The Militant(logo) 
    Vol.61/No.28           August 25, 1997 
Production Slowly Recovers In Cuba  

HAVANA, Cuba - "Things are looking a little better," said Regla María Cuesta, 28, a sewing machine operator at the Renato Guitart underwear factory in Minas, Guanabacoa, on the outskirts of Cuba's capital. She was describing the efforts by garment workers there to boost production.

"In the first quarter of this year we made 14,000 pieces of underwear, 2,000 over our goal."

The Guitart plant reopened in August 1996 after an eight- month shutdown, and the production rate has been picking up. Militant reporters visited this shop and seven other garment and textile factories in or near Havana in late April. While there, it became clear that the small and uneven recovery in industrial production, which began in early 1995 across the Caribbean nation, is being registered in these industries.

More recently, government and national union officials have pointed to increasing production in nickel, tobacco, fishing, and tourism. Miners in Holguín, for example, announced at the national convention of their union here June 23 that they are on target to produce 60,000 tons of nickel this year - 7,000 tons over last year's all-time record. Carlos Lage, executive secretary of the country's Council of Ministers, said at the end of June that these increases in production will more than offset a decline in this year's sugar harvest and result in a growth of 4-5 percent in Cuba's 1997 gross domestic product (see "Sugar harvest in Cuba falls short of goal, agricultural workers confront challenge," in the July 28 Militant).

Since the worst period of the economic crisis, which bottomed out in the summer of 1994, food shortages have eased, electricity blackouts that were long and widespread three years ago have diminished, and transportation has slightly improved. As a result, the difficulties of daily life, such as waiting for hours at a bus stop to get a ride to work, have been alleviated to a degree. In the initial years of the "special period," which followed the sudden end of aid and favorable trade relations with the USSR and Eastern European countries at the opening of the 1990s, Cuba's gross domestic product dropped by an estimated 35 percent.

While a number of factories that closed for a period of time have now resumed operation, much of the goods produced are for export or a growing domestic market in U.S. dollars. Most of the shirts, pants, or swimsuits produced in the garment factories we visited, for example, were for trade abroad or for sales in dollar stores that are now spread throughout Cuba.

"The fact that much of the basic clothing we sew can only be purchased in dollars creates friction and inequalities," said Clara Ester Fonseca Tavares at the Luis Fernándo Rodríguez, formerly Viti, garment plant in Guanabacoa. "It's not in the spirit of socialism we fought for before the special period. But I know hard currency is needed by the country to benefit everyone in society, especially workers. We now have to use dollars to import medicines, food, oil, machines, or cotton to make fabric for these clothes. The legalization of the dollar was a necessary evil."

Magali Díaz, a sewing machine operator at this factory, explained that after the 1959 revolution workers renamed the nationalized plant in honor of Rodríguez, a member of the local militia who died at age 16 fighting the U.S.-backed mercenaries who attempted a failed invasion of Cuba at Playa Girón (Bay of Pigs) in 1961. The Viti family, the former owners, fled to Miami, she said.

Decriminalizing use of dollar
Prior to 1989, 85 percent of Cuba's trade was with the countries of the former Soviet bloc, often at preferential prices. Today the Cuban government has to pay world market prices for everything it imports. Cuba also has to compete on the world market to export its products with a productivity of labor that, while higher than many countries of Latin America, is lower than that of the imperialist world. Efforts to secure credits, find new trading partners, contract shipping, and attract investment are also constantly torpedoed by Washington's unrelenting economic war.

Decriminalizing the possession and use of hard currency, a measure the government adopted in July 1993, was aimed at increasing the flow of dollars into the state treasury and away from the black market. "Under normal conditions we never would have decriminalized" the use of dollars, Cuban president Fidel Castro told the National Assembly in December of that year.

That step and other measures the government adopted subsequently, aimed at curbing inflation and increasing production, did result in a revaluation of the Cuban peso. The peso/dollar exchange rate dropped from a high of 150-to- 1 in 1994 to a fairly stable 24-to-1 in the first half of this year.

For those who have access to dollars the measure has taken the edge off shortages of basic necessities like soap, shampoo, and cooking oil, which are virtually unavailable for pesos. At the same time economic inequalities have widened dramatically and once stable social relations have been broadly disrupted.

