to discuss this problem, which is neither about the private sector’s place in the Cuban economy and development nor the much-debated economic policy and its link to the state sector. It’s about the way that labor relations develop in the microcosm of a private workplace and which external factors affect its existence, progress and daily life. We would like to know the typical problems of those labor relations, for instance, how much the labor market contributes to their definition and, of course, whether the state institutions and organizations also impact labor relations and their development. We also ask the panelists what to do to improve those relations and help them grow in such a way that they benefit and protect entrepreneurs and employees alike so that they can work in a fair and equitable manner in keeping with everyone’s performance. Today’s panel discussion will be about all of the above.

Let’s start by asking: how to describe the current relations between the entrepreneurs and their employees?

Caridad L. Limonta: I think it best to introduce my twelve-plus-year-old family business. It’s a garment workshop called Producciones PROCLE particularly devoted to clothing repairs and alterations. It’s located in a building rented from Centro Habana municipality’s Services Enterprise. At present we have five workers, and our team has always had very empathic and well-balanced labor relations and a friendly atmosphere without detriment to respect and authority whenever necessary.

In my case, I see to it that the team participates in our agreements, achievements and challenges so as to have absolute transparency in our management process and get them all involved with a high sense of belonging. It’s about being there not only to make money but because we are happy and pleased to serve our customers.

In general, what I see in other enterprises is that they create a work environment where loyalty, fidelity and goodwill are all-important to make the business run smoothly. They are highly committed and have a great sense of belonging, for which the working conditions and wage policies are paramount.

As I see it, those relations respond to two deciding factors: 1) the employers engage the employees in the whole process, from the procurement and destination of materials to the quality and delivery of the end product. We distribute the profits so that the business succeeds and the employee is satisfied, and the employer wins too; 2) regardless of any frequent or incidental situation or difficulty, the employer is always available, ready to listen to his employee and help in the most reasonable and fair way. That’s true solidarity.

Ileana González Arteaga: In my experience, employer-employee relations transcend work in many cases. They’re often established on the basis of blood ties (a family business) or when a friend recommends the future employee. It is so because there is no formal labor market to ensure good labor relations with the future boss.

As to the entrepreneurs, the lack of such a formal market and the way of hiring many of their workers make it possible for them to have effective control over their staff, which represents a bond of moral commitment to the employee.

How good these relations are in general is also contingent to a large extent on the interests and sense of belonging of both employers and employees, especially of the latter, because even if they are not the business owners they do benefit from it, depending on the level of sales and the prestige of the business itself, and their impact on his/her personal earnings.

Therefore, the link between entrepreneurs and employees must be marked by their status as professionals with common interests.

Oscar Rafael Brito: Labor relations materialize through a contract that mainly binds the employee to sell his work and the employer to pay for it as accordingly. So, as a sector, we can strike a proper balance between these provisions and have a positive influence on the relation between both parties. Besides, the fact that the entrepreneur is entitled to decide the payment and work systems, which allows him/her to treat the efficient and inefficient employees differently, also contributes to the quality of their relations. As to the proper communication between the parties, it depends on the entrepreneur’s leadership skills as much as on the hired employee’s characteristics, but I believe that it’s generally good and effective, based on mutual respect and a common interest, namely customer satisfaction and profit maximization through good practice. Many employees have a high sense of belonging to the business, manage to develop themselves personally and professionally, and increase their purchasing power to a considerable degree. The prime duty in fulfilling our Business Social Responsibility is to our employees, whose complaints, concerns and personal problems we must take into account. Empathy is the best guarantor of a sincere commitment that benefits all parties. Seldom are the employees solely responsible for on-the-job mistakes. As often as not, there’s something that we could have done: improve our work systems, provide training and give them time to adapt, get to know their qualities and limitations before we assign them tasks and, as a last resort, terminate an employment that proved to be ineffective. It’s up to us. If we fully understand this, we can create the proper atmosphere by improving and diversifying our communication tools. A business that fails to establish adequate labor relations will just fall apart eventually, since the employer and the employee depend on each other and are equally important.

Ramón Manuel López Alarcón: As for me, I have been lucky to work for nice—albeit no less demanding—owners with whom I have had an excellent relationship. In the years that I have practiced my profession I have heard many colleagues talk about their experience and not all of them have shared a similar fate. Of course, that depends to a great extent on what kind of employee or employer you are, so I can’t make generalizations and say that those relations are good in every business. In my opinion, a climate that favors understanding requires professionalism in the workplace, where the employees must be capable of carrying out their duties and complying with any order properly, since that’s what they’re paid to do—an employer’s basic interest in addition to his/her professional self-realization. And good understanding requires that there be a line to follow and that everybody move in the same direction. To this end, the bosses (entrepreneurs) must be very sure about what they want and know how to guide their employees. Both must have an interest in seeing that the work is well done, which will reflect on any service they provide and, therefore, make their customers happy and willing to return. Once they fulfill their duties, what the employees care about is to get money for it and recognition for doing it well. Thus, I think, everyone is happy.

José Luis Martin: We are yet to have good research on social labor relation systems (SLRS) in the private sector. At any rate, there are two big groups therein: those who subsist and those who prosper. The former includes most of the employees and even some owners—usually self-employed—whereas in the latter we find mostly owners and a significant number of employees in jobs related to lodging, food services, construction and transport. Apparently, economic success defines so far the quality of their relations because both actors are still figuring out and/or consolidating their identities. The employees are not aware yet that they will be so forever on account of how persistently exceptional those activities are in Cuba. Their service life ought to change this picture.

