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Posted April 13, 2010 by publisher in Business In Cuba

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By Marc Frank | Reuters

Communist Cuba is turning over hundreds of state-run barber shops and beauty salons to employees across the country in what appears to be the start of a long-expected revamping of state retail services by President Raul Castro.

The measure marks the first time state-run, retail-level establishments have been handed over to employees since they were nationalized in 1968.

Barbers and hair dressers in telephone interviews from a number of cities during the weekend said they would now rent the space where they work and pay taxes instead of receiving a monthly wage.

Those employees who do not wish to rent are being offered other jobs or retirement.

Cuba and North Korea are the world’s only remaining Soviet-style command economies in which the state controls more than 90 percent of economic activity. Other communist countries such as China and Vietnam have long since liberalized retail trade, services and small business.

The measure, which is subject to adjustment and local conditions, sets a monthly fee for each person based on 15 percent of the average revenue generated by haircutting and styling in each area.

They will be able to charge whatever the market will bear and expect to make good money for Cuba, where the average monthly wage is 420 pesos, or the equivalent of about $20 U.S.

Daisy, a hairdresser in easternmost Guantanamo province, said under the old system the government took in 4,920 pesos per month per hairdresser. Now she will pay the government 738 pesos per month and keep any earnings above that.

In Santiago de Cuba the monthly fee is 1,008 pesos and 1,292 in the city of Holguin.

“We have to pay water, electricity and for supplies but it seems like a good idea,” Daisy said.

She said that while the plan did not turn the shops into cooperatives, employees would have to join forces to decorate and maintain the establishments.

“You will have to work very hard to earn a good living but I like the idea,” said Yordanka, 25, a hair stylist in the eastern city of Holguin.

Barbers and manicurists will pay less per month. For example, in Guantanamo barbers will give the government 604 pesos and manicurists will pay 280 pesos.

The government has not announced the new policy, which began this month and now applies to beauty parlors and barber shops with three or fewer seats, nor has the state-run media mentioned it.

Castro has fostered discussion in the media and through grassroots meetings on what ails the economy since taking over for his brother Fidel Castro more than two years ago.

The retail sector has come under withering criticism for poor service and rampant theft, and officials have repeatedly urged patience as they experiment with ways to bring improvement, without jumping into full-scale capitalism.

Beauty shops have operated in a kind of a philosophical void that served no one very well, said Mabel, a Havana hairdresser.

“In practice they were neither state nor private and simply didn’t function,” she said.

Cuba expert Phil Peters at the Virginia-based Lexington Institute said the new measure was a small step with potentially big consequences if the model is applied to the broader retail sector.

“If carried out fully, it would convert small state enterprises into leasing arrangements and urban cooperatives,” he said. “Since the cooperative model and leasing are already being extended in agriculture, there would seem to be no ideological barrier to employing them in the cities.”

The Cuban government took over all small businesses and retail activity in 1968.

In 1993 the government legalized self-employment in a number of retail activities—from home-based snack shops and restaurants to beauticians, barbers and clowns—but then gradually reduced the number of licenses available.

The number of self-employed peaked at more than 210,000 in 1996, according to the government, but had declined to around 100,000 by 2009.

Countless individuals engage in illegal self-employment, including hair cutting, styling and manicures.

  1. Follow up post #1 added on April 13, 2010 by publisher with 3905 total posts

    Great step in the right direction but

    1. The government has not announced it so is it official or is it not official?

    2. “and now applies to beauty parlors and barber shops with three or fewer seats”. WOW! Three seats or less. Now that’s small business.



    Cuba consulting services

  2. Follow up post #2 added on April 15, 2010 by MiamiCuban with 87 total posts

    The beauty parlors in Miami have anywhere from 4 to 8 seats.  Is there really THAT much difference between the U.S. and Cuba, especially when this is a new venture for Cuba?


  3. Follow up post #3 added on April 15, 2010 by publisher with 3905 total posts

    MiamiCuban,

    Are you trying to completely discredit yourself? Everything you say is ridiculous.

    Even Fidel thinks you are too far out there.



    Cuba consulting services

  4. Follow up post #4 added on April 15, 2010 by MiamiCuban with 87 total posts

    Publisher, I was referring to your sarcasm about Cuba allowing 3 seats.


