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Cuba’s fast-growing private sector

by Thomas Leroy

“I started out seven months ago. I have some foreign customers, but most of them are Cuban. You make more money working for yourself,” says Maykol, a hairdresser in the centre of Havana.

“But it means more responsibilities too. We are not sure what income we’ll have at the end of the month,” he warns.

<p>Home-based restaurants and catering, taxi services and guests houses – in that order – are the most common activities in Cuba's private sector.</p>

Home-based restaurants and catering, taxi services and guests houses – in that order – are the most common activities in Cuba’s private sector.

(Thomas Leroy)

Maykol is one of the 28,000 Cubans that have become self-employed since the beginning of the year.

According to the latest official figures, almost 500,000 people are now self-employed in Cuba, which represents an increase of around 3000 people a month.

It is a record figure, but it is still far below the number of state employees on the island.

Around 4.5 million of the five million economically-active people in Cuba work for the state.

This number has, however, been falling since Raúl Castro came to power in 2008.

According to the annual report of the national trade union centre Central de Trabajadores de Cuba (CTC), there are almost 600,000 fewer state employees than in 2009.

It is a shift that is not yet over. During the sixth Congress of the Communist Party of Cuba, the authorities foresaw that 1.8 million people would move from the public to the private sector.

Four years on and a third of this figure has already been covered, significantly improving the finances of the state, which now has less money going out and more coming in, thanks to new income taxes of up to 50 per cent.

 

Growing liberalisation

Having initially been limited to tourism-related activities, the right to set up a small business has been extended to retail and more manual trades, such as farming or plumbing, and now covers large sectors of the economy.

And the population is following. “I make a better living now,” says Fidel, a cobbler with a very critical opinion of the former Líder Máximo.

“Under Fidel, we couldn’t do anything. We have more freedom now and I get what I should from my work.”

Amongst the Cubans interviewed by Equal Times, the most common reason given for becoming self-employed was to earn more for the same amount of work.

“The woman whose terrace I rent for my hair salon is retired and she only receives a pension of 300 Cuban pesos (US$12) [one of two national currencies in Cuba] a month,” says Maykol. “It is far too little to live on here. I do much better.”

Although he does not want to reveal his exact monthly income, he explains that a foreigner pays him three Cuban convertible pesos [CUC, Cuba’s other, foreign exchange currency) for a cut, which is US$3.

According to the latest report of the National Office of Statistics and Information, the average monthly wage is 471 Cuban pesos (US$19).

It is a significant improvement for some, as nominal pay has been increased by over 100 pesos since 2005. But several economists and citizens contest the method of calculation.

The CTC reports that the purchasing power of Cubans in terms of real wages has fallen considerably over the last ten years, due to inflation.

By contrast, the purchasing power of those working with tourists is rising substantially.

“I can earn up to 500 CUC a month (US$500) with my taxi,” says Rudi, who provides a taxi service between tourist destinations at prices lower than the cost of travelling by coach.

Home-based restaurants and catering, taxi services and guest houses – in that order – are the most common activities in the private sector. Cubans who work as guides, waiters, or rent out motorbikes also make a good living in comparison to their compatriots.

 

“Dry feet” and well-heeled

Some did not wait for this liberalisation to make money, but followed a different path: exile.

“I left in 2008. There were 35 of us in a small boat with two powerful motors. The sea was rough and we had to stop at an island between Cuba and Florida, but we got there safe and sound the next day,” recalls Ermel, a proud man in his fifties, showing off his gold chains at Playa Larga, overlooking the Bay of Pigs.

He went to Florida, home to one and a half million Cubans – three quarters of the Cuban diaspora.

Every year, around 40,000 Cubans attempt the journey to the United States, where the wet-foot, dry-foot policy is still in place.

Once on US soil, they have a good chance of receiving one of the 20,000 visas (at minimum) issued to Cubans by lottery every year.

“The US government gives Cuban immigrants who manage to slip through their net money to live off,” continues Ermel. “Then, a year and a day after declaring our arrival on their soil, they give us a legal residence card.”

Naturalisation is also relatively straightforward: his wife already has been given US citizenship and he also expects to have it soon.

Meanwhile, he can come back to the island whenever he likes and continues to send money to his family from Florida, as many others do.

Although the figures should be taken with a pinch of salt, as they are difficult to verify, remittances are thought to be Cuba’s main source of hard currency, ahead of tourism.

According to a consulting group specialising in Cuba, remittances amounted to US$3.5 billion in 2013 alone.

“I have no problem here. I can help my family by giving them money, I can wear my watch and my jewellery, something I wouldn’t dare to do in Miami.” And live the good life, judging by the number of cocktails he happily treats himself to.

He has already paid off the US$8000 a head for the dangerous sea crossing. Now he is building up some capital so that, one day, he can come back to the island, where he son and his sister still live.

“This is where I want to live once I’m retired. It’s the most beautiful place in the world.”

“Why did you leave then?” he is asked.

“I earn a gross income of US$3500 a month in the United States, as a gardener. I could never earn that here,” he explains, while rubbing his gold chain.

 

This article has been translated from French.

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Your comments

  • On 19 June at 09:43, by Peter Replying to: Cuba’s fast-growing private sector

    I am a Ghanaian who loves to stay in Cuba. My questions are,are the private sectors industries pay better salaries it the same $20.00 per month?
    Second, are foreigners also enjoy the government subsidies?
    Is it easy to get job in Cuba as a foreigner?

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