Duncan Brown’s recent travels see him reflect on the similarities and differences between two contrasting economies
I'm waiting at a main road junction on my mountain bike, sandwiched between a thumping 1953 Ford Mustang and a wooden cart drawn by two huge oxen, one of whom is showing a worrying interest in my rear wheel.
Cuba's contrasts are becoming even more apparent as the country slowly opens up to a market economy, with partial privatisation of some state industries and the legalisation of private ownership. Biotechnology and tourists like me are now bigger contributors to economic growth than the traditional state-owned sugar (rum) and tobacco (cigars) industries. Almost 10 per cent of people are self-employed and have the novel experience in a still socialist economy of paying income tax, with a top rate of 50 per cent. No doubt they will need to have accountants advising them on how not to pay it as well. And they will even pay consultants in this land of palm tree-lined beaches!
My cycle guide Lauritzo is one of the majority of state employees on the island though, preferring it to his former job of being a history lecturer. State employees receive a flat salary of $13 a month, and food supplies and consumer goods are rationed – which limits what you get, but ensures everyone gets something. Education and health services are free for all Cuban citizens. I asked Lauritzo if all state employees earn the same. He smiles and points to the large air-conditioned houses visible at one end of the town.
I was proud to tell Lauritzo that education and health services are also, thankfully, still (virtually) free in this country. And of course we are far from being a fully free market economy as well, particularly in terms of labour and pay markets. I always find it amusing when clients complain that market salary survey data has gone down from the previous year – which of course it never does at executive levels, though has done in real and absolute terms at the lower end of the labour market over the past four years. Our big houses have got much bigger.
In reality, tax and employment legislation have had a huge influence on the levels and forms of our pay and employment conditions that predominate today. And most of us would agree that it makes sense in a National Health Service for example, to have a national framework of pay levels and employment conditions, within which local employer freedoms can operate.
So if you were in charge of the Partido Comunista de Cuba extending its reach to the UK, which jobs would you pay more or less to? It’s a game I have been playing with HR managers, students and schoolchildren in various forums and study groups for over 25 years now.
The answers are remarkably consistent when you compare people’s rankings of job importance and contribution to society with actual pay levels: more for nurses and teachers; less for executives and bankers. Most research studies appear to suggest that the differentially high increases for these two latter groups over this period owe more to market power and control, rather than to market demand and performance. And so now we have Comrade Cable apparently coming to the rescue, to help to prevent such market abuse with his reforms.
Thankfully, unlike Cuba, many employers and HR professionals in the UK do have a choice over what they pay their employees, and are not dictated to by the state, nor the market. Hopefully, they all choose to pay their employees enough for them to live on, which is called the Living Wage. I think Lauritzo would find it hard to understand why employers with a choice choose not to do that and oppose it (as many did the National Minimum Wage).
And the nature and scale of the internal pay differentials evident in your workforce are also down to HR and the choices you make, or choose not to make. So rather than leaving it obscured behind an HR system or piece of payroll software, why not take a look at these pay relativities in your organisation and see if you and your colleagues agree with them. Start a debate internally on how you might better invest and distribute your payroll budget. You might not want to institute a Cuban system, but if my study groups are anything to go by, you may well want to make some changes.