LABOUR-CUBA: Wages Increase, But Purchasing Power Shrinks

By Dalia Acosta Reprint | | Print |

Dalia Acosta

HAVANA, Apr 30 2002 (IPS) - Average wages in Cuba grew in the last three years because the government granted raises to professionals and pegged salaries to productivity in some state enterprises, but the workers’ purchasing power has not followed suit.

Anxiety about income does not figure among the official themes as Cubans prepare for May 1, International Labour Day, and the massive parades planned through Havana and other cities on this socialist-run island.

Since the eruption in 1990 of the economic crisis, which persists today, the Cuban people have been forced to find ways to make their insufficient wages stretch to cover basic expenses.

“What my wife and I earn teaching classes Monday through Friday gives us enough to make two or three visits each month to the agro- market, but that’s it,” said Aurelio Castellanos, a high school teacher in Havana. These government-authorised produce markets operate on basis of supply and demand, and prices tend to be relatively high.

The average monthly salary grew from 182 pesos in 1992 to 245 pesos in 2001, according to official figures. The working-age population surpasses five million people in this country of 11.2 million.

By year’s end, the majority of employees at approximately 500 state enterprises will be included in a system that links wages with output, announced Minister of Labour and Social Security, Alfredo Morales, on Sunday.

In 1999 and 2000, more than a million people received pay raises, a policy that was first implemented in the health and education sectors, leaving government agencies and public administration for last.

The revitalisation of the Cuban economy that has been evident in the last few years and the creation of new jobs in the public sector have meant a reduction in unemployment from 7.9 percent in 1995 to 4.1 percent last year.

“In the first quarter of this year alone, Cuba has generated 35,600 new jobs,” said minister Morales. Of that total, 46 percent are held by women and 68 percent by young people, he added.

But the government has been unable to shore up the peso, the national currency, with respect to the dollar, which circulates here freely. Nor has the Fidel Castro government been able to reduce prices on essential items to make them more realistic in relation to income.

“Workers’ wages in 2000 were higher than in 1989, but only in nominal terms, because the purchasing power of wages is much lower than it was prior to the crisis,” said economist Omar Everleny Pérez Villanueva in a recent study.

In the 1990s, the dollar reached an exchange rate of 150 pesos, but then stabilised at 20 or 21 pesos, until surging last year to 26, where it has remained since.

The cost of the basic monthly family “food basket”, a set of items used as an economic indicator, rose from 22 pesos per person in 1988 to a figure varying between 74 and 90 pesos per person since the mid-1990s.

The food basket grew more expensive while the variety of products included in it shrank, as did the quantity designated for each person.

“With the ‘libreta’ (ration card) I used to be able to get tomato sauce, biscuits, canned goods, condensed milk, fish, red meat, chicken, sausages, potatoes and other vegetables,” said Evelio Gómez, 41, a computer expert who lives alone.

Now, he has the right to obtain a small piece of bread each day, rice, sugar, an occasional meat product, and coffee, and – “when they are available” – cooking oil and soap.

Gómez says his salary of 320 pesos is not enough, so he rents his car to foreign tourists in order to obtain the dollars he needs “to make it to the end of the month.”

Workers in Havana would need a salary seven times greater than what they receive now to make ends meet, according to economic studies.

An independent survey conducted in December 1999 showed that the greatest source of frustration among the respondents was the existence of two currencies in circulation – the dollar and the peso – and its devaluing impact on their salaries.

Around 60 percent of Cuba’s population has access to dollars through salary bonuses granted by the government, remittances from relatives living abroad, or through self-employment, generally in the tourism industry.

The circulation of dollars was legalised in 1993. Afterwards, the government set up a network of shops that sell merchandise only in dollars. Today, there are several basic items that can only be had for the U.S. currency.

A family of four would need more than 10 dollars a month to purchase two packages of detergent, four bars of bath soap, one bottle of shampoo, one container of deodorant and two floor rags.

Another 50 dollars would be needed to buy powdered milk, cooking oil, tomato sauce, and chicken and other meats.

An average salary would allow this four-person family to visit the agro-market just once a week to buy the rest of the necessary foods, including fruits and vegetables. Some items, such as a pineapple – priced at 15 pesos -, would be out of the question.

A survey conducted in 2000 by the government’s Territorial Office of Statistics for Havana indicated that more than 77 percent of the capital’s families interviewed said their incomes were not enough to cover expenses.

The situation is somewhat mitigated by the Castro government’s policy of keeping rates low for basic services, such as water, sewerage, gas, electricity and telephone.