During a May 29 Council of Ministers meeting, President Raúl Castro Ruz reiterated the importance of carefully discussing every measure and analyzing all that has been done to date, to determine the small scale errors committed and correct them.
Human beings are crafting these proposals, he said, which those of us who lead the country approve, “Experience is these tasks does not always exist; that is why what we do must be constantly subjected to constructive criticism.”
The President made this comment during the Council of Ministers discussion of non-agricultural cooperatives, a form of economic activity put into practice just a year and seven months ago. He continued. “The cooperatives are of an experimental character and although their implementation is advancing, we have no reason to speed up the pace, we must move at the pace dictated by events.”
Raúl emphasized, “All cadres and officials at all levels, from San Antonio to Maisí, must critically analyze the completion of tasks, give their opinion - in the appropriate place, at an opportune moment, and in the correct manner – on the implementation of decisions, in order to rectify errors before generalizing experiments.”
“We have the duty to consider and foresee the consequences of every step we take,” he said.
These opinions preceded a report presented by Marino Murillo, head of the Implementation and Development Permanent Commission, on the functioning of cooperatives through the end of 2014, in which he noted positive and negative aspects of their performance, as well as measures taken to consolidate their role in the Cuban economy.
It was reported that, to date, the creation of 498 cooperatives has been authorized, of which 347 are operating. Eighty-eight percent are concentrated in three areas, commerce, restaurants and technical-personal services (59%); construction (19%); and Industry (10%). More than 70% are located in Havana, Artemisa and Matanzas. The Commission is currently evaluating 205 other proposals.
Murillo Jorge noted that cooperatives are sources of employment which have expanded options for the population; improved the quality of products and services; in addition to extending hours of operation. He continued saying, “Moreover, they serve segments of the market in which state enterprises are not competitive.”
He stated that the new cooperatives have performed well productively economically and financially, while increasing income for associates as a result of earnings.
As of the end of November, 2014, 268 cooperatives had contributed 87,727,000 pesos, in taxes on sales and income, as well as regular Social Security contributions. According to the National Tax Administration Office, compliance with tax laws predominates in this new modality of economic management.
Murillo also identified elements which have negatively impacted the work of new cooperatives, saying, “Not everyone correctly understands the experimental nature of the process, or the priority given to its implementation in sectors which have a significant impact in the development of the region.”
He noted that the procedure to constitute cooperatives has created bureaucratic overload, generating dispersion and delays, saying, “The beginning of operations has been slow, fundamentally because of the process of selecting locales, their legalization in property registers, and the creation of conditions for their operation; the process of negotiation between cooperatives and the bodies responsible for approval; and the legal paperwork involving notaries and banking institutions.”
During the initial period, Murillo reported, there have been some difficulties with access to supplies, while prices of products and services offered by the cooperatives have tended to rise, above all in produce markets and restaurants.
The Council of Ministers consequently approved several measures to strengthen and improve the work done by non-agricultural cooperatives. First, a decision was made to extend the experiment, under the principle outlined by Raúl to limit the creation of new cooperatives, and prioritize “consolidating those which exist and advance gradually, since, on the contrary, we would be generalizing the problems which have appeared.”
Among other decisions announced was a measure to extend to one year the maximum time allowed for the hiring of temporary workers (previously limited to a three month period), who will continue to represent no more than 10% of the cooperative’s membership. Likewise, the three month start-up tax exemption will be extended to six months, after the registration of contributors.
Also approved was the drafting of a proposal on including cooperatives in the state’s planning and budgeting processes; while work is underway to develop a training program on regulations governing the operation of cooperatives, prioritizing the participation of directors, during which business management, accounting and internal financial control will be addressed.
In order to implement the proposals approved by the Council of Ministers, modifications must be made to Decree Law no.305 and Decree no.309, which currently govern the functioning of non-agricultural cooperatives.
