Cuba: Economy In Motion

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
officially.

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

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
obstacles.

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."

http://www.albanytribune.com/07042013-cuba-economy-in-motion/