Today, more than 40 percent of the population is estimated to have access to dollars, according to reports in the Cuban press. One of the main sources is relatives of Cubans living abroad, mostly in the United States. Workers in tourism also receive a portion of their tips in dollars. And workers in industries such as electricity, tobacco, and ports get a small percentage of their wages in hard currency as an incentive. Recently, workers in a number of other industries, such as textile, have been getting a portion of their pay in dollars.

The licensing of self-employment in more than 150 occupations and the opening of agricultural and other markets at unregulated prices, enacted in 1993 and 1994 respectively, have also significantly increased disparity in income distribution.

Differences are also growing between city and countryside, as well as between Havana and other cities. While food may be better in the rural areas, access to clothing, shoes, soap, and other daily necessities is easier in the urban centers, especially where tourism creates more opportunities to earn hard currency. Over time, these inequalities create a bias toward individual hustling for dollars, or short of that toward substantially increasing one's income in pesos, through all kinds of petty commerce, legal and illegal. These conditions grind away at the social solidarity that was at the heart of the new social relations that have predominated since the 1959 revolution as private property ceased being the foundation of all relations of production.

At the same time, the most conscious layers of the working-class vanguard are trying to lead a collective effort to raise labor productivity as the only way for the class as a whole to affect the conditions created by being brutally thrust into the world capitalist market.

Discussing these contradictions facing workers today, Fonseca, of the Luis Fernando Rodríguez plant, said, "The solution lies in increasing production and doing it more efficiently in all industries."

Struggle to increase production
"Garment and textile were among the last industries to begin recovering," said Héctor Fajardo, a member of the national staff of the National Union of Light Industry Workers (SNTIL). He accompanied Militant reporters during the visits to the six garment plants.

SNTIL organizes 92,000 workers in Cuba, of whom 40,000 work in 14 textile mills and about 25,000 in garment shops. Workers in plastics, furniture, cosmetics, and handicrafts also belong to the union. In 1993, during the worst of the special period, more than half the workforce was idled because of lack of raw materials and spare parts. Cotton, for example, which had been imported from the Soviet Union at $800 per ton, now has to be purchased at world market prices for $3,200 per ton.

While many of the factories were shut down or operated at a tiny percentage of their capacity for anywhere from a few months to a couple of years, workers who did not find other employment received 60 percent of their wages until they were called back. Today, 4,000 union members in Cuba's light industries still receive unemployment benefits, Fajardo said.

By late 1995, the government had begun securing some short-term, high-interest loans, contracts to export manufactured garments, and had negotiated a few joint ventures with foreign investors, bringing in newer technology, according to Fajardo. Union members simultaneously went on a major campaign to improve quality "so our products can compete abroad," as Eulalia Rodríguez Regalado, a floor worker at the Vanesa swimsuit factory in Guanabacoa, put it.

The Vanesa plant was recently relocated to new facilities, which workers cleaned and painted. A volunteer work brigade also built a new cafeteria after regular working hours. The company also replaced old sewing machines with new ones from Japan. The investment in this state-owned plant came as a result of deliberate planning by the government to use some of the limited state resources to start production.

"The improvements in working conditions have helped boost morale and productivity," Orquídea Martínez, 34, the head technician at Vanesa, noted. Workers said they are on target to produce 3,000 swimsuits this year, up from 500 in 1996.

Last year, production of textiles and clothing jumped upward across the country from the earlier near-zero levels. "But it's still an uphill and long-term battle to reach the previous production," Fajardo said. Textile mills in Havana province, for example, manufactured 15 million square meters of fabric in 1996, doubling the previous year's output. Before 1989, however, the same mills produced 80 million square meters of cloth annually.

One of the challenges in the textile industry is replacing antiquated Soviet technology, which consumes inordinate amounts of energy, and restructuring giant factory-cities into smaller and more efficient plants. "We are seeking investments to upgrade or replace the Soviet machinery," said Wilfredo Ramos, 28, a production worker and secretary of the Union of Young Communists (UJC) at the huge Ariguanabo Textile Mill in Bauta, 60 miles southwest of Havana.

The mill employs 3,600 workers and its plants expand over a vast area. Half of the complex has been completely shut down for the last three years, workers said, to conserve energy. While workers are trying to increase production of denim and canvas and improve quality, the union and management are planning to convert the part of the mill that's closed into manufacturing a new product - either a different type of fabric or even shoes.

