Cuba Has New Pay Incentive System

Lourdes Perez Navarro
GRANMA
June 11, 2008

Cuba's Ministry of Labor and Social Security has issued a new resolution that regulates types and systems of payment and introduces new worker incentives.

The new resolution aims to create a uniform salary policy for companies already in the management improvement program and others that are not in the process, said Carlos Mateu Pereira, vice minister of Labor and Social Security.

The resolution stipulates the concept that businesses should have pay incentive mechanisms for their different activities, according to the nature of the work carried out by the worker.

This includes piecework with direct indicators according to the production and services or other markers and efficiency in general, said the Mateu Pereira.

The vice minister of Labor and Social Security said that for many years the pay system has been based on results according to a general indicator; be it profits, sales or revenue. The worker, whether in production, services or management was paid for meeting the norm or surpassing it.

Now workers in each specific area will be paid for meeting or surpassing production targets. If they provide a service they will be paid for quality. Management, for the most part supervisors, will be paid according to certain general or specific indicators, but not by direct parameters.

The Importance of Incentives

Resolution 9/08 states there is no limit to bonuses from surpassing production norms of workers who are paid according to production results for goods and services, providing that other efficiency indicators incorporated in the pay system do not deteriorate.

The rest of the personnel working in the area of regulation and control such as managers, technicians and specialists in marketing, human resources and economy will normally have general and specific indicators with a limit of a 30 percent incentive. The head of a workshop can be considered a direct employee and as such has no pay limit.

Mateu Pereira also said that all workers will receive up to a five percent bonus for meeting their target goals.

Implementing the Resolution

Cuban companies that have not already implemented the management improvement program have until August to redesign and adjust their pay incentive indicators. If a firm has already made this redesign of its payment system and had it approved by the corresponding ministry they can immediately begin to apply it, said the vice minister.

Mateu Pereira said that with the correct implementation of the resolution, the worker will earn what they are capable of producing according to the socialist principle of distribution, each according to their contribution; that is, pay according to quantity and quality.

There has been a tendency in Cuba for everyone to earn the same salary, a type of egalitarianism that is not advisable, said Mateu Pereira. "That is something we have to work on since it has at times led to a prevalence of paternalism where people, to avoid problems, say 'I'll pay everyone the same and nobody will protest.' But it is not fair, it is just as damaging to pay a worker less than they deserve than it is to pay a worker more than they deserve."

Mateu Pereira said the new pay system should be seen as a tool to help obtain increased productivity and better service. The system will have to incorporate adequate controls, so that there is a fair distribution of salaries and so that those who contribute more receive more.