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Cuba's big transition from public to private

Cuban Ivonne Molina works on her old Singer sewing machine at her house in Havana. Cuba will eliminate more than half a million state jobs over the next six months as part of a push to raise productivity in the communist-ruled island, the country's main labor organization said Monday.

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Kai Ryssdal: For all the talk of job cuts and unemployment in this country, we've got nothing on the layoffs announced in Havana, Cuba yesterday. President Raul Castro, Fidel's younger brother, said he is going to cut 500,000 public-sector jobs and make most of them private-sector jobs. It's a pretty clear acknowledgment that Cuba's having some financial difficulties. It wasn't spared by the financial crisis, and it is struggling to struggled to recover from hurricane damage two years ago.

From WLRN in Miami, Kenny Malone reports.


Kenny Malone:Raul Castro has made some "free market" moves before, like turning vacant fields into private farms or letting barbers be their own bosses. But today's move would nearly double Cuba's private sector. That's real change, right?

Andy Gomez: Uh... we'll have to wait and see.

Andy Gomez is a senior fellow at the University of Miami's Cuba Institute. He says state workers make an average of $20 per month. If the government can't even afford to keep those employees on their payroll, this is act of financial desperation.

Gomez: In talking to some of the Cubans on the island, they're very concerned in terms of what the layoffs mean and what they're going to do next.

Uva de Aragon helps run the Cuban Research Institute at Florida International University. She says Cuba isn't exactly fertile ground for small businesses. There's no credit available and between income and social security, taxes could be as high as 30 percent.

de Aragon: For a population that's been used to working for the state and having free medical and free education, that's a difficult pill to swallow.

But Philip Peters, a Cuba expert at the Lexington Institute in Virginia welcomes the move. He says it could go as smoothly as the privatization of barbershops earlier this year.

Philip Peters: Somebody's going to walk in there one day and say, "Gentlemen, this thing is now a cooperative. You're not going to get any more salary, but you're going to still work here. You're going to pay some tax, and you're going to keep the profits."

The 500,000 laid-off workers could have more competition soon. The Cuban government has indicated that deeper cuts may be on the way.

From Miami, I'm Kenny Malone for Marketplace.

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