Cuba cuts state payroll, private sector jobs grow 23 pct in 2012

* Private sector jobs double in 2 years

* State jobs slashed 5.7 percent in 2012

* Unemployment and informal work grows

HAVANA, Dec 27 (Reuters) - Cuba's drive to slash state

payrolls and spur private-sector growth picked up surprising

steam in 2012 as President Raul Castro moved ahead with reforms

to the Soviet-style economy, according to figures unveiled

recently with little hoopla.

The number of private or "non state" workers rose 23 percent

in 2012, while state sector employment dropped 5.7 percent,

according to a report from Economy Minister Adel Yzquierdo

Rodriguez. The unemployment rate grew to a record 3.8 percent,

not including Cubans who did not seek work.

The wide-ranging year-end report to the National Assembly,

which met in Havana last week, indicated the government is

quietly making progress toward its goal of moving toward a more

market-oriented economy while maintaining the socialist system

in place the last half century.

Just a few years ago, the state employed more than 85

percent of Cuba's labor force, but that is changing as the

government battles heavy indebtedness, economic stagnation, poor

retail services and pilfering.

The report said the government cut 228,000 public jobs in

2012, on top of the previously announced 137,000 in 2011,

closing in on its goal to slash 20 percent, or nearly a million

jobs, from its bloated payrolls, by 2016.

At the same time, the number of private, or "non-state"

workers as Cuba calls them, rose to 1.1 million jobs, double the

number reported two years ago.

The majority of the non-state workers, or about 610,000,

were farmers, whose numbers have grown under Castro's

agricultural reforms, which include leasing state lands to

individuals. The goal is to stimulate local food production and

cut the need for budget-draining food imports.

The rest of the non-state workers are mostly in small retail

businesses or self-employed such as carpenters, seamstresses,

photographers and taxi drivers.

RUNNING THEIR OWN BUSINESS

The cash-strapped state is closing thousands of its small

retail outlets such as barbershops and cafeterias, notorious for

economic inefficiency and employee theft, and offering to lease

the premises to employees or others interested in running their

own business.

Starting in 2013 the state plans to turn more than 200

medium-sized businesses, from shrimp breeding and produce

markets to construction and light manufacturing, into private

cooperatives. The experiment will be expanded if successful.

Yzquierdo reported that unemployment was a record 3.8

percent in 2012, or a bit more than 250,000 out of a potential

labor force of 6.8 million people. He admitted that the figure

did not include a million Cubans who he said "did not actively

seek employment."

Cubans often complain that the communist island, with its

wide-ranging social benefits, is a place where too many live off

the dole, a situation Castro has complained about in a number of

speeches and vowed to change.

"Our state cannot and should not continue maintaining

companies, productive entities, services and budgeted sectors

with bloated payrolls (and) losses that hurt the economy, are

counterproductive and form bad work habits," a trade union

federation statement said in 2010, when plans were first

announced to push state employees into the "non-state" sector.

Many of those without jobs still enjoy free health care,

education, subsidized food ration and other government services

while also dealing in Cuba's vast black market, engaging in

minor business activity and trading on the margins of the law.

Clara, a 36-year-old Havana resident, was laid off two years

ago from her job as a secretary for a state-run security

company, given one month's pay, another month of unemployment

benefits and then left to fend for herself.

Instead of looking for another job, she decided to do

manicures and hair styling, working under the radar without

getting the small-business license required by the state.

Clara said she charged 24 pesos (1 dollar) for a manicure

and about the same for hair styling, and brought home maybe 500

pesos, or about $20 per week.

That is considerably more than the $15 a month she earned

with the government, but not enough to get legal.

"I only do my friends and as far as I'm concerned make too

little to go through all the bother of registering my business

and paying taxes," she said.

Most Popular in Business