SALARY PAYMENT SYSTEMS
Marino Murillo was also responsible for presenting a report on the implementation of Resolution no.17, issued in 2014 by the Ministry of Labor and Social Security, on formats and systems of pay, which have contributed to strengthening socialist state enterprises, fundamental to the Cuban economy.
He indicated that at the end of 2014, “Productivity per worker reached 22,852 pesos, 18% above predictions; the average monthly salary was 600 pesos, also 11% above what had been planned; and monthly pay for results averaged 179 pesos, representing 30% of the average salary.”
He emphasized the positive impact of this policy’s implementation, saying that directors and workers are paying greater attention to efficiency and fulfilling commitments, while income based on work is increasing.
Nevertheless, he reported that, over the first seven months of the policy’s implementation, several problems were identified, among them, “failing to comply with salary cost per peso of gross value added limits, and the consequent making of payments without productive support in 238 enterprises, for a total of 347 million pesos.” Some 69% of these payments were concentrated in enterprises affiliated with the Ministry of Agriculture, the national sugar company Azcuba, and enterprise systems supervised by Administrative Councils.
Although a decrease in such payments has been noted recently, Murillo warned of the consequences of the problem and called for careful analysis of the issue.
The maximum index for salary costs per peso of gross value added was reaffirmed during the meeting, as were other guiding indicators approved as part of the 2015 Plan, including fulfillment of state contracts, total net sales, before tax earnings, and export sales, among others.
Also confirmed was the authority to approve pay systems afforded to Central Enterprise Management Organizations (OSDE) presidents, directors of enterprises directly affiliated with a national state body, and directors of enterprises involved in the improvement process.
FOR MORE EFFICIENT BANKING
The meeting’s agenda also included the approval of a plan to improve the national banking system. Leonardo Andollo Valdés, second in command on the Implementation and Development Permanent Commission, explained that the policy should allow for a “more efficient system, capable of serving the new model of economic management.”
This reorganization, he said, will advance gradually and systematically, to separate state roles from those of enterprises, within an updated legal framework.
It will likewise stimulate the creation of financial products and banking services to meet the economy’s needs, in a two-stage plan which will coincide with the currency unification process.
In this way, “Financing will be available to prioritized sectors, in accordance with approved credit policies, to support the investment process, as well as stimulate foreign trade and the internal market.”
The improvement plan is also directed toward “organizing the offering of banking services in every province, in accordance with the demands of different actors operating in the economy, for which studies will be conducted of organizational procedures in banking offices; the hours of operation available to the population; and staff training needs.”
Among other issues, announced was an increase in the availability of personal credit to support economic growth; in addition to more bank branches and automatic teller machines throughout the country; and expansion of banking infrastructure to better meet the needs of the majority of the population.
Andollo Valdés reported, “A secure, efficient system of automatic pay will be developed, based on laws, regulations and procedures which will govern the mechanisms used to process payments.”
The banking and financial system, he concluded, will support the process of improvement underway in enterprises, and strengthen the country’s institutional framework.
REGISTRATION OF BUILDINGS
As has been discussed on several occasions at this level of government, also presented was a report on progress in the listing of state owned buildings on property registers, an issue of vital importance to the country’s institutionality.
Urbano Pedraza Linares, deputy minister of Justice, announced that, over the last four years, 300,011 buildings have been registered, and although plans for this period were surpassed, some 9,059 properties remain unregistered.
Pedraza Linares indicated that the delay is a product of “shortcomings in the conduction of the initial survey; problems in completing property registers in Havana; as well as poor supervision of the effort in 2010, 2011 and 2012.”
He noted that, before state properties can be rented to other economic actors, registers must be updated to reflect transfers, and changes in use of facilities assigned to any national body or entity.
The project’s timeline was extended to December, by which time registration of state properties should be concluded, with the exception of Havana, which may be granted more time given the complexity of the situation there.