Nowadays, employers and employees are allies, regardless of whether there is abuse, harassment, insecurity, etc., if any. Their struggle to prove that their income is legal and that they earn more because they work more binds them together. The effort to prevent the concentration of property and wealth works like a downward equalization or a restriction. It would be interesting to see what happens if we promote the opposite: increased earnings with collective profit-sharing and social responsibility practices, as a pretense of homogeneity, except upwards.

Rafael Hernández: How does the labor market influence entrepreneurship performance?

Caridad L. Limonta: I suppose that about 80% of employers and employees come from either the state sector or temporary turnovers in other businesses, but in any case they had institutional jobs. This group includes young newly-graduates who don’t do their social service and become very good self-employed entrepreneurs.

Another significant trend is that 15% of senior citizens who retire become either employees or employers, in view of both their high life expectancy and the low pensions that they get.

The remaining 5% could be unemployed people who avail themselves of this form of self-employment.

In my case, due to the characteristics of the manufacturing sector, many of my female employees are retirees who can sew by tradition and others who were laid off from or quit the state sector in search of better salaries.

Most entrepreneurs, not to use absolute terms, are qualified. Our employers and employees are at least high school graduates thanks to the country’s education policy. This has a great impact on the wheels of the business machine, since there are no big barriers between two parties who share a single goal: to be successful.

In my view, the businesses related to computerization technology count on high-level equipment and a young qualified workforce.

There is fluctuation of labor in the non-state sector too. In my experience, many of my employees have managed to open their own businesses and set themselves up as employers. This has a multiplying effect, since they become allies with whom we can fortunately link up when we lack the installed and production capacity to execute a contract. It’s a win-win situation.

Likewise, the country’s unstable material logistics has an impact on the entrepreneurial system. Then we explore every avenue and alternative to reformulate our strategies, and the actions and reactions are more resilient and dynamic to solve problems and propose new solutions to customers, suppliers and workers alike. Our employees also contribute to the bank of solutions. All these factors work in favor of entrepreneurial stability.

Ileana González Arteaga: Just like many of the other workers, the entrepreneurs come from the state sector. A minority of them became expendable in their previous job; others quit to join the non-state sector; and a third group moved from one private business to another. Besides, many of those who work in this sector had no previous jobs and found in it a way of meeting their needs by making more money for them and their family, achieving independence and self-realization, and identifying new opportunities.

In recent years, about one half of the students in our universities and the regular technical schools dedicate themselves to some form of self-employment (SE) for which they receive money, with or without a contract. Many of them start working in any given place to have an additional source of income and then the workforce becomes unstable and labor relations difficult to consolidate in many cases as a result.

Oscar Rafael Brito: The labor market is as flawed, as it is in every other economic sector. In our business we have a good employee retention rate; in most cases, our employees quit because they are leaving the country for good. It’s quite difficult to find formal qualified and skilled workers in any field, so we often have to train them to provide an efficient service. A poor culture of service provision, the exodus of skilled labor to other countries, an excessive state paternalism and the absence of private businesses for more than 50 years have left us a very depressed labor market. Most of our employees graduated from Cuban specialized trade schools and never worked in the state sector before. Therefore, training them to provide an efficient service is more viable because learning is easier than unlearning and then re-learning. Other employees come from similar private businesses seeking better salaries and working conditions. We have also hired repatriated Cubans, foreign nationals with permanent residence in the country and, of course, state sector workers, albeit in lower numbers and to perform accessory tasks. However, for the reasons that we all know, many good people wish to work in the private sector, so anyone who manages to get a footing in the market and be competitive will have plenty to choose from. In my case, I became an entrepreneur at 18; then I graduated from Law School and worked as a State and Government official for seven years; and for over nine years I have been an entrepreneur again, together with my wife.

Ramón Manuel López Alarcón: Right now everybody wants to work in the private sector. I was a state worker myself for three years and trained to be a cook before I went self-employed, and there’s really no comparison. I think most workers of my generation feel the same way. Things have changed now that a graduate has the chance to start off in a private business, of which there are many, unlike back in my time. I believe they all do it by their own accord and not because they lost their jobs in the state sector. This in turn favors the private sector by giving it more options to create better work teams with more highly qualified people. Sure enough, the most highly qualified ones come from the state sector because the private sector is younger. Most entrepreneurs also come from the state sector, because in this field your experience is essential to success, as is the length of your service to make the money you need in order to migrate to the private sector.

In my view, this is most noticeable in the customers. We realize that they find private businesses more rewarding in every respect, be it quality, service, cleanliness, etc. I’m not implying that state places don’t work in the same way, it’s just that very few of them do.

