Below is a Power Point Presentation on “Non-state enterprises in Cuba current situation and prospects” by Camila Piñeiro Harneck erof the Centro de Estudios sobre la Economia Cubana, Universidad de la Habana. It was presented at the “Seminar on Prospects for Cuba’s Economy” at the Bildner Center, City University of New York, on May 21, 2012.
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The complete original Presentation is located here: “Non-State Enterprises in Cuba”, Camila Piniero Harnecker, 2011 .
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Original Essay from the Morales Scarpaci Havana Consulting Group web site here: “Bring on the [Cuban] college graduates!”
The Cuban government slammed on the brakes when it recently scrapped plans to allow private wholesaling and let skilled workers strike out on their own.
Vice-Minister of Work and Social Security, José Barreiro’s announcement last week signals a strong reversal of reforms that began in 2010. He also stated that jobs that had been previously off limits to private workers –auto-body repairers, floor polishers, aluminum product vendors, rust removers, welders, and confectioners—are now legal trades.
But what about software engineers, tutors and teachers, and other skilled workers?
The new announcement shows resistance to change and the lack of a strategic plan. Both moves are intolerant of free-market competition among the island’s emerging private sector.
President Raúl Castro’s recent trips to China and Vietnam show concern about adapting the magic formula from these two key allies. The Asian answer was simple but it is only part of a recipe for success: open up to foreign capital, liberalize all economic sectors, and let skilled, professional workers earn a living either on their own or in small enterprises.
Vice Minister Barreiro described the ‘new’ changes this way: “[they] are designed for urban cooperatives, a different kind of organization compared to self-employment, [but the cooperatives] will have greater flexibility and work like the state-run beauty shops did where the shops were passed on to its workers.”
We argue that this move is bound to fail. The track record speaks for itself: the classic failures of both the sugar-cane and non-sugar cane UBPCs (a type of cooperative) should not be forgotten by the Cuban government.
Unexplainable contradictions.
A priority two years ago was the plan to shed 2 million workers from public payrolls over the course of five years. One hundred eighty-three private trades were approved by the Cuban Communist Party to absorb downsized workers. However, the limitations of private-sector work, inflexible laws, high taxes, the continuation of a dual currency system (pesos and CUCs), and poor conditions to acquire inputs have thwarted these efforts. So how can the government send layoff notices to 2 million workers if it cannot nurture a private sector to employ them? The Nanny State is unwilling to cede economic space that it has dominated for more than 50 years.
A work break in a private sector barber shop, Havana, March 2011, photo by Arch Ritter
How can you build a private sector without private wholesalers?
This is a major weakness of the Cuban model. No country can develop a sustained private sector without wholesalers. Failure to do so will further the pattern of stealing from public institutions and stimulate the black market.
While the mindset of Cuban workers needs to change to adapt to these new measures, both the laws and thinking of the Cuban governments must also adjust if real reform is to take root.
We suspect these observations are not lost on the Cuban leadership because in recent years, hundreds of high-level Cuban scholars have been traveling around the United States, Asia and Europe to gather first-hand observations about what constitutes successful development. They file reports to myriad agencies when they return. Are the polítcos and decision makers reading these reports?
Economic reforms without professionals and technology: Mission Impossible The National Statistics Office (ONE) in Havana claims there are 6.8 million working-age Cubans, of which, about one-fifth are college graduates. So why doesn’t the state allow them (about 1.5 million workers) to work in trades that maximize their skills and training? White-collar and skilled workers drive economic development, and failure to engage them will doom the Cuban economic model.
Remember the fiber-optic cable laid between Cuba and Venezuela? Well, it has been idle for over a year even though it –along with other infrastructure and reforms—could play a key role in creating high-tech work and jump-starting the economy.
Cuban college graduates are needed in housing construction, agriculture, selling automobiles, supply-chain management and distribution channels, tourism development, the food industry, and a plethora of service-sector jobs.
Tapping into college-trained workers will require a change in the mindset of the Cuban leadership. Triggering this new thinking is the main dilemma in changing the economic model. Failure to do so will only produce a “light” version of the economic reforms spelled out in last year’s VI Cuban Communist Party meetings and attendant laws that have been approved in recent years.
Let the college grads work!
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The authors are principals at The Havana Consulting Group LLC and authored Marketing without Advertising: Brand Preference and Consumer Choice in Cuba. Scarpaci chairs the Marketing and Management Department in the West College of Business at West Liberty University, West Liberty, WV.