Comptroller General Gladys Bejerano Portela addressed the Council of Ministers to describe acts of indiscipline, illegalities and cases of administrative corruption detected last year, the eradication of which remains a priority for the Cuban state. She reported that efforts to stem such activity have not yet had the desired impact.
According to information presented, half of the cases detected in 2014 were linked to commerce, restaurant services and agriculture. The situation is most difficult in Havana, Holguín and Santiago de Cuba.
The principal motive, Bejerano commented, continues to be the misappropriation of resources for illicit sales and personal enrichment. The activities most often involved inappropriate handing of inventories, contracting, billing, granting and use of idle land, consumer standards and shortages.
Among the modes of operation mentioned were the falsification of documents, fictitious transfers, and appropriation of cash not deposited in a bank, billing fraud, and the illegal importing of merchandise. She additionally noted fraudulent payments for services not contracted or delivered, as well as the favoring of certain providers.
Bejerano stated, “There is a lack of rigor in the analyses undertaken by administrations of the causes and conditions which contribute to these acts, and consequently the implementation of work procedures, which allow for effective countermeasures, is not accomplished.”
She emphasized the necessity of considering the production and sales of products in the non-state sector, which often come from questionable, if not illegal, sources.
Bejerano mentioned the proliferation of small shops selling clothes, hardware, furniture, electrical equipment and food, where imported products and those manufactured by state enterprises are sold Illegalities and theft, she emphasized, discredit the importance of self-employment as a source of jobs and a modality which should complement state efforts to meet the needs of the population, adding, “Not all cadres and leaders, at the community and intermediate levels, have internalized their responsibility in the implementation of internal control systems which allow for detection and a timely response to manifestations of illegality.”
“It is essential to develop comprehensive strategies and systematic actions to change the perception and behavior of administrations regarding these problems; to promote social rejection; and implement more effective preventative measures, with the participation of leadership teams and workers.”
LAND USE AND URBAN ZONING
As the last point on the agenda, Samuel Rodiles Planas, president of the country’s Physical Planning Institute, addressed enforcement of land use and urban zoning regulations, which motivated a comment by Raúl, “An important battle has begun, one which still lacks combativity, and in which it must be clear that the idea is not to prohibit construction, but rather to indicate where it can be done.”
In 2014, progress was made in the eradication of irregularities, “From January through November, 57,818 violations were eliminated, 12,835 more than in 2013, and the largest number in the last four years,” Rodiles reported, adding that the numbers reflect both relatively simple illegalities as well as more complex ones.
Generally speaking, the provincial Administrative Councils which have made the most progress are Villa Clara, Pinar del Río, Holguín and Havana; while Mayabeque and Santiago de Cuba have accomplished the least.
Rodiles Planas stated, that although arduous efforts have been made, progress is insufficient, as a result of the “lack of joint action on the part of governments and entities which are not subordinate to them; lack of understanding at the local level of the responsibility of every entity to eliminate illegalities and establish order regarding buildings, land, areas and coastlines for which they are legally responsible; and shortcomings in work to incorporate the population in this battle.”
At this point, an initial inventory has revealed 152,485 violations of land use and urban zoning regulations throughout the country. According to Rodiles, some 34% are scheduled to be eliminated, and “the necessary resources have been projected in economic plans.”
During the meeting, Raúl asked Public Health Minister Roberto Morales Ojeda to share some information about temporary shortages of a group of medications in the country, including some needed for the treatment of cancer.
Morales Ojeda explained that the situation has arisen because of delays in the arrival of imported raw materials, which obliged the plant, where these vital treatments are manufactured, to halt production.
Morales explained that a plan had been approved to use products which were being held in reserve, and to purchase medications in countries within the region, which will allow for more rapid delivery. He reported that the closed plant should be back in operation within four months, and that long term plans are being made to erect a new factory devoted to producing cancer medications.
The government has approved funds to cover needs over the coming months, while the enterprise group Biocubafarma has taken steps to improve the situation during the second half of the year, he said.