Resisting Washington's economic war
Washington's intensifying economic war is exacerbating the difficulties. Pedro García, manager of the Playa Girón shirt factory in the Old Havana district, said a Canadian company that had a contract to buy half a million shirts produced by the Cuban enterprise Encanto Clothing canceled the agreement last year. The cancellation came after U.S. president William Clinton signed into law the so-called Cuban Liberty and Democratic Solidarity Act, also referred to as the Helms-Burton law.

Encanto is one of the two state-owned garment companies in Havana. It comprises 19 factories employing nearly 3,000 workers, including Playa Girón, Vanesa, and the other clothing plants Militant reporters visited.

"The Helms-Burton law is an instrument Washington is using to make its economic blockade against Cuba more brutal," said Pedro Ross, general secretary of the Central Organization of Cuban Workers (CTC), in an April 29 interview with Militant reporters in Havana. "But this escalation of the imperialist aggression has made Cuban workers more determined to resist, to defend our independence and our socialism."

Many of the garment and other workers interviewed made similar points.

"We know what capitalism is and what Clinton's `transition to capitalism' is all about," said Roberto Vejo, in an April 23 interview at the Dairy Complex in Cotorro, on the outskirts of the Cuban capital. "Look at Russia and Eastern Europe." He was referring to a January 28 report by Clinton in which the U.S. president offered the Cuban people $4 - 8 billion if they got rid of Fidel Castro and Defense Minister Raúl Castro, dismantled the revolution's Ministry of the Interior, and began a "transition" to capitalism as dictated by the Helms-Burton law.

Vejo and other union members there described how workers have used their creativity to make up for a shortage of fresh milk. Since 1995, mechanics at the dairy complex have adapted existing technology to produce soy milk and yogurt. (Militant reporters have visited this plant twice before and reported on developments there in articles that appeared in the April 11, 1994, and Feb. 6, 1995, issues.) The latest invention is the production of "analogous cheese," said Vejo, who has worked at the plant for 25 years. This cheese, made from a mixture of imported powdered milk and soy products, is now used widely among other things to make pizza in the fast-food restaurants that have proliferated across the island.

Vejo also took Militant reporters on a tour of a cooperative farm run by workers from the factory. Union members took the initiative to set up the co-op three years ago on a piece of land they cleared near the industrial complex.

The decision was made after workers in the soy milk products department proposed that those who are not needed in the plant be allowed to organize such a cooperative in order to minimize layoffs and grow some badly needed food. The suggestion was raised by a young worker named Elmer Durán at a workers assembly in the dairy complex on Jan. 31, 1994, which Militant reporters attended. At that time, milk production in the factory had fallen from 700,000 to 300,000 tons annually, because of lack of powdered milk that used to be imported from East Germany. At the same time, the workforce had remained unchanged at 1,300, which meant that many workers had little or nothing to do, causing demoralization.

In April, Vejo and other union members were proud to show us the fruits of the workers' initiative. The farm produces a growing portion of the beans, vegetables, and fruit used in the plant cafeteria that provides meals for workers on three shifts. Lunch there costs around 1 peso, an affordable price for workers in the complex, who earn between 180 and 300 pesos per month.

Exchange value of wages diminishing
In the garment plants we visited, wages range between 140 and 250 pesos per month. Since production resumed recently, there has been only one shift and no meals are provided in the cafeterias.

While the purchasing power of the wages has increased since the worst days of the special period, the standard of living for most Cubans remains substantially lower than a decade ago with no rapid improvement on the horizon. "It's not easy to make ends meet," said Fé Boris at the VITI garment plant, pointing to high prices for food at the agricultural markets and the fact that many goods are available only at dollar stores. "Don't get me wrong," she added, "it is better than two years ago when you couldn't find food to buy even if you had the money. Now you can always find food, but it's expensive."

Even with a social wage that is very large compared to any capitalist country, Cuban working people feel the growing pressure of having to compete on the world capitalist market. Medical care in Cuba remains free and accessible to all and education is free through the university level. Most families either own their homes or pay very low rents.

The rationing system, however, which before the special period ensured an equitable distribution of food at subsidized prices, accounts for a smaller and smaller portion of the food Cubans eat. The precipitous decline in agricultural and industrial production has accelerated the breakdown.

Most Cubans today have to rely on the agricultural markets for a high percentage of their food. Rice, a basic staple of the Cuban diet, costs around 9 pesos per pound now at some of these markets. During a visit to several Havana markets in April, pork cost about 25 pesos per pound. For Cubans who have no access to dollars, it means spending most of their income on food, even if they have jobs that provide them with a high peso income.