August 14, 2012 . Fernando Ravsberg. HAVANA TIMES
Original: Avances y vicisitudes de los trabajadores autónomos en Cuba
he Deputy Minister of Labor and Social Security, Jose Barreiro, explained to us that self-employment in Cuba is a “measure adopted while thinking of people coming from the overly staffed government sector as well as others who are not occupationally engaged.”
He was referring to those people who are laid off or are currently unemployed, though government officials always avoid using those terms. Nor do they like to deal with the issue of low wages, even though most people and President Raul Castro consider this a crucial issue.
Barreiro talked about greater flexibility in permitting activities that were previously banned and new approaches, such as urban cooperatives, but he confirmed that self-employment by university graduates will continue to be prohibited.
The deputy minister recognizes that the lack of products and supplies for the self-employed leads to black marketing and theft from the state. This is why he assures that supplies will continue to grow in stores, though they still haven’t opened wholesale markets – which he believes “would be ideal.”
According to Barreiro, the labor market structure will change over the coming years to an economy with “fewer government employees as they feed into the ranks of the non-state sector (as members of cooperatives, independent tenant farmers and self-employed workers).”
Slow growth
Deputy Minister Barreiro explains that “the main object (of self-employment) is that this becomes an employment alternative,” adding that “since October 2010 this sector has grown by 240,000 workers, bringing the total to 390,000.”
According to Barreiro, the growth in the number of autonomous workers is due mainly to “new permits being issued and the hiring of employees; currently there are 62,747 such employees,” a figure that indicates the success of some “self-employed workers.”
Among the independent workers, “Sixty-nine percent had no employment relationship at the time of applying for a license,” with that figure including the unemployed, pensioners and self-employed workers who exercised their trades illegally when those activities were prohibited.
The deputy minister said that though they lack reliable statistics, the fact is that only 31 percent of the self-employed come from government businesses or institutions. This situation is slowing the rate of layoffs, which needs to eventually lay off one million workers.
Barreiro asks for caution when people look at “the number of reduced personnel (layoffs), because in the ministry we believe that it is a sustained, attentive and organized process. Sometimes downsizing is associated only with the availability of workers (the number of laid off/unemployed workers) but this can also happen through increasing production without increasing personnel.”
More reforms
Barreiro agrees that the absolute number of self-employed workers “has not stopped growing, but the rate of growth is less” than in the beginning. He added that because of this, “self-employment will continue to become more flexible, within the country’s legal, zoning and health standards.”
“Now we’re working on designing structures for urban cooperatives, a form of organization that is different from that of the one for self-employed individuals (…) it will have much more flexibility (…) adopting a similar approach to that of the beauty parlors and barbershops that were transferred over to workers management.”
“There are many services that are currently provided by the state but that could be much more profitable if they were run by cooperatives, they would have much more room for success. We see a place for them in the economy,” explained Barreiro. But then he cautioned that this could not happen right away because “first you have to experiment so that when you advance you’re doing things right.”
He assured us that soon new models of independent work would also be initiated, ones that were previously prohibited. Among those authorized will be “sheet metal workers, iron workers, floor polishers, vendors of aluminum articles, flame-cutters, founders and marble masons.”
Scarcity and crime
The issue of the materials and supplies is the most serious one for self-employment. Authorization was given for independent carpenters, but wood isn’t sold to them. Sheet metal workers work without permission in front of everyone, despite it being known that they use oxygen and acetylene stolen from the government.
Barreiro maintains that “we must end this situation of illegal operations by creating legal mechanisms for purchasing products – for example, the types of gas used by sheet metal workers. Still, he insists that there will be no wholesale markets, though he recognizes that this would be ideal.
He claims that, “We’re clear that the solution is to increase supply,” adding that “now there are materials and inputs in stores; though these are not everything that people need, the supply is increasing. This will continue until the conditions exist for the transition to wholesale markets.”
The other major obstacle that’s confronted is the lack of start-up capital, since banks hardly ever make loans to stimulate business development. According to Barreiro, the main problem is that they still haven’t found ways to ensure that people will pay back their loans.
(*) An authorized translation by Havana Times from the Spanish original published by Cartas Desde Cuba
Bicitaxis
Below is a Power Point Presentation on Cuba’s rapidly evolving microfinance system prepared for the “Seminar on Prospects for Cuba’s Economy” at the Bildner Center, City University of New York, on May 21, 2012 by Pavel Vidal Alejandro. To my knowledge this is the first such analysis to appear for the Cuban case.