José Luis Martin: The labor market exists almost exclusively for the non-state sector of the economy. For now, it moves less than one third of the people employed in the economy (around 4,5 MM) and there is no record or study about what it does with a little more than 1,5 MM unemployed people of working age, half of whom, at the very least, could join the workforce. The labor market seems to function at two levels: one is visible, the other isn’t. In short, it has a highly desirable labor market compared to othars: it’s not responsible for providing jobs—employment is still largely dependent on state planning—it relies on a huge and magnificent reserve army of labor and even its worst tenders have a definite competitive edge over the disadvantaged, whose only assistance comes from the State and the planning system. It just has to maintain a favorable relationship vis-à-vis average income earned to succeed. But the question refers to the origins of the so-called entrepreneurs. Where do they come from? From nowhere else but the socialist, or more exactly, the state training and economic system. They learned in our educational system; they were or should have been state entrepreneurs; and they have the qualifications and, above all else, something left unsaid about the Cuban people and their subjective wealth: a hell of a life experience (pardon my language, but there no more honest way of saying it). We’re talking about people who have seen a lot of life (those at the top) and people who have done everything humanly and divinely possible in this life (those at the bottom). An important remark: they are not excluded; you can be left-handed and from the province of Matanzas. As to the employees, that’s another story. I have seen famous TV and movie actors working as entertainers or even waiting on tables in a restaurant. It can certainly be a space for a jobless person, and maybe it has been so, because we have seen everything, but things would be different if it didn’t turn into a shelter. Perhaps it is for some who get by in the private sector even if they have a state job. But the idea that it’s a job opportunity for those displaced from the state sector is but a theoretical truth with hardly any real reason other than subsistence.

These forms of ownership will not become a space of social confrontation any time soon. They will, depending on the development of the socialist relations of production and to what extent they will prevail as to productivity, as well as on the personal welfare of those engaged therein.

Finally, I think that Cubans are culturally communist, as they will just as easily embrace a popular religion. They condone neither injustice nor discrimination, despite hundreds of anecdotes to the contrary. I know and everybody knows that anything can happen, but it’s always different in Cuba. That’s not the problem, although as the wisest one said, “love aided by surveillance is the best form of justice and government among men”. The issue of inspection and regulation is still an unresolved matter in need of a good solution.

Rafael Hernández: What are the main problems arising from labor relations?

Caridad L. Limonta: I think that labor relations lack supervision and regular control.

In my case, we do have work contracts that we update every year. My employees pay their quarterly social security taxes and when they fall ill they receive at least 70% of the salary earned in the last six months. Likewise, they get protection in cases of commuting accidents or death of a close family member. We make it clear in the first interview that we implement a one- or two-month trial period, enough to assess the applicant’s skills, personal attributes and performance.

We have codes and standards of behavior, interpersonal relations and customer service that make the difference and establish a business referent. In this connection, we are zealous and demanding. Customers need to be properly assisted and understood; it’s part of an entrepreneur’s nature and in general a typical feature of entrepreneurship.

In cases of disagreement or indiscipline we call aside and sit with those involved, always trying to preserve the workflow and team spirit. We have not had any labor disputes, but I think that even if there are regulations about them they should be dealt with and resolved through a negotiation between the employer and the employees.

We pay by piecework and everyone is subject to the same working conditions and quality requirements. Poor quality and material loss are subject to penalty. We go on vacation twice a year, on July 20 and December 20, and we pay a bonus for these periods.

We look after the employee’s health and dental care and meet on a regular basis—including our most loyal customers—with a psychotherapist to provide our workers with coexistence, tolerance and teamwork tools and prepare them to cope with risk, conflict and mental health issues. This helps us through situations that we overlook during our daily work which are detrimental to our team.

Now, owing to the crisis caused by the Covid-19 pandemic, we give the employees the option of home-based work, bringing them assignments to where they live and picking them back up in a coordinated way, which favors a consistent income level.

Ileana González Arteaga: The main problems about labor relations in the private sector are:

  1. Professional conflicts between employers and employees. Sometimes the owner hires someone on account of his/her work experience whose suggestions are never heard from again.
  2. Long hours of unpaid work.
  3. No right to a vacation or to receive vacation pay.
  4. Using 10% of the service fee collected as salary rather than part of the worker’s tip.
  5. Absence of a contract or set of rules defining the tasks and obligations of every job.
  6. Absence of a grievance mechanism for cases of dismissal without prior notice or payment of compensation by either of the parties. As a rule, very few employees dare to meet face to face with the business owner to resolve a disagreement. Most act with caution and avoid discussing with the owner.

In my experience, with few exceptions, there have been very good labor relations among the employees and no labor disputes. What prevails is a friendly atmosphere, even with the newcomers.

Oscar Rafael Brito: Discipline and service quality are the main problems that we identify when it comes to the employees. On our end, we have made management mistakes such as failure to properly clarify tasks and responsibilities, getting angry about problems not always ascribable to the employee, or giving a public reprimand when best handled in private, to name a few. One of our prime goals has always been the improvement of our leadership skills, understood as a long but indispensable process to keep the business in good working order. Since proper labor relations is one of the most difficult and important matters in entrepreneurship, I deal personally with each problem or conflict in order to build trust and keep communication flowing. We have Service Guidelines—which we explain to them and append to the contract before the beginning of the labor relation—with details about our vision, mission, objectives and values as well as the common and specific duties of every workspace. The contract also mentions the grounds for termination of employment, for example, doing physical or aesthetic harm to the customer. We work for two days from 8:40 a.m. to 8:00 p.m. and then rest for another two days, covering the required 44 hours per week, and enjoy all other labor rights. The contract stipulates that termination of employment is subject to a unilateral decision, but even though there’s a 15-day term before it becomes effective, neither of the parties comply as a rule, which proves to be very damaging. That’s a consequence of entrepreneurship’s lack of legal protection.

