Informacion economica sobre Cuba

Cuba: Economy In Motion

By Latinamerica Press — (April 7, 2013)

By Lídice Valenzuela

Two years after the reforms to the Cuban socioeconomic model began, one

must ask: have substantial changes to the life of this Caribbean nation

of 11 million people been observed? What is missing for the economy to

be able to advance in the accelerated manner that is demanded by a

population mostly worn down by the U.S. economic, financial, and

commercial embargo, internal errors, and the dependency on other nations?

To avoid creating false expectations, President Raúl Castro warned at

the Sixth Congress of the Communist Party of Cuba, or PCC, in April

2011: "We will act with no hurry, but without pausing," which means that

the period of improvising and economic chaos has ended — at least


In that context, opening up to private initiative is directing national


It is still recent history that during the so-called Special Period of

the economy — established to face the crisis triggered after the fall of

the socialism in Eastern Europe at the end of the 1980s — the return to

private enterprise was sought, albeit having been limited to two

sectors: home rentals and the opening of mini-restaurants called

Paladares, most of which ended up closing because of state obstacles

that indicated more of a political contradiction than an economic one.

Now they once again proliferate in all cities.

In 2011, following the Sixth Congress' guidelines, private work

reappeared to drive the semi-paralyzed economy, although there are still

inherent obstacles because of an internal resistance to change by some

state officials.

A year before, the Ministry of Labor and Social Security put into effect

Resolution No. 35 that liberalized 181 activities, including careers and

professions of different ranks that range from professors of different

educational levels to barbers and domestic workers. Some 400,000 people

take part in this strategy.

Even with a small contribution to the gross domestic product — around 10

percent — the private sector frees the state from providing small

services and tries to reverse the tense agricultural situation, which

offers no solution to the feeding of the people, an issue Castro

considers "of national security."

Currently, there are many forms of private businesses that stand out:

home rentals, cargo and passenger transportation, food manufacturing,

and mobile vendors of agricultural products. Land leasing with usufruct

rights to some 176,000 farmers also has a vital role. These farmers

still do not achieve high production levels for reasons attributed in

large part to official deficiencies, such as the guarantee of work

tools, transportation for the harvests, and low prices for the products.

Tax obligations

The national economy was the sole main issue discussed by the delegates

to the Sixth Congress of the PCC. The debate resulted in the approval of

the "Economic and social guidelines of the Party and the Revolution" –

the guiding document for all of the changes, consisting of more than 300

reforms and previously discussed and enriched by the people.

However, Marino Murillo, vice president of the Council of Ministers,

told the press in March 2012, "[We] must continue to perfect the

implementation of the guidelines," given the previously identified


Although the people understand the official needs, they are dissatisfied

with the high prices imposed by the so-called "self-employers." There

are very costly alternatives for the average state employees, who earn a

daily average of 10 pesos (one of the two official currencies, along

with the CUC, the Cuban convertible peso). Among them are the taxi

services, the Paladares, the clothing industry, and home products.

Another delicate situation occurs when wholesale providers cannot

steadily deliver products to private businesses. The latter are forced

to buy from the retail market which supplies to the population, thus

hoarding products which are for family consumption. For almost three

years now, basic food products are sold outside of the so-called ration

card, such as eggs, pork meat, bread, cheese, or tomato puree.

In the middle of this diverse landscape, some experts link the process

of labor reorganization in the state sector, started in October 2011 and

which left 340,000 workers as available labor force, with the emergence

of private business.

"The reappearance of private [enterprise] lacks a link to the labor

reorganization, a process on its way to greater efficiency in the labor

force, which considers the employment peculiarities, conditions, and

alternatives of the different territories. The relocation of the

available labor force happens in the state sector itself, and at a lower

rate in the private sector," said Ariel Terrero, specialist in economic

issues, to the Cuban television.

Experiences in the private sector

Karelia Sopena leases a room in her house in the Nuevo Vedado

neighborhood since 1997, when the tax system took its first steps in Cuba.

"Taxes were exceedingly high," she tells Latinamerica Press. "Then, they

charged me more than 200 per month although I did not have clients. With

the Tax System Law of this year," she comments; "now I pay 35 CUC each

month, while I charge 35 CUC a day for my room."

In the flower shop "Angélica," an establishment leased from the state in

the municipality of Playa, six contracted individuals work 12 hours in

alternating days. They pay two monthly taxes: a work license to be part

of the private sector and social security for retirement. For vendor

Indira García, this kind of job "is harsh but positive," for her salary

is higher than that of a state employee's. Although she is not the owner

of the shop, she understands the internal management and says that

obstacles to their business come from lacking a state supplier.

In the municipality of Central Havana, Manuel Pedroso owns a formal food

and light food cafeteria. He pays some 1,000 pesos per month in taxes,

but his daily income is about 2,000 pesos. His employers make 100 pesos

a day in 10-hour alternating shifts. "Obtaining the supplies is

difficult, but it's worth the sacrifice," he points out.

In an informal analysis, it is observed that more adjustments to the

state-private management relationship are still necessary, but the

balance is positive if the essential economic movement is considered.

2013 promises socioeconomic novelties. The Cuban first vice-president,

Miguel Díaz Canel, informed last March that "the actualization process

is starting its most important and complex stage because of the

decisions to be taken and their importance in the future development of

the country, seeking greater economic and productive efficiency within

the socialist system with the ongoing transformations."

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