  5. Follow up post #5 added on April 15, 2010 by publisher with 3905 total posts

    What sarcasm? The article states that this private enterprise only applies to hair salons or barber shops with three seats or less.

    I will admit this is better than nothing but why does the Cuban government always have to restrict free commerce?

    What’s wrong with NO restrictions on the number of seats?

    So now three seat shops are going to compete with government run shops? Makes no sense.



    Cuba consulting services

  6. Follow up post #6 added on April 15, 2010 by MiamiCuban with 87 total posts

    Try looking at it a different way, Publisher.  Maybe it’s just a start.


  7. Follow up post #7 added on April 15, 2010 by manfredz with 464 total posts

    Its just like CPs only having 2 rooms for rent and private restaurants having a maximum of , what is it 12 tables?.
    Cuba is putting its little toe into the lake to see how cold the water is, is one interpretation,
    another is that this way they’ll have everything going against them, be no real competition to the state and only the most determined will go that direction.
    Take your pick.


  8. Follow up post #8 added on May 02, 2010 by pipefitter with 275 total posts

    I just came back from a month in Cuba and I can say that there is quite a bit of pressure to expand this concept to other small buisiness even from some of the upper etchalons of the government. The taxi cab experiment they say has been a success for both the cab drivers and the attitudes towards the upkeep of their cars, more in wages, attitude etc. Maybee they are, as was said putting their toes in the water to see how cold or warm it is. I think that the small buisiness shops will outperform the big government ones unless the government tries to limit their access to supplies etc.


  9. Follow up post #9 added on May 02, 2010 by publisher with 3905 total posts

    Hmmm. Capitalism instead of Communism.

    Who knew it would work out better?

    Even you seem to sound like this is a good thing.

    What about the inequality for those people who don’t have cars or a don’t know how to cut hair? What about them? Who’s going to take care of them?

    Certainly not these new evil Capitalists. Right?



    Cuba consulting services

  10. Follow up post #10 added on May 02, 2010 by pipefitter with 275 total posts

    Pub, I don’t think you can find anywere that said I thought the Cuban government should have control of absolutly everything. I have always thought that the small operations schould be left to fend for themselves and it was a mistake to try to stop this as it provides things the Government can’t. On my trip to Cuba this time, although oficially it is illegal, I saw lots of people operating their own little buisinesses. Some as a secondary thing. Even the police turn a blind eye to it and buy stuff from them. There are a lot of vendors walking the streets selling just about anything you want. Road side stands, people making wine, smoking pork to make ham, fishing etc., you name it.


  11. Follow up post #11 added on May 02, 2010 by Yeyo with 411 total posts

    That police turning a blind eye is nothing new, that had been the way things have been done in Cuba for the last 50 years, they turn a blind eye on you until…they want. One day you say something that is no longer funny or somebody thought that you are not a good communist anymore, and they can easily throw you in jail, aggravated with the fact that you have been doing illegalities for quite long time. It all depends if they need you or not, that simple.


  12. Follow up post #12 added on May 03, 2010 by pipefitter with 275 total posts

    Yeyo, you are partly right, they do sometimes get turned in by someone that they have rubbed the wrong way, but they only get a fine and are back selling stuff again, not thrown in jail like you say.


  13. Follow up post #13 added on May 03, 2010 by Yeyo with 411 total posts

    I feel that you and I lived in different Cubas. In my Cuba Castro governed the country with a tight grip as it was its own backyard. We ate wherever he liked, think what he taught us and say what he told us to say, anybody that did not listen carefully or say anything different was branded mercenary. He threw people in jail for not working (peligrosidad), selling stupid stuff or for saying anything against Castro and/or the government.
    Apparently in your Cuba life was much easier. Unfortunately I did not have the opportunity to visit your Cuba.


  14. Follow up post #14 added on May 03, 2010 by pipefitter with 275 total posts

    Yeyo, unfortunatly you are still living in the past.


  15. Follow up post #15 added on May 03, 2010 by Yeyo with 411 total posts

    Yes I’m still in 2010 past and you are in the future but with Alzheimer’s.


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