Ramón Manuel López Alarcón: A major problem arises in labor relations when, for instance, an owner hires a qualified worker to make sure things work out properly and then expects that everything is done his way even if he knows nothing about the task at hand. That could happen among employees who rival with one another to excel or whose lack of concern about anything has impact on the work of their coworkers. Normally, they try to settle the matter among themselves and only if they fail to reach an understanding will they make the higher-ups aware of the situation for them to find a solution. Some places have work rules for every job position, but in general it’s not specified in the contract except at the employment agency, where everything is somewhat indefinite. It’s in the job interview, before the hiring, where you receive an explanation of the duties attached to the job, your salary, working hours, etc., but I have never seen that in any contract. The employment agency establishes a minimum or average salary determined beforehand. In these cases, the workers who do the same job should get equal pay, but that depends on the requirements, responsibilities and workloads. The private sector pays fixed salaries, but the owners also pay according to the percentage of sales rather than by the hour in order to incentivize the employees to do more and better. Some businesses take into account the man-hours worked to estimate the personnel’s vacation time. The time off varies; it can be every other day, two by two, one day a week, the weekends, the morning or the evening according to each workplace’s needs. Regarding occupational health and safety, it’s up to the employee to pay ONAT (the national tax administration office) a monthly fee for social security. Until now, when I have been ill, it’s the owners and coworkers who have shown concern. It’s not like that everywhere. I have never been to ONAT for this reason; I don’t even know how it works. Every workplace has the logical specifications about labor relations. I have never had to file any claim through legal channels, since I have never been fired from any place. The dismissals that I have witnessed were justified due to breach of labor regulations. If it were for downsizing or any other similar reason, the worker is entitled to severance pay at the owner’s discretion.

José Luis Martin: I insist on the need for sound research on labor relations and their structure in the private sector. It’s hard for me because I have almost no experience and what little I know is only hearsay or based on other people’s sketchy views. Given their heterogeneous nature, I get the impression that there’s a bit of everything and it depends on the qualities of both the employers and the employees. That’s what I can say about everyday labor relations. My point is, as far as I know, there is a contract or not, a commitment or not, and considerations or not while we hear just about anything from the stock of popular anecdotes: harassment, discrimination, abuse and other nasty things. I have also heard of thoughtful and respectful treatment. I repeat, it all depends on the human quality and previous work record of those involved. What really matters is that the private spaces are basically deregulated. State control has been more concerned about preventing the emergence of a capitalist class that might become a political actor—which amounts to preventing enrichment—than the despotic practices that define the form (i.e. content) of the capitalist relations of production. There are neither grievance mechanisms nor unemployment benefits; a one-week vacation per year that may be granted or not; maternity equals dismissal… In short, this sector is at once relatively solvent and absolutely precarious. You should also bear in mind that many of its employees work “under the table”, that is, enter in off-the-books contracts, which makes them all the more vulnerable.

Rafael Hernández: To what extent do the links between these businesses and other entities and instances influence labor relations between employers and employees?

Caridad L. Limonta: I believe that those relations depend to a large extent on the entrepreneur’s character, perseverance, preparation, motivation and interest, as well as on his/her certainty that the non-state sector is part of the new economic model.

Most of the institutions contract our products or services, but we are not part of the logistic system that guarantees the raw materials; that is, the receiving and supplying organizations.

Obviously, such an unsteady provision has as much influence on the business as on the employers and their employees. Hence the flexibility to do what you can with what you have, even if you have the potential for doing more.

I think that the Ministry of Labor and Social Security (MTSS), with its approval, inspection and control mechanisms, is precisely the closest entity to the self-employed workers. We still need to form alliances and links with bodies and sectors related to the high number of non-state job categories. In the future, our interaction will somehow contribute a great deal to the improvement of the economy. In fact, great solutions in these hard times of crisis have come from socially responsible entrepreneurs.

We are connected to the Union of Industries and have presented papers in national and international conferences, but as I said, it’s not enough.

We are pleased to have consignment and sales contracts, production linkages to the Cooperative “Model” and other customers. However, it’s fair to say that we as entrepreneurs have established cooperation networks and alliances which show that we have plenty of strengths still not in use or considered as being part of the value chain. These alliances and services range from accounting and business consultancy to design, IT, production, promotion, etc.

Unfortunately, we notice that some state institutions still have reservations about hiring our services, never mind the Decrees and Resolutions authorizing them to do so. I’m confident that the end of the pandemic will unfold new horizons for some entrepreneurs.

While there are unlawful acts that must be dealt with, there are many people who ennoble entrepreneurship in our Homeland with their contributions and the services that they provide in their communities under the protection of a Decree. They also deserve recognition by local and labor-union institutions. We could mention many entrepreneurs who enjoy recognition in their territories, but it’s not enough. I think that a responsible and socially relevant business whose customers are attracted by its service quality, image, working environment, etc., dignify their neighborhoods, which no doubt works in favor of entrepreneurship in our society.

Ileana González Arteaga: The state institutions attached to the ministries of Labor, Public Health, etc., interact with private owners or their representatives, never with their employees. The unionized workers never rely on their labor union; they just pay their membership dues and settle their matters directly with their employers.

As to their value to the community, many businesses create jobs in the areas where they operate, which allows them to relate to the local families and residents and help them improve not only their economic situation but also that of the neighborhood.

