Salaries and Productivity: the Cornerstone

August 16, 2012 | | Print Print |

Fernando Ravsberg* 

Doctors are highly productive – nonetheless their wages will remain the same. Photo: Raquel Perez

HAVANA TIMES – The principle of increasing productivity as a prerequisite for increasing people’s wages seems irrefutable, from an economic standpoint. However, it’s not something pleasing to those Cubans who are forced to “inventar” (invent) to make ends meet.

But even when one accepts this principle as valid, many wonder why salaries are not being increased for those people working in sectors that are already productive, some of which have produced tremendous economic returns for years.

Highly productive low-paid doctors

Public health care, for example, provides the greatest portion of the foreign exchange that comes into the country. The combined revenue from 2 million tourists and the remittances from 1.5 million immigrants are less than the earnings obtained by the government from doctors working overseas.

Though one couldn’t ask for more productivity from this sector, the wages of its workers continue to be inadequate for them to live on. Patients know this, so when they come for their appointments they often bring a gift – from a cup of freshly brewed coffee or a snack to a whole pig.

Some doctors who have served on missions abroad complain that now the government is refusing to pay them their compensation of $50 USD per month, which apparently had been promised before sending them to work for two years away from their families.

The official Granma newspaper published an article with the costs of health care so that citizens know what they are receiving as their “social wage.” It’s a good idea, but it could also say how much is paid to a physician for each of these consultations.

They work hard, carry out on-call shifts, participate in foreign aid missions and in this way bring in millions to the government. So why don’t they get wage increases? Why are they being treated the same as unproductive sectors?

Cigar growers too

But these aren’t the only workers in that situation. Recently I went exploring in the Santo Tomas cave, the largest in Cuba, located in Pinar del Rio Province. Along the way I visited a bohio (hut) without electricity. They didn’t even have a refrigerator for preserving their food or keeping water cool.

Revenues are also very high in the cigar industry, but the incomes of farmers remain low. Photo: Raquel Perez

The woman of the house is the buyer for a cigar company in the area. All year round she controls the planting and care of the crop, and after the harvest she decides on the quality and price. She earns only $18 a month, despite of the enormous profits for the country.

Small farmers are also very productive. Very little is invested in them and yet their output is much higher than state-run farms. But the campesinos were not the ones who created those farms. An absurd distribution system was imposed and the administrators over this industry were appointed, thanks to which they continue to lose crops of rice, tomatoes or bananas – according to complaints in the Granma newspaper.

A new model and motto

Because of all this, many Cubans feel that it’s an injustice that the workers are the ones who have to suffer with their low wages. They believe the low productivity is the government’s fault, which is the entity that created the mechanisms and promotes inept and inefficient administrators.

One Cuban economist told me that when analyzing a company’s lack of productivity, what should be identified is whether it’s the fault of the employees, the poor performance of their supervisors and managers or because the model doesn’t allow them to produce.

An accountant at one of the hotels with the highest occupancy rates in the capital explained to me that his company is “unproductive” because they turn over their hard-currency CUC earnings to government and they are exchanged for national currency pesos at a rate of 1:1 (one dollar for one peso), when the real exchange rate should be 1:24 (one dollar for 24 pesos).

It is up to the government to free up the productive forces from the corset-like model that doesn’t let the economy breathe. It would also help with production and services being promoted by the authorities if they were to think in terms of professional suitability and not just political reliability.

As the model ends up being “adjusted,” they could pay better wages in sectors that are productive, such as with doctors and tobacco growers. They would not have to be afraid of inequality because this would certainly become an incentive to others.

A few years ago the government decided that social justice shouldn’t be based on citizens receiving equal incomes, but on them having “truly equal opportunities” – while ensuring that the poorest have the basics to live as human beings.

That is the cornerstone around which a nation could be built.
—–

(*) An authorized Havana Times translation of the original published by BBC Mundo.


What's your opinion?

  • http://www.GRDPublishing.com Grady Ross Daugherty

    The idea of socialism as having equality-or-incomes is an old Utopian socialist idea. It did not arise from working class thinkers–like P-J Proudhon–but from bourgeois thinkers who did not have to be practical. It is, objectively speaking, an anti-socialist and counter-revolutionary idea because it destroys incentives and ultimately destroys any socialist state that tries to force in on the people. Fernando’s article is right on.

    A major economic problem of state monopoly ownership socialism is that the working people do not receive an adequate share of the surplus values they produce. All goes into state coffers. Working people therefore do not have the incomes sufficient to purchase goods and services, thus preventing the growth of a vibrant small service bourgeoisie. This perverts all of society and alienates broad sectors of the people.

    The question as to “Where is the surplus value money going?” might be answered by payment of interest on public debt. I don’t know how much of the country’s wealth is being sucked out by monopoly capitalist banks in the form of so-called “debt servicing,” but I think it is substantial. If interest payments are indeed sucking up too much of the nation’s surplus value production, this might help explain the low wages and salaries.

    Hey, Fernando! How about an article on the role of interest payments in the low wages and salaries of Cuban workers?

    • Moses

      Grady, wrong again. Cuba’s problems do not come from paying debt service. Cuba has almost the lowest Moody’s credit rating available (Caa1-substantial risks) and NO rating from Standard & Poor’s because of their historically abysmal debt repayment record. Fidel, years ago, defaulted on hundreds of millions of dollars of IMF and World Bank Loans and Cuba continues to hold income earned by foreign companies doing business in Cuba. I agree with Raul that the culprit here is low worker productivity. According to Marx’s theory of social surplus value, worker productivity is the reason for the rise and fall of surplus value. Cuba’s sugar crop for 2011 was the lowest in more than 100 years. Is it any wonder surplus value is low? There is little argument that the system is broken in Cuba. The question is whether it is worth fixing.

      • http://www.GRDPublishing.com Grady Ross Daugherty

        Moses, there is little argument that the system is broken and worthless in the US and the capitalist world. The only question is whether it will be replaced by a world network of socialist cooperative republics, in time to keep civilization from being destroyed by environmental catastrophe or nuclear war, or by both.

        I’d like very much to hear from Fernando Ravsberg on the subject of Cuba’s foreign debt, and the yearly interest paid on it.

        By the way, if Cuba did default on hundreds of millions of dollars in IMF and World Bank loans, I say Bravo! The reason? Banks do not “loan” money. They extend credit based on the future productivity of the borrower, something owned by the borrower by natural right. Interest therefore is unjust, regardless of the rate. The IMF and World Bank are usury bloodsuckers, and if Cuba avoided their usury racket by any means, again, Bravo!

        You may “agree with Raul that the culprit here is low worker productivity.” But what is the origin of the low productivity? It is due to the disincentives of Marxian state monopoly socialism, as workers say, “They pretend to pay us, so, we pretend to work.” Workers are not to blame. The blame falls on the erroneous conception of what constitutes “real” socialism.