A professor of social sciences at the University of Matanzas described to Militant reporters one such example. He and his wife, who also teaches at the university, take home over 700 pesos per month, but they have no access to dollars. Most of their pay is spent on food, he said, and adults in the family rarely eat meat or any other animal protein, which is usually reserved for the kids. The professor's comments were not a criticism of the measures the government has initiated during the special period, which he thought were necessary. He was simply describing the reality many Cubans face today.

Impact of spreading use of dollar
Those who have regular access to dollars, through relatives abroad, through bonuses earned by family members working in tourism or sectors producing for export, or through hustling for dollars from tourists, do enjoy a much higher standard of living regardless of their job.

To undercut this widening inequality, the unions, with the support of the government, have tried to institute incentives that make some goods sold in the hard-currency market accessible to more workers. One such example is the dollar store at the Ariguanabo Textile Mill.

Workers at the mill who go over their production quotas and have a good attendance record get a percentage of their wages in certificates that are equivalent to dollars at the exchange ratio of one peso to the dollar. These coupons can be cashed in at the dollar store in the textile complex. A bottle of shampoo there costs $1.50 and a liter of cooking oil $2. But only a limited number of workers can use this store, which is subsidized from the revenues of the factory. It's also poorly stocked compared to dollar supermarkets in Havana and other major cities that offer a wide array of goods.

These pressures are registered in the self-employed sector as well. In June of this year, about 180,000 self- employed Cubans were registered with the state, a drop from more than 200,000 in 1996. The decline came after the government began enforcing collection of taxes on the self- employed. This was a popular measure among working people, since some self-employed are able to take home exceptionally large amounts of income. This is especially the case among those with skills like plumbers or electricians with access to spare parts and raw materials illegally "diverted" from various enterprises.

But while the number of self-employed with licenses has dropped, vendors in the streets of Havana, selling everything from juice and pizza to handicrafts, have visibly multiplied. And greater numbers of people repair cars, fix refrigerators, or operate paladares, small home restaurants, without a permit to avoid paying taxes, according to many residents interviewed.

Over the last two years, a growing number of Cubans have begun renting out their apartments for dollars to visitors from abroad, a practice that was illegal until recently. The U.S.-based publication CUBAInfo published an interview in July with an architect in the Parque Trillo neighborhood of Havana who rents her apartment for $35 per night to visiting foreigners. "I will do it with or without permission," said the woman, whom the magazine identified only as Myrta. She was very unhappy with new taxes the government was about to impose on landlords like herself.

On July 15, Law 171, approved earlier by the National Assembly, went into effect. The law requires those renting out apartments to pay an initial fee of $100 and a monthly tax of $200 if they rent to foreigners, and to register the names of their guests with the National Housing Institute. Those who do not comply could face fines up to $2,000 or have their licenses revoked. Repeat offenders could have their houses confiscated.

This measure, which has stirred opposition among layers who benefited most from solving their problems individually by such means, is supported by many workers. "Why should someone, just because they rent out their apartment, make in a few days what most workers make in a year?" said dairy worker Roberto Vejo in April, referring to the upcoming implementation of Law 171.

Resisting `capitalism within'
In an April 4 speech in Havana, marking the 35th anniversary of the founding of the UJC, Castro referred to the debate around this law. "Imagine that someone charges 600 dollars for a house - some people move into the garage or into a neighbor's house. If this person receives 600 dollars, multiply that by 20 [the approximate peso exchange rate]. That person receives 12,000 pesos. That seems just a little bit high. This person would fall into the category of those who have to pay taxes...

"What cannot be tolerated is the non-fulfillment and the violation of the laws. That does great damage to the country, and the enemy encourages all this and places its hopes in this lack of discipline," Castro said. "The enemy is thinking about Torricelli laws, Helms-Burton laws, to aggravate the difficulties in the country, to promote discontent, to promote disorder in the country."

Referring to the economic and social crisis in the capitalist world, including the United States and other imperialist powers, Castro stated, "We must also be very much aware of the realities of the rest of the world, and aware of the fact that this hard and terrible wave confronting the revolutionary movement will pass, and it will begin to pass as the peoples of the world become aware of what is happening. And capitalism teaches us this every day, capitalism outside and capitalism within, because we undoubtedly have certain forms of capitalism within."

Pointing to that speech, Roberto Vejo said, "This is what Fidel was getting at: we must resist today until the day we can stop using dollars, get rid of the dollar stores, and strengthen the revolution once again."  
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