Oscar Rafael Brito: The idea that the same structures of the MTSS and the Cuban Trade Unions (CTC) should look after both the entrepreneurs and their hired labor is utterly counterproductive, puts a strain on their efforts to protect the workers and nullifies the protection of the employer figure. I’m not familiar with the way that the CTC, the local governments or the corporate structures of any other State Central Administration Body (OACE) have an impact on labor relations. I do know, though, that for some time now there has been more cooperation and conciliation between the local governments and some businesses, but it’s not a widespread practice. Regrettably, the public policies about entrepreneurship and its relationship with the state sector and the gulf between the letter of the law and the entrepreneurs’ practices and realities undermine the effectiveness and heath of labor relations. When it’s competent and looks after its staff, a business venture can affect the performance of its counterpart in the state sector—in other words, its competition—because the employees of the latter might quit to get a job with the former, or vice versa. We also share good practices in terms of working hours, salary systems and labor protection. At the community level, our workers make outstanding contributions to our Business Social Responsibility. We often provide free services to senior citizens or low-income households and help many needy neighbors. As to the environment, we contribute to the beautification of outdoors and common areas, that is, gardening, hygienization, painting, etc.

Ramón Manuel López Alarcón: Far from helping, the state institutions slow down private activity. They seldom offer their help selflessly. Anyway, it doesn’t happen in full view of the employees; the employers (entrepreneurs) are the ones who have to go through that. There are mass organizations in the private sector just like everywhere else, but I think they count for nothing. As a rule, all matters are dealt with among the employees and the entrepreneurs themselves or with other businesses in the same sector, always thinking of making progress and solving their problems without waiting for anybody’s help, perhaps by force of habit or for being unaware of the assistance that those institutions can provide nowadays. One of the reasons that I decided to take part in this panel is the chance to talk about my experience and get valuable feedback on how to carry on with private work. I believe that the entrepreneurs are quite useful to the community inasmuch as they create new jobs and provide services otherwise unavailable, and the population is grateful for that.

José Luis Martin: Even if speeches and statements draw a different picture—proof that they know what is right—the relationship of the country’s current institutional system with the private sector lacks a well-defined and transparent platform for cooperation and complementarity. In practice, we have achieved quite a few accomplishments, mainly in construction. I know there has been acknowledged progress in quality, timeliness and integrity regarding the use of resources, which should serve as an exampleon which to build the platform for cooperation. In reality, however, many of those cadres behave in an inconsistent and at times suspicious manner and in general remain aloof and uncommitted.

The state inspection is adequate and convenient regarding workplace hygiene and safety, but not so when it comes to labor relations—apparently excluded from its scope, which makes sense because it’s not too different in the case of the state sector. We’re also aware of the CTC’s decision to welcome the self-employed into every branch of work on equal terms, with no distinction between employees and employers and without a platform for cooperation particularly designed for them. That explains why so very few private workers join a labor union.

In my view, the lack of communication still prevails, as does the fact that some see [the private sector] as a necessary and maybe temporary evil while others maintain that everything is revertible and uncertain and that the “Revolutionary Offensive” of the late 1960s could well make a comeback. In short, two absurdities based on prejudice.

This is due to the absence of clear-cut and transparently regulated platforms for public-private alliances. Moreover, while organic solidarity in Cuba is very well-structured and stands as a value of Cubanness on a personal or family level, organizational solidarity is sorely disarranged and sometimes it comes along with regulatory barriers or practices by no means committed to the community and the people. There are as many excellent instances of solidarity in the private sector as there are commendable practices in certain state organizations, but it all depends as much on the individual’s education and values as on some people’s willingness to prove that things can function differently. The rationale behind the so-called Social Solidarity Economy provides a frame of reference worthy of consideration and everyone’s appreciation. It’s both possible and necessary.

Rafael Hernández: What policies, regulations and practices could contribute to labor relations that benefit employers and employees alike?

Caridad L Limonta: One of the policies, regulations and practices that I can suggest as beneficial to the future of both figures is the supply strategy. Even though some items have approved import licenses, the purchasing process must be sufficiently dynamic and expeditious to constitute a tangible and objective solution.

Another necessary practice is communication and feedback through sectorial meetings in which the entrepreneurs can showcase their products and services. There could be entrepreneurship mini-fairs, with employer and employee participation, where the state institutions would get firsthand information about the solutions and services available to them. Local meetings of entrepreneurs could also contribute to regional development and to the promotion of business ventures that sometimes move out to other communities for lack of support and understanding within their area of operations.

Ileana González Arteaga: There should be a signed contract defining the duties, obligations and rights of both employers and employees as well as the latter’s tasks, working hours, days off, paid vacation time according to their job, and financial compensation in case of unfair dismissal. It should also provide for compensations for the employers when they turn out to be the affected party.

To this end, there should be a single labor union for non-state workers so that they can organize themselves based on their economic activity. The CTC has tried to integrate them into the labor-union system currently in use in the state sector, but in a perfunctory manner, without adapting them to the country’s new social and productive spaces. Consequently, unionization has not been very popular with a new sector whose actors and interests are totally different from those of the state sector. Bear in mind also that the form of relationship that prevails in the labor-union system applied in the socialist state enterprises stipulates that they represent the State, which in turns represents the workers.

In like manner, it would be convenient to establish associations or unions exclusively for entrepreneurs. Employers and employees should not be in the same labor-union organization because they have totally differing and conflicting interests that make it impossible for the union to represent them equally.

