Cuba's Brave New Economic World

HAVANA, Cuba Sept. 15, 2010— -- A brave new world is slowly dawning in Cuba as the cash strapped government of President Raul Castro cuts gratuities and subsidies, designs wage systems based on performance, sheds state jobs, revamps the feeble tax system and liberalizes agriculture in search of socialist sustainability.

The government announced plans Monday to lay off 500,000 state employees over six months and spur development of non-state jobs in their place, the biggest shift to private enterprise since the 1960s after Fidel Castro moved his revolution into the Soviet camp.

Cuba is a poor, developing country, embargoed by the United States, caught in an antiquated system and racked by hurricanes. But the basics, from jobs to food rations, health care and education were always guaranteed. Except for health care and education, that is no longer the case.

The austerity measure is certainly painful, but perhaps not as painful as one might think.

Many Cubans working for the state in jobs from driving taxis and repairing appliances to waiting on tables and making furniture will move to leasing their activity or working as cooperatives.

At the same time state employees, most of whom already do something on the side to make ends meet, will now strike out on their own.

Havana secretary Kendra, like many of those being let go, already is self employed in her spare time doing friend's nails and hair, as her state salary of $15 a month lasted barely a week.

"I guess I'll do this full time," said Kendra, who asked to be identified by her first name only.

"The recent announcement that the government will shift 500,000 state jobs to the private sector confirms the important, but gradual and slow reforms underway are irreversible," Arturo Lopez-Levy, a Cuban-American political scientist at the University of Denver, said.

"The government has committed to opening more space for small business and cooperatives, which to function need the model to change from state dominated toward the market," he said.

Lopez-Levy, like other experts, says the measures must include the recognition that the private sector is not evil but indispensable, an ideological shift that Castro has clearly supported in Agriculture where he has leased land to more than 100,000 new farmers and ordered private farmers be supported in the same way as state farms.