Controversy erupts over workers from India building Cuban hotel

Controversy erupts over workers from India building Cuban hotel
NORA GÁMEZ TORRES
ngameztorres@elnuevoherald.com

Cuba's approval for a French company to import Indian workers to build a
Havana hotel has been met with disbelief, anger and complaints about a
policy that usually requires foreign companies to hire local workers
through state labor agencies

About 200 workers from India hired by the French Bouygues company are
renovating the Manzana de Gómez, an iconic building that was Havana's
first shopping mall, the Reuters news agency reported. The Swiss
Kempinski chain will run the luxury hotel in a deal with GAESA, a
holding company controlled by the Cuban military.

"Workers brought from far away work in Cuba and receive good salaries,
while hundreds of thousands of Cubans try to make ends meet without
proper salaries," wrote former Cuban diplomat Pedro Campos. "They have
no way of improving their lives or those of their families other than to
leave Cuba any way they can, risking everything."

The Diario de Cuba, an independent digital publication, also condemned
the hiring in a recent editorial.

"Cuba has always been a magnet drawing immigrants from all over the
world. But foreigners could not be paid more than their Cuban colleagues
for doing the same work," the editorial said. "...In any case, as one
can see, all the factors that have generated this great national
humiliation are the sole responsibility of the Castro regime."

Some analysts said the case sets a precedent because the Cuban
government in the past has blocked the hiring of large groups of foreign
workers.

Richard Feinberg, a Cuba expert at the Brookings Institution think tank
in California, noted that Havana had vetoed a Beijing request to hire
Chinese workers to update a petrochemical complex in Cienfuegos, a
project financed by China and Venezuela.

One knowledgeable source said, however, that Bouygues Bâtiment
International, the construction arm of the French company, also imported
workers to build three hotels in Cayo Santamaria, an island off the
north central coast of Cuba. The company's website says it built 17
beach hotels in Cuba from 1998 to 2012.

Feinberg said the long-running relationships between the French company,
the Cuban tourism ministry and Gaviota S.A. — the island's largest hotel
enterprise, controlled by GAESA — may have led to some favoritism for
the company, which could have been avoided if Cuba had "a more
transparent system for awarding contracts."

Some Cubans who worked for state construction companies also may have
quit to cash in on the rapidly growing number of jobs improving homes or
restaurants on the island, Feinberg said, perhaps explaining the need to
hire foreigners.

Other experts say, however, that the key problem highlighted by the case
of the Indian workers is the Cuban government's much-criticized policy
of barring foreign firms from hiring local workers directly and forcing
them to hire through state labor agencies.

Cuba has 13 such labor agencies. "The idea is that each ministry has
files of its best employees who can be quickly available when foreign
companies need to hire," said Emilio Morales, director of the
Miami-based Havana Consulting Group.

Sources quoted by Reuters said the Indians are paid $1,500 euros per
month, roughly $1,661. In comparison, Cuban construction workers hired
through one of the labor agencies receive about $25 to $30 per month.

The disparity is the perfect recipe for discouraging Cuban workers, said
Morales. "The problem is the labor agencies. No foreign investor is
going to risk his investment and hire a worker who will not produce," he
said.

Cuban economist Omar Everleny Pérez agreed.

"If the Indians don't work on the Manzana de Gómez, it never gets done.
Because of the problems with the labor agencies, no one is going to work
16 hours if they are going to be paid what they are paid now," said
Everleny, recently expelled from the University of Havana's Center for
the Study of the Cuban Economy. "That's why the (French) company, to
meet quality and deadlines, was forced to look for foreign options."

Diario de Cuba reported before Reuters that the Manzana project was
clearly behind schedule, and that its Cuban construction workers were
paid roughly $20-$22 per month plus a "bonus" that could be as high as
about $90 but often went unpaid. The digital publication also reported
that the Military Construction Group was using recruits from the
obligatory military service to work on the project.

The idea that Cuba offers cheap labor to foreign companies is not
exactly true, however, Feinberg wrote in his book, Open for Business:
Building the New Cuba Economy.

Employees receive a tiny share of the salaries paid by the foreign
companies, and the labor agencies pocket the rest, significantly
reducing the competitiveness of Cuban workers compared to neighboring
countries like the Dominican Republic, Feinberg wrote.

The system has led some foreign companies to pay additional salaries to
Cuban employees, but that's a gray-area practice that has complicated
charges of corruption against foreign investors such as Canadian
businessman Cy Tokmakjian.

Salary terms are more favorable for Cubans working in the new Mariel
Special Development Zone west of Havana, because the labor agencies keep
only 20 percent of the salaries paid by the foreign company for Cuban
employees.

Cuban laws and regulations technically restrict the hiring of foreign
workers to management and administrative jobs in Cuban joint ventures
with foreign companies.

The 2014 Foreign Investment Law limits foreign workers to "upper
management and some technical positions. The Indian workers, described
as electricians, carpenters and plumbers, would hardly meet those
descriptions.

The law includes one section, however, that allows joint ventures or
foreign companies to hire Cubans directly in "exceptional" cases.
Another section, even more vague, authorizes the use of "special labor
regulations" only "as an exception."

Diplomats from a number of European and Asian countries have said that
the restrictions on direct hiring of Cuban employees has been a key
factor holding back foreign investments.

The U.S. government also has urged Havana repeatedly to lift all
restrictions on direct hires of workers. The first U.S. hotel chain to
invest in Cuba, Starwood, has publicly promised to "promote local
talent" and create job opportunities.

After the Reuters report, which included photos of the Indian workers,
measures to block access to the Indian workers were tightened. They are
bused daily from their dormitories east of the capital to the work site.

The Bouygues group did not respond to requests for comment for this
story. But a news release by Bouygues Bâtiment International said it
"recruits locally 100 percent" in Cuba and has created a school to train
construction workers.

"More than 150 employees have been trained there during the last five
years," it added.

Source: Controversy erupts over workers from India building Cuban hotel
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