A labor union should be in a position to represent the workers and act effectively on the regulations and concepts that govern such a relationship with a view to resolving the conflicting situations which the system of labor relations is currently facing.

Oscar Rafael Brito: The legalization of the much-mentioned SMEs and the enactment of an Enterprise Act would no doubt be a significant contribution to the improvement and transparency of labor relations in the private sector. By granting legal protection to all business ventures, tailoring their tax system, and making trade and the market more viable would logically pave the way for a notable increase of business and, therefore, more jobs and benefits for their holders, who should have better salaries and working conditions because their skills would be more in demand. Some countries have an independent governance structure (like an OACE) under the central government to take care and coordinate the work of the SMEs and the private entrepreneurs. We would do very well to have a similar thing in our country. Leaving public policy proposals for a given field to the governing body in charge of it (for instance, the National Institute of Water Resources, as the governing OACE, drafted the National Water Policy) is common practice in Cuba. Then there is a conciliation period before the government’s approval, a procedure that I consider adequate and which makes it possible to highlight the real needs of and possible solutions for the relevant field. This should also apply to entrepreneurship and any potential SME. The universities, research groups, related OACEs and other entities are a great help, but there is no question that no one understands, feels about, and works harder for entrepreneurship than the entrepreneurs themselves together with their collaborators and employees. I think that the very dynamics and composition of this panel is proof of that.

Ramón Manuel López Alarcón: First we must make each party’s duties quite clear, in writing if possible, so as not to make them conditional on anybody’s memory or logic. The employees must be fully aware of the guidelines that they have to follow to do their job well and for which they can be held accountable. The employers, in turn, must make available to their employees everything they might need to fulfill their obligations so that they can reach the goals that they expect and desire. There must be a place to deal with cases of employers or employees who are legally liable for breaching of contract in situations of resignations or dismissals. Sometimes an employer makes a decision that leaves the employees unprotected, but they cannot afford losing their job. Likewise, an employer loses out when a worker decides to quit without previous notice, usually before the end of his/her shift. All workers should have the right to paid vacation time based on a percentage of their monthly salary retained for that purpose. I also think that another percentage can be deducted from the monthly salary for dismissal compensation or when an employee tenders his/her resignation in due time and without damaging the business. Both parties would thus have assurance that these procedures are properly followed.

José Luis Martin: I already talked about public-private alliances and Social Solidarity Economy. Adding the private sector with well-defined and agreed roles to the other fields of work should be an item on the strategic local development agenda. Observance of the contracts, formal and unbiased arbitration, transparent and auditable tenders; in short, doing everything by the book will ensure the ethical values that economic recovery can’t possibly dispense with.

The joint business ventures between all kinds of cooperatives and common-property enterprises and entities and the private sector is the trump card that the territorial authorities and even the Top Corporate Management Organizations (OCDE) should use to resolve specific production and service problems.

Using every available channel to advertise the best experiences and practices of socialist labor relations should be one of the Revolution’s top strategies, starting with the state sector, but not stopping there! Socialism bears and nurtures a different culture of work, based on very high productivity, and is intrinsically supportive and emancipatory. The formation and promotion of that culture is the solution in prospect. It’s infuriating to realize at every turn Saint-Exupéry’s warning that “what is essential is invisible to the eye”.

Rafael Hernández: No more questions for the panelists. Now I give the floor to the participants for questions and comments.

William Bello (University professor; business and corporate social responsibility consultant): I believe that labor relations between employees and employers, at least in the private sector, respond to the fact that the demand for real employment exceeds by far the supply of jobs. There is great interest in private sector jobs, where the salaries are obviously higher than in the state sector and, therefore, the employees have an advantage over their employers. Martin also pointed out an interesting fact when he said that the labor union membership is made up of employees and employers alike, and when they’re all “on the same side” it’s very difficult to settle a conflict of interests. I don’t think that things can work that way. There should be a guild for business owners and a labor union for hired workers.

Owing to those higher salaries, people are often willing to overlook certain things that they would never accept under normal circumstances. That’s why now and then some entrepreneurs work without a clear dismissal compensation system or demand a little more than what I think they should. However, the employees carry on just on account of the better pay. On the other hand, moving around the self-employment market is complicated because not all jobs pay the same and it’s difficult to find a second job with the benefits that you consider as most favorable.

Eric Caraballoso (Journalist, OnCuba News). What social security measures does the Cuban State offer today to private sector employees? On what legal grounds can—or should—the State itself rely to mediate in the relations between private sector employees and employers? What prospects do the panelists see in the short and medium terms for the consolidation of a legal framework that stipulates consistent and organized relations between employers and employees and provides the guarantees that both need to that effect?

Daybel Pañellas (Psychologist and professor of the University of Havana): Although no national research has ever been published, the results produced by some field studies throw into relief the heterogeneity and contradictions of those labor relations. To begin with, despite the legitimate title of this panel, I think it’s important to not restrict the term entrepreneurship or the employer-employee relationship to the private sector. While both have particular characteristics, they’re also part of a systemic relationship which also gives rise to the interchange of forms of relationship between the actors and their jobs as much as among themselves.

On the other hand, even if a legal framework is a determinant of and a means to protect the said relations, there are other cultural, structural, ideological and subjective issues to consider. For example, inequalities in or between groups of people based on gender, age or skin color; incentives to work in the sector; the visible and required characteristics of a given role; the type of exercised leadership; and the reasons for mobility within and between groups.

