Cuba's Brave New Economic World

Cuba's Brave New Economic World
Many Cubans Already Have Private Side Business to Supplement Government Job
By MARC FRANK

HAVANA, Cuba Sept. 15, 2010—

A brave new world is slowly dawning in Cuba as the cash strapped
government of President Raul Castro cuts gratuities and subsidies,
designs wage systems based on performance, sheds state jobs, revamps the
feeble tax system and liberalizes agriculture in search of socialist
sustainability.

The government announced plans Monday to lay off 500,000 state employees
over six months and spur development of non-state jobs in their place,
the biggest shift to private enterprise since the 1960s after Fidel
Castro moved his revolution into the Soviet camp.

Cuba is a poor, developing country, embargoed by the United States,
caught in an antiquated system and racked by hurricanes. But the basics,
from jobs to food rations, health care and education were always
guaranteed. Except for health care and education, that is no longer the
case.

The austerity measure is certainly painful, but perhaps not as painful
as one might think.

Many Cubans working for the state in jobs from driving taxis and
repairing appliances to waiting on tables and making furniture will move
to leasing their activity or working as cooperatives.

At the same time state employees, most of whom already do something on
the side to make ends meet, will now strike out on their own.

Havana secretary Kendra, like many of those being let go, already is
self employed in her spare time doing friend's nails and hair, as her
state salary of $15 a month lasted barely a week.

"I guess I'll do this full time," said Kendra, who asked to be
identified by her first name only.

"The recent announcement that the government will shift 500,000 state
jobs to the private sector confirms the important, but gradual and slow
reforms underway are irreversible," Arturo Lopez-Levy, a Cuban-American
political scientist at the University of Denver, said.

"The government has committed to opening more space for small business
and cooperatives, which to function need the model to change from state
dominated toward the market," he said.

Lopez-Levy, like other experts, says the measures must include the
recognition that the private sector is not evil but indispensable, an
ideological shift that Castro has clearly supported in Agriculture where
he has leased land to more than 100,000 new farmers and ordered private
farmers be supported in the same way as state farms.

Cuba Says It Wants to 'Modernize' Economy

"This is a major change in the government's thinking. The new
entrepreneurs and cooperatives will amount to a sort of small business
sector, and the government sees them not as a necessary evil, but as a
way to make the entire economy more productive," Phil Peters, a Cuba
expert at the Virginia-based Lexington Institute, said.

Castro, during a speech in August, announced a five year plan to
modernize the economy had been approved, but failed to give any details.

Cubans are not sure what's ahead as Castro "modernizes" the economy and
states that in the future, "Cuba will no longer be known as the only
country in the world where you do not have to work to live," words
uttered during the August speech that certainly caused anxiety among
some of his minions.

Government insiders say the jobs reform that will eventually effect more
than a million state workers, 20 percent of the labor force, is part of
the five-year plan that also includes more foreign investment, bank
credits for small business and farmers, measures to improve efficiency,
a mixed retail sector and the lifting of many regulations on the supply
of inputs to farmers and sale of what they produce.

The non-descript Cubataxi garage on Palatino Street in the Cerro
municipality of Havana may not look like much, but it provides a glimpse
into the past, present and future.

The past, even the government admits, was characterized by suffocating
bureaucracy, massive pilfering and slovenly work habits. The present
still is, but also by the recognition one of the world's last
Soviet-style economies must change.

Controversy over who gets what and anger at the tax man will more and
more replace paternalism and passivity.

The 30-car garage opened for business on an experimental basis in
January. Instead of three support staff for every vehicle as in other
garages, an administrator, book keeper, mechanic and custodian man the fort.

The drivers do not work for a state wage, but lease the cars on a daily
basis and pay for their gas and vehicle maintenance. They will have to
pay social security and income tax at the end of the year.

Cuban Barbers Will Have to Lease Their Barber Chairs From Government

"Starting next year we will have to pay the local equivalent of more
than a $1,000 to the tax office on top of everything else," a taxi
driver, whose garage will go over to leasing next year, angrily said.

The average monthly wage in Cuba amounts to $20.

The government is thrilled with the pilot project, and for good reason.

On Monday, the same day that the official trade union weekly
Trabajadores announced the state's massive layoffs, the paper ran a
story on a meeting of transportation officials.

Buried in the article were a few paragraphs with the astounding news
that productivity at the garage was up not by 55 percent, but 55 times
its previous level and the state's yearly take from each taxi estimated
at the local equivalent of $18,360, compared with $580 in the past.

"It's no mistake," Christina, the book keeper said, sitting outside the
garage's office. "No one hangs around here anymore doing nothing for a
few dollars, stealing and taking the family to the beach in a company
cab all expenses paid."

The drivers are not so enthusiastic, insisting it's from their hides the
fantastic statistics come.

"It is slavery. We do not have a minute for the family," Roberto, one of
them said.

"We have to work day and night and seven days a week to pay the lease
and tax office," he growled.

Hundreds of barbers and hair stylists across the land have also been
leased their chairs and small establishments, and at least in Havana
many voice similar complaints as the cabbies, while others appear
satisfied and are sprucing up their shops.

Transportation officials met the drivers in June to discuss the project
and according to Roberto got an ear full. They promised to hold another
meeting in December to announce "adjustments" before the experiment goes
nationwide.

Four drivers soon quit, while Roberto said the rest had adopted a wait
and see attitude.

Christina confirmed all this, but with a scoff as if to say things were
not all that bad, though she admitted given the spectacular results
perhaps a bit more of the pie could be shared.

http://abcnews.go.com/International/cubas-brave-economic-world/story?id=11644606