By Patricia Grogg
HAVANA, Aug 10 2000 (IPS)

Legally authorised private initiative has been losing ground in Cuba after a boom in the early years of the economic crisis that broke out at the start of the 1990s, when the government expanded the number of areas in which self-employment was permitted.

In May, just under 113,000 people held licences to set themselves up in business, nearly half of the 1995 total of close to 208,350.

To that total are added 34,600 transport workers and 11,600 people who rent rooms to tourists or fellow Cubans, an activity that has been authorised and regulated since 1997.

“We do not encourage self-employment, nor do we have the intention of making it disappear,” deputy minister of labour Abel Acosta told IPS. He said the solution to the country’s economic problems did not lie in favouring “chinchalitos”(a local term for small businesses or street stalls).

Acosta attributed the decline in the number of independent workers to the reactivation of the economy and the generation of new jobs and services, as well as the implementation of new systems by which state companies pay their employees.

But only 102 of the 2,224 people who officially gave up their self-employment licences in May did so in order to accept jobs offered by the state, which has a monopoly on employment even in the sector of foreign investment.

Of the rest, 379 licences were turned in due to a lack of demand for the services they offered, 257 due to back taxes owed, 407 because of personal problems, 264 on health grounds, and 102 because they simply wanted to get out of whatever business they were in.

Only one person said they turned in their licence because taxes had been raised, while 211 had their permits revoked after they were accused of breaking the law.

Cuba has been in the grip of a severe economic crisis for a decade, after the collapse of the Soviet Union and East European socialist bloc, which offered Cuba preferential terms of trade.

Those who exercise any of the more than 100 trades in which self-employment is permitted often complain that the lack of raw materials and essential inputs forces them to turn to the black market.

But Acosta argued that self-employed people could produce those inputs themselves, or purchase them at the government’s “hard currency recuperation stores” — where a wide range of products are sold in dollars — or in the free farmers’ and industrial markets.

“I have no choice but to buy flour in the ‘shoppings’ in dollars or to purchase it on the black market,” said Manuel, who charges six pesos (the equivalent of 30 cents of a dollar) for each pizza he sells on a busy street of the Havana neighbourhood of El Vedado.

Eating establishments are submitted to constant inspections by the state, which closely monitors, for example, their receipts for purchases of raw materials.

The plunge in the number of “paladars”, small family restaurants that began to emerge in the 1990s, has apparently been the result of heavy fines or the temporary or permanent closing down of the establishments by authorities.

The number of “paladars” operating in Cuba has plummeted from 1,562 in 1996 to 253 today, 151 of which are located in Havana.

The restaurants, authorised to serve no more than 12 guests at a time, usually provide a livelihood for three or four people, including the owner and the family members authorised to help out.

The initial success of the little family cafés now seems to have transferred to the business of renting rooms and housing units.

The number of people involved in that business has nearly doubled in a year, because renting to tourists and others appears to be profitable despite the tax burden, which varies according to the location of the housing units.

“My house is in a tourist zone, so I pay more taxes, but I can’t say things are going badly for me,” said María, who designated her mother as the landlord in order not to lose her job in a state enterprise.

Acosta pointed out that university graduates could also set themselves up in business, but not “in the area in which they obtained a degree free of cost.” In Cuba, education is free at all levels, up through the university.

“In fact, 543 professionals currently have a licence for self- employment, a figure that has also dropped, from more than 1,000 three or four years ago,” he added.

A joint resolution adopted in 1998 by the ministry of finances and prices and the ministry of labour and social security introduced a series of limitations on self-employment, modifying law decree 141 passed in 1994.

The 1998 resolution clarified that self-employment was temporary in character, and ruled out the possibility of allowing the creation of associations of self-employed people, which was apparently discussed by authorities at some point.

Researchers attributed the resolution to the government’s alleged aim of setting in place a barrier to the creation of “a small informal bourgeoisie,” and to keep social inequality at relatively low levels.

In the past, independent economists frequently pointed to the “paladars” as an example of the emergence of micro-enterprises that could turn into small or medium-sized collectively or family- owned businesses.

“We do not plan to join the dance of private initiative, which only means fat pocketbooks for a few,” stressed deputy minister Acosta.

Excerpt: