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Cuba reauthorizes private sector, but with tighter controls
HAVANA, July 10, 2018 (BSS/AFP) – Cuba on Tuesday reauthorized private
businesses after a year-long freeze, but with tighter controls than before on
a segment of the economy that now makes up 13 percent of the Communist
island’s workforce.
The freeze had led to jitters among would-be entrepreneurs in Cuba’s
budding private sector, and Tuesday’s announcement brought some measure of
relief.
The official daily Granma said the new, stricter measures were necessary
because of numerous breaches by private entrepreneurs, such as tax evasion,
under-declaring the number of people they employed and failure to pay
employer contributions.
The government suspended the issuing of business licenses in August 2017
for around 30 of the island’s most profitable business activities, in
particular the restaurant trade, in order to review regulations.
“We are not going to go backwards, nor slow down, nor allow prejudice
against the non-state sector, but it is essential that people respect the
law, in order to consolidate the gains,” said then-president Raul Castro, who
was succeeded in April by Miguel Diaz-Canel.
As a result of the new restrictions, the number of trade categories to be
authorized will be reduced from 201 to 123.
“No activity has been eliminated but they have been regrouped,” the deputy
minister for labor, Marta Feito, was quoted as saying by Granma.
On the other hand, some new categories of private entrepreneur have been
introduced, including “confectionary baker” and “renter of transportation.”
Former president Raul Castro introduced reforms in 2011 to open the top-
heavy, centralized economy to foreign investment and small private
businesses, which have since boomed.
But Cuba remains under a United States trade embargo and state firms still
account for 85 percent of the economy.
A dollar a day is roughly the average monthly wage for a government
worker, but those in private enterprises can make far more.
The private sector employed more than 590,000 people by May this year,
official figures showed, equivalent to 13 percent of the working population.
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– Fuel theft –
“I think it’s a good thing,” Eduardo Garc-a, a private watchmaker, said of
Tuesday’s announcement.
“Lots of people were left on the hook with their money, hoping to get a
license. They had invested a lot of money. Lots of landlords had bought
properties or houses. They had the money and the goods there, and then all of
a sudden they went and froze it,” he said.
“I hope this is good news for a lot of people,” he said.
One of the main illicit activities the government of Diaz-Canel has tried
to crack down on is the theft of fuel by state employees for re-sale on the
black market.
Within 150 days, when the new rules kick in, private taxi drivers will be
required to account for their fuel consumption, using a card that allows them
to purchase gas at a cheaper rate than on the retail market.
“I see it as a positive and important step, as it will help to improve our
work to a certain extent and put a stop to the illegal stuff,” said Pablo
Jauger, a 47-year-old taxi driver.
Another new restriction will be that only one license will be issued per
person.
“There are jobs that by their very nature cannot be performed at the same
time,” said Freito, the deputy minister. “How can someone at the same time
take on the role of restaurant worker, manicurist and car-washer?”
According to the treasury, private sector workers only contribute five
percent of revenues, while state-run companies bring in 86 percent. The rest
is made up by smallhold farmers and other sectors.
That has put Cuba on track to approve more small and medium-sized
businesses, a move which could eventually be reflected in constitutional
reforms for the Communist state.
“Micro- and small private enterprises have already been recognized
politically as necessary. But steps to legalize them have not so far been
taken,” said Cuban economist Pedro Monreal on his blog.
“How long will it be before necessity and choice coincide?” he asked.
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