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Cuba Adding Wage Bonuses to Boost Productivity

Cuba says it is dropping wage limits for state employees in favor of salary bonuses aimed at stimulating worker productivity. In Miami, VOA's Brian Wagner reports the change is the latest economic shift in Havana in recent months.

Cuba's vice minister for labor, Carlos Mateu, told Cuban state media the changes already are under way to implement the incentive system at all state-run companies. He said individual employees could earn up to five percent more, if they meet performance goals, and managers could boost staff pay by as much as 30 percent.

The announcement marks a shift away from the Socialist policies of former President Fidel Castro which aimed at reducing income disparity. Mateu told Granma newspaper that egalitarianism is not convenient, and said it is harmful to pay workers less than what they deserve.

Low salaries have been a frequent complaint among employees in Cuba's state sector, which represents the vast majority of the island's economy.

Magdelivia Hidalgo, a Miami-based activist for Cuban farm workers, says many workers receive similar wages regardless of their position or experience level.

Hidalgo says a trash collector earns about 198 pesos a month, which is the same as an office worker.

She added the wage shift will not have a significant impact, and said Cuba's government should address the disparity created by the dual currency system. State employees are paid in pesos, while workers in the tourist or informal sector often earn convertible pesos which are pegged to the U.S. dollar and are worth much more.

Ted Henken, a professor at Baruch College in New York, says some state workers have abandoned their jobs in recent years to pursue more lucrative work in the informal market. He says the latest shift on wage limits seeks to reverse the trend.

"So the government is learning that is has to do something to attract these people to stay in their professions and continue to perform, because for many people it is a losing deal," said Ted Henken.

Henken says the growth of informal restaurants, hostels, shops and other underground businesses in Cuba has had a serious impact on the nation's economy. He says income inequality has expanded widely over the past 15 years, because of the success of the informal economy.

It is unclear whether the reform on wage limits will further the trend, but Henken says the decision shows the Cuban government is moving in a new direction.

"It is dangerous because one of the pillars of the revolution, at least rhetorically, is this idea of socialist egalitarianism," he said. "But that puts a damper on efficiency and productivity. It is kind of a balancing act."

The wage reform is the latest economic shift announced since Raul Castro succeeded his brother, Fidel, as president in February. Other changes included lifting measures that prevented Cubans from staying at tourist hotels, buying electronics and owning cell phones.