UPDATE ON SELF-EMPLOYMENT

7 03 2011

Salon Tropical, one of only two private restaurants (paladares) open in Santiago before the end of 2010

I have written before on the changes that are being introduced here, in which the number of people employed by the state is being reduced, whilst people are being encouraged to become self-employed and many previous barriers to self-employment are being removed.

The daily newspaper Juventud Rebelde reported on 4th March that between October 2010 and the end of January 2011, a total of 113,618 new people have been authorised to become self-employed. This compares to the total of 157,371 that existed at the end of 2010 and represents an increase of 72% in the number of self-employed (known here as trabajadores por cuenta propia).

The article gave details of the activities that have been approved: 20% for preparation and sale of food, ranging from selling cakes to people’s homes to running private restaurants (known here as paladares); 15% for contracting in the 83 different options not provided by the state; 6% for transporting passengers or goods; 4% for the production and sale of household items; 3% for renting rooms (casas particulares, both for tourists and for Cubans); the same percentage for builders and messengers; 2% each for manicurists, carpenters and shoemakers.

32% of the approvals are in the capital, Havana, whilst the provinces of Camaguey and Matanzas each have 8%.

An interesting figure is that 68.3% of those given approval previously had no employment status. I would suggest that the majority of these were previously conducting the same businesses, but unlicensed. I know two such people: one a retired guy who previously did some unlicensed taxi work for friends and acquaintances (including me). He has now received permission to work as a taxi driver, after his car passed a number of checks. The second is a guy who sells pirate CDs and DVDs in the streets and bars. He has also now received permission for this work (I wonder if there are any other countries who license sellers of pirate CDs and DVDs?).

If I am correct and the majority of the new self-employed are not actually engaging in new activities, the impact on the balance between state-run and private economic activity will not be as dramatic as it might appear. What it will do, however, is provide new taxation income for the state. Cuban people have not been used to paying taxes. The state has until now received most of its income from directly engaging in economic activities. This will require a culture change. It seems reasonable to me that people who work in the informal economy and yet receive benefits from the state (such as subsidised food and other products, healthcare and education) should contribute something towards their cost.

A big difficulty for those running businesses is that there is no such thing as wholesale markets here. They have to pay the same retail price for products as anybody else. There is also a state monopoly on foreign trade. The other day I could not find any spaghetti in the shops and it was suggested to me that the reason for its absence was that all the new cafeterias offering spaghetti – amongst other things – were buying it all up. It is similar in the bakeries. If the Cuban government wants to see viable new businesses established, it will need to give some attention to these matters.

The changes that I have noticed since last year are that there are many new cafeterias set up in front of people’s houses, along with stalls selling household products and pirate CDs and DVDs. There are not many new casas particulares (houses that let rooms and provide food – what we in the UK would call a bed and breakfast). People seem to think that the new tax rates for casas particulares are too expensive.

In Santiago, which until last year only had two licensed private restaurants (paladares), I have noticed four new ones. There are probably others. Even the four that I have noticed represent an increase of 200% on what existed previously. In the vast majority of cases that I can think of, the private restaurants are superior to the state-run establishments. This is good news for tourists, if nothing else.

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4 responses

20 03 2011
SARAH BUNNETT -- GIBSON

Really interesting! to follow your writing . Very glad you aae doing this . I have bben going to this part ff cuba for now over 19 years . I do think SANTIAGO is very SPECIAL ,MY place that I love the best ! Often , I stay out at preety and very Cheap , BUCANERO and come and out of town . And then stay over with friends in their CAS A P . I am not a dreamer ! Ican see how tough Things are becoming there $$$$$ ! My fear is that more crime will happen,— More Stealing from the Cubans themselves, the poor stealing , from the richer “tourism workers” Cuabans . And yes , then stealing from the Tourists also. It is so oviviuosly the sad next step! > Thanks for your BLOG , -I really , HOPE you will keep this UP!! GREAT STUFF !!!! -It is really valuable and so very Interesting ! –I bring medical stuff down to the COLOINAl HOSPITAL , each time for the CANCER ward there
ALL the BEST to you ! —- ” Si , NO ES FACILE “! and to me < well , MEDS are more important than Baseball hats and t -shirts .
SINCERELY ! SARAH BUNNETT – GIBSON

20 03 2011
SARAH BUNNETT -- GIBSON

Really interesting! to follow your writing . Very glad you are doing this . I have been going to this part of Cuba for now over 19 years . I do think SANTIAGO is very SPECIAL ,! MY place , –that I love the best ! Often , I stay out at pretty , quiet and very Cheap , BUCANERO HOTEL and come and out of town . And then stay over with friends in their “CASA P “. I am not a dreamer ! YEs , SADLY , — I can see how tough things are becoming there $$$$$ ! My fear is that more crime will happen,— More Stealing from the Cubans themselves; the poor Cubans , stealing , from the richer “tourism workers” Cubans . And yes , then stealing from the Tourists also. It is so oviviuosly , the sad next step! Thanks for your BLOG , -I really , HOPE you will keep this UP!! GREAT STUFF !!!! -It is really valuable and so very Interesting ! –I bring medical stuff down to the COLONIAl HOSPITAL , each time for the CANCER ward there
ALL the BEST to you ! —- ” Si , NO ES FACILE “! and to me < well ,to my mind , MEDS are more important than Baseball hats and t -shirts at this time ! .
SINCERELY ! and THANKs for your thoughts ! and ADVICE !
SARAH

7 11 2011
The low Cuban workplace productivity – 4 thoughts « octobersunincuba

[…] turned its mind to economic change and (some) renewal. A joker has blogged about the changes here and here if you are interested. I have been told that Cuba workplace productivity in Cuba is […]

13 11 2011
Cuban workplace productivity – another thought « octobersunincuba

[…] granted suggesting perhaps that formerly ‘black’ traders have sought legitimacy. As of January 2011 of the 114,000 licenses granted 68% were to people with no prior ‘employment status’. […]

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