Unfortunately for the Centro de Estudios de la Economía Cubana (CEEC) de la Universidad de La Habana, Dr. Vidal has just left for Pontificia Universidad Javeriana of Cali, Colombia, where he will be a professor of macroeconomics. He apparently left on good terms with CEEC and, fortunately, will continue his work on the Cuban economy. \
The full presentation can be found here: Pavel Vidal: Microfinance in Cuba
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Cuba: When bureaucrats attack
The abrupt closing of a popular Havana business tests Raul Castro reforms.
Ulises Aquino
Original here: Cuba: When Bureaucrats Attack
Nick Miroff, July 31, 2012 08:44
HAVANA, Cuba— In the new Cuba, the one President Raul Castro and his team of reformers say they’re building, the hard-working entrepreneur is a patriotic figure, a job-creator who’s helping to lift up the island’s feeble economy.
That’s the Cuba where Ulises Aquino thought it would be a good idea to start a business.
With funds earned abroad as an award-winning opera singer, Aquino opened a restaurant and cabaret last year where the company he founded, Opera de la Calle (Opera of the Street) could perform.
He called it “El Cabildo” (roughly, the “meeting place”), transforming a trash-strewn lot into a lively entertainment venue, with an open-air stage, restaurant and bar. Aquino offered free children’s theater and other community activities on weekend mornings, and kept his prices low, charging $2 admission to Opera of the Street shows that feature as many as 80 singing-and-dancing performers.
Aquino was a good socialist businessman too, sharing profits with his 130 employees and paying wages that were three or four times the $20 average monthly Cuban government salary.
More from GlobalPost: Cuba mute in the time of cholera
El Cabildo was so innovative that Aquino and his new model of socialist enterprise were featured in a July 12 Reuters article titled “In Cuba, an opera singer builds an empire.”
And that’s when the bureaucrats attacked.
“It may have been the last straw,” said Aquino, of the article. “But they had their eye on me for a while.”
The following Saturday night, on July 21, a team of city government inspectors arrived at El Cabildo and interrupted the show, “like a team of commandos,” said Aquino, a barrel-chested bulldog of a man, who trembled with anger as he re-told the story.
The inspectors ordered Aquino off the stage as the audience looked on in shock. Then they shut down the kitchen and froze the cash register for a four-hour inspection.
By the following Monday El Cabildo was closed and Aquino had an order from local Havana officials stripping him of his business license for two years.
The inspectors had determined El Cabildo to be in possession of “more chairs than the permitted number,” and “products whose origin could not be determined” – ie lacking receipts. Two prep cooks who Aquino says were there on a trial basis were found to be “illegal workers.”
Worst of all, Aquino was accused of “enrichment” because he was charging a $2 cover “for personal benefit,” something he was not specifically authorized to do—even though entertainment venues all over Havana routinely charge $5 to $10 at the door.
There was no fine, no appeals process, no legal recourse. It didn’t seem to matter that Aquino had more than $100,000 of his savings invested in the business, or that 130 families would lose their income.
This was the old way in Cuba, where bureaucrats rule.
More from GlobalPost: Cuba’s gay rights revolution
Aquino, for one, doesn’t blame Raul Castro. “This goes completely against everything that the government has been telling us,” he said.
“The people who are behind this are the mid-level bureaucrats who know the status quo is endangered by all these new opportunities that offer a change from all the old taboos and prohibitions,” said Aquino.
On Monday, officials from Cuba’s Ministry of Culture issued a statement offering their support for Aquino’s Opera company and its ability to continuing performing at El Cabildo. But they said nothing about his dispute with city authorities and the fate of the businesses that make Opera of the Street possible.
“This place is dead right now,” said Ruben Rodriguez, the opera company’s choreographer, covering up the sound board and lighting controls opposite an empty stage. “Everything’s paralyzed.”
The fate of El Cabildo will be closely watched in Cuba, where Raul Castro’s economic reform process has lost momentum in recent months and Cubans’ initial enthusiasm for starting small businesses has faded.
Officials announced a new pilot program last week that will convert state-run companies into employee-run cooperatives, but the experiment will be limited to just 222 firms.
Meanwhile, a vast state apparatus of government officials who produce nothing of value remain ready to prey upon those who do.
Castro and other Cuban officials have repeatedly said that recalcitrant bureaucrats will not be allowed to stand in the way of economic change. If they intervene to help re-open El Cabildo, they will send a clear signal that Cuba’s new small businesses deserve encouragement, not strangulation.
