The Guardian reports that state run Cuban firms are starting to use productivity related bonuses to increase output.
The government consigned a decades-old ideological pillar to history by eliminating caps on salaries and promising to pay productive workers more than lazy or inefficient ones.
Carlos Mateu, the vice-minister of labour and social security, said many state enterprises, which comprise 90% of the economy, had already introduced the changes, and the rest would by August. . . .
Workers will receive bonuses of up to 5% of their salary for meeting production quotas, which are typically modest, and possibly more if they exceed them. Managers may receive up to a 30% wage increase for improved performance. Wages will vary "according to the nature of the labour performed by the worker", said the minister.
Almost half a century after the revolution, Cuba boasts free universal education and healthcare, but the island is impoverished. Average state salaries of just £10 a month [about $20] leave people struggling to buy decent food, let alone luxuries such as soap.
Productivity in the state sector is extremely low. "They pretend to pay us, we pretend to work. It's an old joke but it still applies," said Marta, a 45-year-old writer for radio programmes.
Officially, unemployment is just 1.9%, but it is no secret that millions of Cubans are underemployed or idle, few seeing the point of labouring for a pittance. The black market, a source of foreign currency, hums with diligence and ingenuity.
It is an extraordinary event when a Guardian reporter admits that life under Castro is not all happiness, and admits that the sector that dodges the government is much more productive.
I wonder though whether those bonuses will make any difference. A problem with incentive pay is how it gets used. I am thinking of what Sovietologists named the ratchet effect. The government would offer higher wages for higher output. When workers hit that higher output, they proved that higher output was possible, so a few got sent to Siberia for being bourgois sabetours, and the rest got a higher baseline output to meet to avoid the gulag. The private sector is by no means immune from the problem, but in a police state like Cuba, they can hand out much nastier punishments than being sacked.