The private sector is appealing in terms of autonomy and economics, creativity, social creativity and autonomy; however, not so much when it comes to responsibility, lack of time, stress and instability. Nor is it necessarily the option most coveted by a number of professionals who don’t feel at ease in a sector where they can’t practice what they learned.

Moreover, the CTC as an organization connotes meanings very often questioned and repelled, especially within the younger generations, because of its ill-defined role in defending the institution rather than the workers. Nonetheless, there is a clear demand for association deemed necessary for those in the sector, which entails support, inclusion, visibility and empowerment.

The assistance to and training of employers and employees is also important, both to the consolidation of the business and its role and to its ability to exchange views with all sorts of people, including officials and the media engaged in the reproduction or transformation of sector-specific stereotypes. Besides, the educational level is a variable with significant implications for the result of our research.

An employment policy must also cover social security—an issue increasingly mentioned in recent times and particularly because of this pandemic—in light of some vulnerabilities that affect not only the employees but also many employers. As often stated since the beginning, this sector is very heterogeneous.

 Jackie Cannon: From England I ask the panelists if they notice—I don’t know if you have any information about it—any difference between the attitude of a Cuban businessperson or entrepreneur who has traveled around or lived in another country and that of one who hasn’t.

Adriana Sigüenza (Industrial engineer, Project Cubaemprende): I have a question for the panelists, whom I also congratulate on their good and professional comments. Which elements are key to the success of employer-employee relations in the Cuban private sector?

Maricel Ponvert Iser (Founder of D’Marie Holistic Wellness Center): From the outset of my business I had many problems with labor. We are Reiki massage therapists whose service creates problems because it’s custom-made and very personalized. But I solved them at once by organizing a workshop on massage and another on Reiki. That is, we train our future workers, and nowadays all my employees come from those courses. From the first lesson I get to know them little by little and then decide whether I will hire them, keep them on the reserve list or simply conclude that they can’t possibly do this kind of job.

William Bello: Martin talked about a very interesting question, namely where the entrepreneurs come from. I agree with him: we all are entrepreneurs, we come from the same place and have the same education. It’s very interesting because when I started in the field of Business Social Responsibility and its certification I wondered why the Cuban entrepreneurs were interested in being socially responsible. At some point I worked on the theory that it was risk-reducing. In their case, it actually made them more vulnerable, but in the end they would take the risk of engaging in BSR on principle, because like Martin said, solidarity has deep roots in a Cuban’s ideology and idiosyncrasy. It’s perhaps what makes us different from our peers in other parts of the world. We have been raised with the profound values of socialism, solidarity and humanity, and somehow, he also remarked, the same people who used to work in the state sector, all members of the Cuban society, are today’s entrepreneurs. They are the same people with the same values, now faced with a new reality to which they try to apply those values. I’m not saying that all entrepreneurs take heed of social responsibility or intend to run a socially responsible business. It’s that, in contrast with other environments, that process developed more rapidly in Cuba. Therefore, we will have to introduce legislation for a private labor environment bound to be much more favorable to both the employees and the employers.

Ricardo Herrero (Cuba Study Group): I have a few questions. I would like to know the most common channels in Cuba for an entrepreneur to advertise job offers and scout for and hire talent. Is it by word of mouth or do they use websites or other professional online services such as LinkedIn? How are salaries established, by whom and on what basis?

Rafael Hernández: The panelists have the floor once again for comments or answers. They can also add anything they might have forgotten to mention.

Caridad L. Limonta: I totally agree with psychologist and professor Daybel Pañellas’s words and approach. It’s true that the non-state sector’s diversity and composition merits appraisal. In reply to Eric Caraballoso’s question, even if there are regulations and legal provisions in support of employers and employees alike, I believe that there should be a manual or document that all of us could use as a tool to learn about their rights and duties. We don’t have that right now.

About Jackie Cannon’s comments on the experiences of those entrepreneurs—be they employers or employees—who go abroad and return, it’s undeniable that they come with a different view, especially when they have the chance to observe, assess or advise other businesses. But beware! You need to put those experiences into context because there’s no point in bringing here everything that you learned around the world if you won’t be more creative, resilient and willing to find solutions.

Ileana González Arteaga: In response to Eric too, I agree with Caridad—I think I’m not as experienced as she is because she’s still working in this sector—in that neither the employer nor the employee are protected. As a result of the ongoing COVID-19 situation and the problems it has caused to labor and the economy, the MTSS took a number of measures but only for the benefit of workers in the state sector. They don’t provide for, regulate or establish anything regarding non-state and self-employed workers. Consequently, both types of workers are in danger of losing their means of support because they have no protection other than any savings that they may have at home or in a bank account or the social security system. Meanwhile, the state workers kept receiving their full salary at first and then 60% of it.

Oscar Rafael Brito: I guess that our answers to the five questions and to those of the other participants have covered the topics under discussion. The questions were somewhat far-reaching and to the point. The answers to some of them were in the interventions, so I don’t think they are worth repeating. Anyway, if you want me to talk or give you more information about a specific subject, I will be pleased to. Thank you very much.

Caridad L. Limonta: There’s no labor pool in the non-state sector nowadays, nor has the government established a proper mechanism for us to submit our demands and needs as entrepreneurs or private workers and for people of working age to apply for a job that they have the experience and meet the requirements to fill. Furthermore, except for some service-related occupations, almost all the self-employment categories that the MTSS approved involve production. For example, a designer can’t apply for a job in a design firm any more than a lawyer will be allowed to be the legal adviser of a private business. The status of “individuals with authorization to perform self-employed work” carries a lot of weight in this case, since we have business ventures in this field which are not nominally recognized on an institutional level. In other words, we are not enterprises.

