ECONOMY-CUBA: Private Initiative Struggles to Survive

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, Jul 28 1999 (IPS) - Private initiative in Cuba remains subject to tight government controls and restrictions, despite the economic reforms implemented since 1993 that have provided new opportunities for self-employment and family-run businesses such as small home-based restaurants.

“Everything is conceived of to finish us off,” said Angel Garcia, 69, who set up a small photographic studio after retiring, thanks to a 1993 decree expanding the areas of activity in which people could run their own businesses.

Garcia’s concerns are shared by many of Cuba’s self-employed, who complain of the government’s strict inspections, the limitations they face in doing business and the heavy taxes that dig deep into their profits.

According to the latest available statistics, approximately 160,000 people are currently self-employed in Cuba, out of a population of over 11 million. In 1995 the number stood at more than 208,000, but by 1996 it had dropped to around 171,861.

That figure does not include around 11,000 truck and taxi drivers and a few thousand small farmers who own land – holdovers from the early days of the revolution.

Another 6,000 people rent rooms or housing, authorised to do so and regulated since May 1997. And roughly 6,000 work as independent artists.

Authorities say the drop in the number of self-employed is due to the economic recovery after nearly a decade of crisis, as well as stepped-up controls on permitted activities.

In Garcia’s view, excessive restrictions and difficulties in obtaining raw materials and equipment make it tough for people to feel stimulated to try their luck outside of the protective umbrella of the state, “which pays you a salary whether or not you’re productive.”

“The self-employed contribute one percent of the national budget,” said a source at the Labour Ministry, who added that “the economic effect is not what interests us most, but rather that we see there is order, and that these people contribute.”

Private initiative is allowed in 157 occupations, 16 of which account for nearly 75 percent of all registered self-employed Cubans.

A study by Lilia Nunez, a sociologist at the Centre of Psychological and Sociological Research, found that the preparation and sale of food and beverages – in “paladares”, small family restaurants with up to 12 seats, and at stalls where coffee, juice and snacks are sold – along with assistance by family members accounted for 16.6, 5.7 and 8.6 percent of independent economic activity, respectively.

Other common activities were carried out by taxi drivers (5.7 percent), messengers (5.1), carpenters (4.0), rental car drivers (3.8), hairdressers (2.8), shoe repair (2.1) and bicycle or three- wheel vehicle transport (1.7 percent).

According to international estimates, for each registered independent worker, an average of 3.5 are not self-employed. If that ratio were to exist in Cuba, around 600,000 people would be working on their own instead of depending on the state for their livelihoods.

But a joint resolution adopted last year by the ministries of Finance and Prices and of Labour and Social Security introduced a series of further restrictions on self-employment, modifying earlier laws.

The resolution authorised the corresponding authorities to close down any private business if there was cause to do so, limited the range of people allowed to engage in the permitted areas of private initiative, and stipulated that family members could only be registered as assistants in the area of preparation and sale of food and beverages.

The possibility of permission to form associations of self- employed individuals, apparently studied by authorities, was also definitively ruled out.

Early this year, Cuban Minister of the Economy and Planning Jose Luis Rodriguez rejected the idea of encouraging small and medium-sized private businesses, alleging that such a policy would run counter to the country’s economic and political interests.

“We have no reason to copy other experiments, which were the result of conditions that we are not experiencing,” said Rodriguez, who added that the interests of “the enemies of the revolution tend towards the creation of a capitalist class in the shadow of small and medium companies.”

In the 1960s, in the early years of the revolution headed by Fidel Castro, a private sector existed, basically comprised of merchants, workers in the services sector and small industrial enterprises.

But a March 1968 wave of nationalisations wiped such activities out of existence, and alongside the public sector’s predominance over all branches of the economy, only a tiny pocket of private initiative survived in the areas of transport and agriculture.