Economics, International economy

Foreign companies profit from Cuban labor abuses

Image credit: BIT boy (Flickr) (CC BY 2.0)

Image credit: BIT boy (Flickr) (CC BY 2.0)

For those who dream of normalizing business with the Castro dictatorship, the University of Miami served up a dose of reality on how the regime uses state-run “commercial” enterprises as a tool of control and abuse:

For the past half-century Cuban workers have been subjected to an oppressive system, which violates the most elemental working class rights. The state controls labor employment and salaries. There is only one labor union … [which] is controlled by the state. Strikes and collective bargaining are prohibited. All major enterprises in Cuba are owned by the government, and the ruling military elite manages over 60% of the country’s key economic activities, particularly in the tourist and mining industries. This militarized social and economic environment oversees Cuba’s “workers’ paradise.”

A November 2012 report entitled, “The Plight of Cuban Workers: Rights Violations by the Cuban Government and Foreign Investors,” was released by the University’s Institute for Cuban and Cuban-American Studies (ICCAS). The picture it paints is very sobering.

Since the Castro regime seized power more than five decades ago, workers have been denied basic labor rights and exploited by the dictatorship. In recent years, unscrupulous foreign investors have partnered with state-run enterprises and benefited from something akin to slave labor.

Cuban state enterprises, such as GAESA and Grupo Cimex, are controlled by senior cronies of the Castro family and the military establishment.  These companies operate some of the finest andlargest resorts and department stores as well as cafeterias, gas stations, auto-part outlets, apartment rentals, and tourist operations.

The ICCAS report explains that under the regime’s “Law 77,” which regulates foreign investment and describes permitted businesses, there are only three acceptable business arrangements in Cuba: Joint ventures, contracts of international economic association, and foreign capital companies. Under the law, individual Cuban may not engage in any private business, except for tiny restaurants, barbershops or repair shops. Any foreign company doing business in Cuba today has the dictatorship as a business partner.

When the government establishes a partnership with foreign companies, the state determines who can work at the venture and how much they can be paid. What’s worse, although the foreign company is expected to pay the regime for the labor force in US dollars or Euros, the state pockets what it receives and gives nearly worthless Cuban pesos to the workers.

Foreign companies are aware of this violation of international labor standards. Indeed, they invest in Cuba knowing that their costs will be reduced by the use of an exploited labor force. Among the companies operating in Cuba today are Melia Cuba Hotel International (Spain), Sherritt International (Canada), Telecom (Italy), Pernod Ricard (France), and Mercedes Benz (Germany).

The labor situation in Cuba is only one of many problems that Cubans have to face under the rule of a regime that is determined to oppress its people to maintain control and hold on to power. One day the dictatorship will end, and the apparatchiki of the regime will be held accountable. What price will foreign company’s pay for profiting from this scandalous exploitation?

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