Sunday, April 27, 2008

Cuba raises social security, says wages must wait

Sunday April 27 2008

By Marc Frank
HAVANA, April 27 (Reuters) - Cuba said on Sunday it could not afford to increase wages for government workers, but it would raise social security payments.
About 90 percent of the Cuban economy is controlled by the state, which employs the vast majority of people and provides all pensions through the social security system.
May 1, International Workers Day, is a major holiday in Communist Cuba and expectations were high among health and education employees that state wages would be increased to mark the date.
The expectations were fueled by an announcement in local media this month, which said Cuba was revamping the state wage system to create more incentive by allowing workers to earn as much as they can.
But a government statement published on Sunday by all state media made it clear that some wage earners would have to wait for better economic times.
"It is not possible right now to increase salaries of all sectors, because the country does not have the resources necessary," the statement said.
"Increases will be granted by sector and priority, always after a rigorous evaluation of the economic and financial conditions."
However, judges, court personnel and employees in the district attorney offices will receive raises, the statement said.
Raul Castro, upon taking over as leader from his ailing brother Fidel Castro in February, promised to make wages better reflect one's work, a major complaint of the population.
State wages are mainly paid in pesos, even though the state sells many goods and services in another local scrip pegged to the U.S. dollar, the convertible peso, worth 24 times more than the peso.
The dual currency system has led to a stratification of Cuban society where people with access to foreign exchange through remittances and other avenues are better off than people who must live on the state peso wage or pension.
Since taking office, Raul Castro has begun a major reform of agriculture, lifted caps on workers salaries and bans on Cubans purchasing cell phone service, computers and other consumer goods, as well as opened hotels to the local population.
Sunday's announcement appeared to affect education, health care and other state budgeted sectors, which do not charge for their services, and not industry, which was recently authorized to increase wages on a local level in tandem with increased productivity.
The state has also increased what it pays for agricultural goods, another sector that is largely self-financed.
The government statement said monthly social security benefits would increase up to a maximum of 20 percent, with a ceiling of 400 pesos, equal to Cuba's average monthly wage.
Sunday's statement also said as wages increased, all workers would eventually pay a 5 percent social security tax, which some workers began paying in the 1990s.
Social assistance to needy families was increased by 25 pesos to 147 per month.
Free health care and education and a subsidized food ration and transportation are universal in Cuba. (Editing by Tom Brown)

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