Cuba at the Crossroads of the Digital Economy: Employees or Independent Contractors

Hundreds of thousands of private-sector workers in Cuba are experiencing the system’s shortcomings

A “rider” (courier) delivering an order for the mobile app Mandao /EFE

14ymedio biggerEFE (via 14ymedio), Juan Carlos Espinosa, Havana, 9 June 2024 — Thirty-five-year-old Jorge takes his cell phone out of a yellow thermal backpack and pulls up an order he is delivering on his bicycle.

He is one of hundreds of thousands of “cuentapropistas” (independent contractors) who have emerged since self-employment was legalized fifteen years ago. His particular type of employment would not have been possible without the introduction of cell phones in 2018 or the legalization of small privately owned businesses (MSMEs*) in 2021.

These changes to the system, however, are not without their shortcomings. On paper, Jorge is free to take on multiple gigs or use his time as he sees fit. In practice, however, he works as an employee but without some of the benefits of being on the company’s payroll.

“It seems we in Cuba only import the bad stuff,” he complains.

The advent of this type of business in Cuba has brought with it the same problems that have vexed capitalist governments and labor unions

Jorge (a pseudonym) works for Mandao, a food delivery app similar to Glovo or Uber Eats. Of the 11,000 legally licensed MSMEs in Cuba, it is one of the most popular.

Nevertheless, the advent of this type of business in Cuba has brought with it the same problems that have vexed governments and labor unions in capitalist countries.

After being shown contracts the company has with three individuals, two experts both agreed that the workers — commonly known in Cuba as “riders” — are not actually independent contractors but rather salaried employees.

They had differing opinions, however, on just how illegal this might be. The practice is, in any case, problematic.

For example, in two of the three contracts, the company retains 10% of each delivery fee, charges the courier 100 pesos a week ($0.83 USD at the official exchange rate) for use of the backpack, and does not provide coverage in the event of an accident. Nor does the agreement explicitly state how or how much the courier is to be paid.

Laritza Diversent, director of the formerly Cuba-based but now US-based Cubalex legal information center, believes this is a clear violation of Cuban employment law.

Mandao explained to EFE that the rates are set separately and that it does not impose schedules but instead tries to organize shifts by taking into account fluctuations in demand. It also pointed out that, as an MSME, it is not allowed to hire more than a hundred employees. It also argued that, since the workers are self-employed, these are commercial rather than labor contracts.

Cuban economist Tamarys Bahamonde believes that, in this regard, the company is mistaken and that the problem is due to legal loopholes in an obsolete labor law.

She characterizes the document as a hybrid, a cross between a commercial contract and a labor contract.

In this sense, Diversent describes what she sees a clear example of “legal illiteracy.” She is critical of the contract’s prohibitions on couriers discussing its content, something she says prevents them from seeking legal advice.

According to Mandao, its couriers made a monthly net profit of between 8,900 and 17,700 pesos ($74.00 to $148.00 USD) in 2023. By contrast, the average monthly salary of a state employee was 4,648 pesos ($39.00).

Another contract that EFE analyzed was that of a porter who worked in a building owned by Caribe, a state real estate investment company. Though it stipulates the employee’s work schedule and how many days of vacation they get, it is written as though they were an independent contractor.

EFE reached out to Caribe for comment but has so far not received a response.

Cuban economist Tamarys Bahamonde characterizes the employment agreement as a hybrid, a cross between a commercial contract and a labor contract. “It shows a level of legal ignorance of both types,” she says

Bahamonde believes, the company’s contract demonstrates that job insecurity is reaching levels never before experienced in Cuba.”

“We assume it’s the state’s responsibility to protect workers. But if the state isn’t doing it, we can’t expect the private sector will do it,” she says.

When asked about this issue, the Ministry of Labor and the government-controlled Cuban Workers’ Union (CTC) both told EFE that, so far, they are not seeing these practices, at least not in a “statistically meaningful way,” as Leovanis Agora Góngora, a member of the CTC’s National Secretariat put it.

The Ministry of Labor said it anticipated updates to the law regulating Cuban MSMEs this year.

*Translator’s note: Literally, “Micro, Small, Medium Enterprises.” The expectation is that they are also privately managed, but in Cuba this may include owners/managers who are connected to the government.


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