But if El Cabildo stays closed, it can send a different message about Cuba’s incipient capitalism in Cuba: that new entrepreneurs here should not be too ambitious with their plans or too proud of their success. And any business, no matter how big, can be shut down on a whim, if a local official orders it so.
In that case, Aquino said, “the loser here won’t be me. It’ll be our country.”
Opera de la Calle
See also Havana Times July 27, 2012, Cuba Closes ‘Street Opera’ Project
By Marc Frank
HAVANA | Thu Jul 26, 2012 8:07pm EDT
(Reuters) – Cuba adopted a new tax code this week and said it would loosen regulations on some state companies while turning others into cooperatives, as one of the world’s last Soviet-style economies moves in a more market-friendly direction.
The plans were announced at a session of the National Assembly, which passed the country’s first comprehensive tax code since the 1959 revolution on the communist-ruled island. Foreign journalists were barred from Monday’s meeting, only portions of which were later broadcast by the official media.
President Raul Castro, 81, has liberalized regulations for small businesses and farming, and begun leasing small state retail outlets to employees since taking over for his ailing older brother Fidel in 2008. But he now appears ready, says Cuba expert Phil Peters, “to put some meat on the bone.”
Marino Murillo, head of the Communist Party commission responsible for implementing reforms approved at a party Congress last year, characterized the tax law as providing the basis for “bringing up to date the economic model,” while releasing few details of the code.
The new law takes effect next year and is scheduled for publication next month.
Castro’s point man for reform said it would gradually replace an old Soviet-style system and eventually require everyone to pay income and property taxes for the first time since the 1960s.
Murillo, in a two-hour presentation to the National Assembly, announced that an unspecified number of state companies would be partially deregulated by the end of the year. He said the companies, previously part of various ministries, would be able to make day-to-day business decisions without waiting for government approval, manage their labor relations and set prices. After meeting state contracts, they will also be able to sell excess production on the open market. The companies will be self-financed, including through bank credits, and expected to cover their losses, versus handing over all profit to the state and receiving financing and subsidies from the treasury. Instead of being micro-managed by the ministries, Murillo said the companies would be evaluated by “four or five indicators” such as earnings, the relation of productivity to salaries and their ability to meet the terms of state contracts.
Murillo also announced that 222 small to medium-sized state businesses were preparing to become cooperatives, ranging from restaurants and produce markets to shrimp breeding and transportation. The cooperatives will lease state property and equipment at 10-year renewable intervals, operate on a market basis, pay taxes like other companies and divide profits among members as they see fit, Murillo said.
“SLOW BUT STEADY”
“They have been rolling things out one by one on a slow but steady timetable and my guess is they will continue to do so. It’s a timeline that goes to 2015,” Peters, a vice president of the Virginia-based Lexington Institute, said. “Now they are getting to the things that really have the ability to increase the size of the private sector and create the savings in the state sector that they say are their targets,” he said.
Cuba, with a foreign debt of more than $22 billion according to Reuters’ estimates and still mired in a post-Soviet crisis after 20 years, has no choice but to change its inefficient ways, government insiders say.
Marino said as much during the National Assembly meeting. “We are not calling for turmoil … but the reality of life shows we cannot maintain (a command economy),” he said.
The five-year reform plan calls for moving from government administration of just about the entire economy to managing it through ”indirect” means such as taxes and bank credits.
Most retail services and minor production and farming are scheduled to go over to a ”non-state” sector that will account for more than 40 percent of the labor force, compared with the current 15 percent.
At the same time, the Communist Party plans to move away from a paternalistic state system of collective work and consumption to one where individual effort is better rewarded. Across the board subsidized goods and services are to be replaced by targeted welfare.
Castro, who closed the National Assembly meeting, said the new measures would ”permit the state to forget about the administration of a set of secondary services and productions and concentrate on improving the management of the basic means of production which will remain as socialist state companies.”
Murillo also announced that the government would lease to its employees more than 1,000 small cafeterias, following in the footsteps of barbershops, hairdressers and a host of other minor services let go over the last few years. The former state establishments now must compete head to head with a burgeoning small business sector of more than 300,000 mom-and-pop operations, including restaurants and other small companies.
Murillo said the new tax code would cut small business taxes on average by between 3 and 7 percent and provide other benefits for start-ups, such as eliminating the labor tax for those with five employees or less. The new law will also benefit small farmers, he said.
Below is a Power Point Presentation prepared for the “Seminar on Prospects for Cuba’s Economy” at the Bildner Center, City University of New York, on May 21, 2012 by Pavel Vidal Alejandro and Omar Everleny Pérez Villanueva. Unfortunately Omar was unable to make the CUNY session himself due to visa and flight delays and complications.
