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In Defense of Cuba’s Self-employed

The regime's press analyses the results of the measures imposed in December to regulate entrepreneurial activity.


Despite the fact that in Cuba there are 580,828 self-employed workers, the category closest to entrepreneurship, the percentage is still paltry compared to the situation in other countries: of the 4,474,000 employees operating in the economy, only 13% are engaged in private economic activities, while 87% of Cuba’s workers depend on the State.

This is an anomaly with respect to economies around the world, where private employment invariably far outweighs State employment. For example, in Spain three million people work for the State, but the economy encompasses some 19 million workers, such that they account for just 15% of the total. Similar figures may be found in other countries, where State employment stands at similar percentages. Cuba's atypical pattern is remarkably disproportionate, and unsustainable.

Some sociological features of self-employment deserve to be highlighted, as well: 29% are young, 34% are women, and up to 15% alsowork in the State sector, as there is a high level of multiple employment; up to 10% are “retirees” whose insufficient pensions force them to resume productive activities. At a territorial level, and closely related to the distribution of the population, six provinces account for 65% of private workers: Havana, Matanzas, Villa Clara, Camagüey, Holguín and Santiago de Cuba.

These general figures confirm that self-employment is a fundamental element of the economy, as it offers opportunities that are not found in the budgeted sector, and allows those who engage in it to break free from the chains of State dependency and to maintain, at least for the time being, a certain stability in the face of the State and its regulation of their activities.

Not surprisingly, self-employment is often found in food-related activities (restaurants, coffee shops, street vendors), 9%; the transport of cargo and passengers, 8%; the leasing of houses, rooms and spaces, 6%; telecommunications agents, 5%; and employees hired, in turn, by independent workers, 26%, mainly associated with food and transport activities.

Last December a series of regulations entered into force to regulate entrepreneurial activity in Cuba. The results were analyzed in the regime's newspaper Juventud Rebelde. Here we will discuss some aspects of those results.

Concentration and/or elimination of licenses

The limited numbers of entrepreneurs and the self-employed are due to the fact that the regime only authorizes 123 activities for this sector, even going so far as to unify 96 of them, precisely in the most popular jobs. What they have done, in this way, is to limit and further curtail the expansion of these activities. It is obvious that the concentration and/or elimination of licenses has generated discontent.

Only a fraction of self-employed workers –some 15,466 according to official data– engage in more than one activity, and most of it is in the food sector. At Cuba's paladares (restaurants), for example, where the number of jobs was limited, the position of bartender was prohibited, and the sale of home-delivered food, which has meant less revenue for these establishments. Inspectors even fine paladares that sell sweets to children who go with their families to eat.

Self-employed workers are concerned about the uncertainty looming over their activities, which the Government does not ease, but actually exacerbates. There is concern about the elimination of the limit of 50 service positions at restaurants, bars and cafeterias; and the prohibition on more than one activity of the latter type at the same legal address. Bakers/confectioners would like to be able to sell non-alcoholic beverages. And, above all, they are alarmed by license mergers and upsetting rules; for example, that in the morning they cannot serve breakfast, as a cafeteria; and serve lunch and dinner, in the afternoon and at night, as a restaurant.

This possibility has been eliminated by the authorities, and some self-employed workers do not understand why. The truth is that the mergers, for now, have been limited to the food sectors, but there are already plans to expand them to others, like crafts and saddlery, in light of the similarity between these tasks; or people with a photographer's license who also laminate cards, make key rings, and photocopies, to provide an example of what is coming.

Increase in state bureaucracy

The bureaucracy has increased related to the granting of licenses for the exercise of food-related activities. Now it is granted with the prior approval of the multidisciplinary groups in the different territories, which are made up of Physical Planning, Public Health, the Tax Administration (ONAT), Work, Hygiene and Epidemiology, and Tourism. This bureaucracy lengthens the processes and complicates them, noticeably. It also generates significant asymmetries, as the burden of regulation and control that private establishments must endure is not found at State facilities, which are falling apart, worn away by the passage of time.

Fiscal bank accounts

Another controversial aspect has been the opening of "fiscal bank accounts". According to the information provided by the Central Bank of Cuba, only 10,763 fiscal bank accounts had been opened in December by those who are obliged to use this type of account. 73% of the accounts belong to renters of houses, rooms and spaces. The data cannot be assessed, but it is obvious that the measure has not been well received, which has forced the authorities to intensify their inspections.

Self-employed workers are asking for more flexibility in schedules, services and activities, and demanding expedited bureaucratic procedures, especially on the part of the municipal authorities. They would like the irregularities they observe in numerous activities to be rectified; in particular, requirements applied to certain activities that do not appear in their governing regulations, which is interpreted as arbitrary conduct by the authorities.

Calls for wholesale markets

There are also calls for well-supplied wholesale markets, at moderate prices, allowing workers to adequately serve their customers. As the authorities have indicated, self-employed workers comply with hiring and labor relation formalization requirements, in accordance with the provisions of the Employment Code.

Finally, there is fairly widespread consensus among self-employed workers that, since last December, oversight efforts have increased markedly. A key cause of this, it seems, is the assignment of surveillance tasks to the Administration Boards, as they carry out their activity based on the guidelines established by the ministries. As a result, at the end of December 793 citations were issued for non-compliance with legislation; of that total 610 were preventive notifications, and 183 were fines, 18% for operating illegally.

More control, more taxes, more fiscal bank accounts, and more repression, may have unpredictable effects on a sector that is struggling to flourish.

This article originally appeared on the blog Cubaeconomía. It is published here with the author's permission.

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