About the definition of wage scales, although I pay by piecework, I always inquire about the average income of a well-paid seamstress in a cooperative, in a state industry—where she makes less money—or sewing shop, etc. Then I establish a wage level such that my business makes a profit and the worker feels satisfied and pleased. That’s in general the basis that we use. We make certain comparisons, but not because of any legal regulation forcing me to pay this or that minimum or maximum wage.

Ramón Manuel López Alarcón: I couldn’t agree more with Professor William Bello’s remarks, as they tally with and provide more arguments than what I said when I answered the question. His second intervention even taught me a few things.

In reply to Jackie Cannon’s question, there is indeed a difference between the employees who travel and those who don’t. They manage to appreciate by themselves the management systems implemented in other countries, undoubtedly more polished than ours after their long experience in the private sector. I have been in workplaces where there are people who engaged in business after traveling and others who have tried to do the same using the local knowledge.

I’d like to congratulate Maricel Ponvert on her solution to the lack of skilled labor. I think it can be just as useful to many entrepreneurs to remedy one of the biggest problems that we have today.

In answer to Ricardo Herrero’s question, we use every possible means to search for jobs or employees, even by word of mouth. Many times the employees themselves know someone whom they recommend to us. Now we are using the social networks or websites like Revolico or Bache cubano. ONAT fixes the salaries, and then, depending on the business, we give the workers cash incentives.

José Luis Martin: I will answer the participants’ questions. Thank you all for your mostly interesting but always clever and much to the point.

Eric asked about State guarantees. Other panelists answered that, and I said in turn that we’re talking about a largely deregulated sector, quite precarious in that respect. The lack of security is what makes it so and its main problem, whereas its advantage is that they make much more money. I think that in the medium term, to the extent that we encourage the development of different economic spaces and the market manages to reach its rightful place and establish the necessary link with the planning structures—in manners that it would take too long to enumerate here—this sector will be much better organized. Mark my words, Eric, in the medium term.

Daybel raised an excellent and fundamental point about the peculiarities of this sector, to wit, its heterogeneity, one of its prime features.

Jackie asked about the influence of travelling. Your culture of work always has an influence. When a British person who comes to work in Cuba returns to the U.K. they start fooling around with people and poking their nose into their personal affairs. It’s because now they are more outgoing and do a lot of things deemed natural in Cuba but not in the U.K. and other countries. What’s the difference? I have met very professional foreigners working in Cuba, but they are quite restrained and not as overly familiar as the Cubans, who establish another kind of rapport with customers. On the downside, the Cubans have a gift for justifying malfunction: something went wrong, and they explain it as if it were the most normal thing in the world. That’s also a culture of work.

Adriana was wondering about the key to success in labor-management relations. It’s the same in the private as in the state sector: we’re “cousins”; you are an industrial engineer, and I am an labor sociologist. Regardless of the sector, you achieve effectiveness and clarity through an adequate and fairly proportional organization of your system of social labor relations to ensure that the job requirements are in keeping with its holder’s competence and the incentive and penalty plan fits the collective motivations. And the workers must get involved, which is not only about giving opinions but also emulation, management, innovation… It’s essential to have those things and that they should be on a par with people’s potential in order to improve human relations and change things for the better. When everything turns out well, there will be good relations too.

William’s comment was very relevant and in agreement with what I said. The more regulations we have, and the more equitable they are, the better. And rest assured that we are working on ways to help entrepreneurs work within the law, reward people’s social commitment, and to see to it that our tax policy and every other regulation give better treatment to those who perform better.

Finally, Ric Herrero asked about the ways to find a job. I know that sometimes the social networks post job offers, but as a rule the personal and family networks are the best source. About salary levels, according to the reports that I have you use what the State pays as a baseline and then multiply that figure by 6, 7 or 8. That’s in essence what the private sector pays.

Ileana González Arteaga: I’d like to make reference to the topic of affiliation. I think that a man or a woman who owns a restaurant or a business with more than fifty workers is not just an ordinary employer but an entrepreneur. It would be necessary then to develop specific ground rules for this type of figure that is showing up today in our country’s private market. The labor union is and must be there to protect labor rights and those associations of entrepreneurs that I mention must also be there to protect their members’ interests, because both figures have different concerns. There’s no point in denying that. If the labor unions changed their structure and work style, many more workers would be willing to join them.

Rafael Hernández: It’s almost 6:00 p.m., the usual time to finish Último Jueves. We had a great turnout, not so much in terms of number as of quality. Seven participants from Cuba and abroad took the floor. We are very grateful to you for your attention to this panel and your intelligent questions and acute comments. Needless to say, we thank the panelists for their great effort and their elaborate, rich and, I would say, incisive answers to such complex questions and for helping us understand and fathom the nature and particular and relatively strange intricacies of labor relations in the Cuban private sector.

It only remains for us to invite you to stay connected, since later on we will feature all interventions in text format and as a podcast on Temas‘s blog Catalejo and the social networks.

We thank you all very much for coming and for your very special and enriching contributions to the analysis of these issues. Have a nice day.

Traductor: Jesús Bran


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