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HavanaJournal.com: Cuba Business

Entrepreneurs Faces More Business Restrictions in Cuba

Posted May 05, 2004 by publisher in Cuba Business.
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ANDREA RODRIGUEZ | Associated Press

HAVANA - If you want to build a better mousetrap in Cuba, you’ll have to go to work for the government.

Officials are halting new licenses for some types of self-employment - from magician to masseur to restaurateur to jeweler to mousetrap maker - as the communist government steadily reasserts control over the economy.

Under a Labor Ministry decree scheduled to take effect Oct. 1, no new licenses will be issued for 40 categories of jobs that were legalized in 1993 during the severe economic crisis that followed the collapse of the Soviet bloc, which was Cuba’s biggest source of aid and commerce.

The measure, dated March 25, has not yet been made law by publication in the official gazette, but a copy was obtained by The Associated Press. Recently, there has been a two-month delay between the time decrees are issued and published in the gazette.

Those already working in the eliminated categories can continue to do so. And two-year renewable licenses for 118 other private occupations - including language teachers, carpenters and pet trainers - will still be allowed.

“Without this, I wouldn’t be able to get along,” said Clara Santos, a woman in her 60s who sells hand-knitted caps, blouses and dolls from a street-side rack in Old Havana.

Whether privately employed or state worker, Cubans don’t pay rent, get free education and health care and are given a small food ration. But with low salaries, many families without access to additional income have trouble making ends meet.

Nestor Iglesias, director of the labor force section at the Labor Ministry, confirmed the decree had been issued and said self-employment had never been more than a supplement to state employment in the communist system.

“Today state organizations are able to assume many of these services under various formulas,” Iglesias said. “We are working in that direction.”

The roughly 150,000 self-employed Cubans represent only 2.1 percent of Cuba’s work force, and Iglesias said the state system had recovered sufficiently from the shock of the early 1990s to absorb more workers.

Communist leaders had always been uneasy with private economic activity, describing it at an evil that was necessary to provide jobs and services that the state could not during the hard times - known to officialdom as “the special period.”

The government has have repeatedly complained about growing inequality associated with self-employment. A private worker can earn more in a day than the $15 that the average state worker might make in a month.

Officials also say private workers often compete with the government or steal state goods. Several of the 40 job categories affected - metalworker, food-seller, auto body repairman, for example - are notorious for using raw materials claimed by the state. Often there is no other source.

In the midst of Cuba’s crisis, more than 200,000 people turned to self employment, and many more applied for licenses. But a steady increase in taxes, red tape and official monitoring squeezed many out. Most private restaurants have vanished.

Among the proscribed job categories are used-book sellers, although most vendors with licenses said they don’t expect to be affected much.

Miguel Luna, who was hawking a big book of Che Guevara photos in a Havana plaza, said he does not compete with the state because the government has few stores for used books.

“Sometimes you make good money, but none of us is getting rich,” Luna said from his book stall - one of about 50 on the Plaza de Armas that sell everything from Marxist texts to novels to pre-revolutionary social directories.

Since last year, the government has been gradually introducing measures that veer the country back toward economic centralism.

The Central Bank announced in July that state enterprises handling U.S. dollars could now use only convertible Cuban pesos - a local currency equal to the dollar but worthless outside the country. The National Housing Institute announced strict new rules for individuals who rent rooms and apartments to foreigners.

Member Comments

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On May 06, 2004, publisher wrote:

And you thought running a small business was tough in the United States grin

One thing though about the Socialist way… no competition. The government regulates the licenses so there is no such thing as competition.