Cuba Business

Fidel Castro plans crackdown on self-employed Cubans

Posted June 03, 2004 by publisher in Cuba Business.

By Marc Frank in central Cuba | [url=][/url]

In the words of Maria, who works in a sugar-producing town in central Cuba, the region’s cash-starved workers have to “invent” ways to buy essentials such as food, clothing and soap.

“The state’s wages are very low and state prices very high,” says Maria, who earns 231 pesos ($8.56, 4.72, ?7.08) a month at her state job - just below Cuba’s average wage of 245 pesos.

“I sell ice for a peso a tray, three or four trays a night,” she says. “I need at least twice my income to just get by.”

Tourists in Havana are accustomed to meeting locals who have found a variety of ways to supplement their state wages. But from October, the government will begin to close 40 broad categories of self-employing businesses.

The directive from the Labour and Social Security Ministry means that no new home-based restaurants or pizza stands, bed-and-breakfast inns or garages can open - nor “self-employed” clowns, magicians, flower sellers, metalworkers, booksellers or mouse-trap makers.

This is the latest move by Cuba’s communist authorities to draw back from cautious market-oriented reforms. After the collapse of the Soviet Union, Cuba’s main benefactor, some private initiatives were allowed by the government to help draw Cuba out of depression. But Fidel Castro, Cuba’s president, has always insisted the state would reclaim that economic space.

Popular sentiment is opposed to the move. “The state should put all its efforts into important economic matters like energy, utilities, tourism and nickel,” says one economist. “It has no place running coffee shops, fixing watches and repairing televisions.”

The government’s decision will hit Havana and areas close to tourism resorts the hardest. The economic recovery has been strongest in the capital and small businesses have flourished - at least by Cuban standards.

Outside Havana, the impact is harder to gauge. Most of the country still has few licensed small businesses or self-employed people.

There were 150,000 individuals among Cuba’s 11m people licensed as self-employed this year, the government reported. In 1995, when the permits - along with stiff regulations and taxes - were imposed on an already active, but illegal, small business sector, there were well over 200,000.

“Under the Labour Ministry around 20 per cent of licences were granted in the city of Havana and 40 per cent including the adjoining provinces,” says a Cuban academic with access to previously unreported self-employment data. “At least a third of those licences were for small business, like food services, now on the chopping block.”

The government provides a food ration for about 40 pesos per month, as well as free health and education and subsidised utilities. An internal government study says the rationed rice, beans, sugar, a bit of protein, milk and yoghurt for children, perhaps a bar of soap and some pasta, meets 40-60 per cent of the population’s nutritional needs. Children under seven receive 120 per cent of their nutritional requirement, the report says.

In reality, Cubans must resort to state and private farmers’ markets, where a pound of rice or beans can cost more than a day’s pay, a pound of pork three days’ pay, and salad vegetables a day’s pay or more.

State dollar stores sell even more expensive cooking oil, milk, meats, pastas, cheese, herbs, soap, detergent and other personal hygiene products.

Then there are clothes, household appliances and other “luxuries” that can cost many times a month’s salary.

Outside Havana and a few other cities, Cuba is a patchwork of rural towns such as the one Maria lives in, with 20,000 to 50,000 residents. Supplementary work is even more ad hoc than in Havana: “Everyone knows each others’ business, literally,” she says.

Maria’s neighbour, a teacher, hitchhikes to the coast every weekend with an empty suitcase, bringing it back full of fish. Another neighbour paints pictures and signs. Others sell their services as vintners, seamstresses, handymen, gardeners, bicycle repairers, messengers, cigar vendors or make-up artists.

“Just about everyone who isn’t working for the tourism industry or getting money from relatives in the US does something,” says Maria, who is a Communist party member. “Most are unlicensed, but no one does anything about it because everyone is just trying to survive.”

The Bush administration announced a series of measures in May to limit remittances from Cuban-Americans to relatives. The Cuban government responded by raising prices at the dollar stores.

“We are all really traumatised,” Maria says, recalling the early 1990s, when the lights were off for 18 hours a day, there was no food even if one had money and the buses that connected her town with the provincial capital stopped. “Do you think that could happen again?”

Member Comments

On June 03, 2004, John Bomar wrote:

And so, sadly, on it goes, while new U.S. policy is a part of the machinery that helps drive such wretched dispair and suffering. 

In the name of God, and humanity we should stop and think.  Our present policy of helping “isolate and starve them to death so they will overthrow Castro and embrace us” is as misguided as foreign policy can be. 

Our role in helping to keep jack boots on the necks of average Cubanos is obvious to all who have followed this miserable story.  In our arrogance of false presumptions and willful over-reaching into another nation’ soverignity we give strength to the communist henchmen, while at the same time our embargo provides them the scapegoat they need to avoid their own responsibilitiy for the suffering.

Irrational and white hot emotionality, delusional hopes, and cold hard cunning by entrenched Cuban-American leaders, out of touch with daily life in Cuba, drive our policy makers.  While far too many Americans just look the other way, and take no notice, or regard. 

The first step to solution seems so obvious, a win-win proposition.  Simply opening up all our markets to Cuban purchase, on a cash basis, would slay the scapegoat the Communists now hide behind, ease the desperate plight of semi-starving Cubans, and foster our own economic growth.  How obvious, and how right, except to those of hardened heart and idealogue mentality. 

Two evils do not good make, no matter how high-minded words may flow. We strengthen and extend communism’ hold on average Cubans by Mr. Bush’ use of threat, intimidation and economic restriction.   

On June 23, 2004, andy douglas wrote:

Indeed, talking to Cubans, their primary problems are economic, simple. The quickest way to regime change would be a lifting of the embargo.Sadly it seems that the powerful right of the Cuban exile community want to roll in there unhindered by an incumbent Communist regime, and thus buy up the place from under the Cubans` feet, and make a killing.