The full presentation can be found here: Pavel y Omar Relanzamiento del Cuentapropismo en medio del ajuste estructural
Pavel Vidal Alejandro and Omar Everleny Pérez
By Arch Ritter
Below is a Power Point Presentation made at the “Seminar on Prospects for Cuba’s Economy” at the Bildner Center, City University of New York, on May 21, 2012.
The full presentation can be found here: CUNY Bildner Presention, Arch Ritter on Cuba’s Economic Problems and Prospects….”, May 21 2012
From Trabajadores, June 27, 2012
Iliana Hautrive / 27-06-2012
Courtesy of Ted Henken, author of El Yuma.
Original here: Mantienen estabilidad los elaboradores-vendedores de alimentos y bebidas que prestan servicio gastronómico por cuenta propia en La Habana.
Paladar “Dona Eutimia” Callejon del Chorro Plaza de la Catedral, opened February 2010
Hal Klepac at another fine paladar, 23 y Calle G (Avenida de los Presidentes)
De excelentes restaurantes se califican los conocidos paladares que hoy funcionan en La Habana, la capital de Cuba, con una cifra de 376 al cierre de mayo último.
Isabel Hamze Ruíz, directora provincial de Trabajo y Seguridad Social en el territorio, confirmó que esta actividad de trabajo no estatal mantiene una línea ascendente, desde octubre de 2010, cuando en el país se amplió y flexibilizó el quehacer por cuenta propia, y en La Habana prestaban servicio entonces unos 74 de estos centros.
Dijo que esos lugares no son mayoritarios dentro de la rama de elaboradores-vendedores de alimentos, pues los que ejercen al detalle en sus domicilios o de forma ambulatoria sobrepasaron los 10 mil 900, y quienes tienen cafeterías (puntos fijos) llegaron a dos mil 567 cuando finalizó el quinto mes del presente año.
Sin embargo, comentó, es una fuerza laboral estable, que a no ser en casos puntuales de solicitud de bajas, como en otras actividades, se consolida tras haber realizado importantes inversiones e, incluso, estudios de mercado, por parte de sus titulares.
En esos restaurantes es apreciable una variedad de ofertas y elevada calidad del servicio, dentro de un espectro que va desde pequeñas fonditas para pocos comensales, hasta aquellos que cuentan con las 50 capacidades autorizadas en cada uno de esos centros gastronómicos.
Para la población y los visitantes extranjeros es una opción que complementa a la red de restaurantes estatales que se mantiene funcionando en La Habana, tal como sucede en el resto del país.
On May 12, The Bildner Center at City University of New York, under the leadership of Mauricio Font organized a one-day conference analyzing the recent experience of the Cuban economy in its process of transformation. All of the Power Point presentations from the “COLLOQUIUM ON THE CUBAN ECONOMY” have been posted on the Center’s Web Site. The presentations of the Cuban participants, all from the Center for the Study of the Cuban Economy, namely Omar Everleny, Pavel Vidal, Camila Piñeiro, and Armando Nova, are especially valuable and informative as they provide up-to-date and inside analyses of major issue areas. Mauricio, Mario González-Corzo, and the team are certainly to be congratulated for organizing this event
All of the presentations can be be accessed at the Bildner Web Site via the hyperlinks listed below in the form of the program of the conference.
1. Cuentapropismo y ajuste estructural
Omar Everleny, University of Havana
2. Microfinanzas en Cuba
Pavel Vidal, University of Havana
3. Non-state Enterprises in Cuba: Current Situation and Prospects
Camila Piñeiro, University of Havana
4. Impacto de los Lineamientos de la Política Económico y Social en la producción nacional de alimento
Armando Nova, University of Havana
Moderator: Mauricio Font, Bildner Center for Western Hemisphere Studies
1. Measuring Cuba’s Agricultural Transformations: Preliminary Findings
Mario González-Corzo, Lehman College, CUNY
2. U.S. Food and Agricultural Exports to Cuba – Uncertain Times Ahead
Bill Messina, University of Florida
Moderator: Emily Morris, Economist Intelligence Unit in London
1. Actualización in Perspective
Mauricio Font, Bildner Center for Western Hemisphere Studies
2. Cuban Restructuring: Economic Risks
Emily Morris, Economist Intelligence Unit in London
3. Prospects in a Changing Geo-Economic Environment Archibald Ritter, Carleton University, Canada
ROUNDTABLE: Implications and Future Agenda
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