Wednesday, September 15, 2010

Self-employment key to Cuban economic overhaul

By WILL WEISSERT (AP) – 4 hours ago

HAVANA — Euridis Rivero might not look like much of a role model for Cuba's new economy: His tiny eatery selling fried pork and salami sandwiches on Havana's crumbling San Rafael Street doesn't even offer seats for its customers.

It is precisely this sort of business, however — a small, privately owned enterprise in the heart of the island's capital — that the communist government is promoting as one of the building blocks of a new and improved social and economic system.

When authorities fire a half-million employees — 10 percent of the country's work force — in the next six months, they will steer many of those losing their jobs toward positions at foreign-run companies; encourage them to band together in cooperatives that will do everything from raising rabbits to making bricks — and even offer some the chance to start their own businesses.

"The people need to take advantage of this opening, just like we have," said Rivero, who since 1997 has run Cafeteria El Cubanito, his own street stall selling sandwiches, microwaved pizzas, and tongue-numbingly sweet glasses of pineapple juice. It's the kind of place where you can have lunch for less than an American dollar.

Before he went into business for himself, Rivero doled out similar fare as an employee at a state cafeteria and earned a meager salary of about $20 a month, the average for government jobs.

Now, with his own business, he gets to keep all his profits — and while Rivero wouldn't say exactly how much he makes, he conceded he does better than when he was on the state payroll.

Cuba is still far from fully embracing the free market to the extent that communist allies China and Vietnam have. Large farms, office buildings, storefronts and most vehicles will remain in government hands, though island employees may soon be able to lease them as a way of encouraging entrepreneurism.

A total of 823,000 Cubans already work in the private sector, including Rivero and the other 144,000 Cuban professionals — tutors, tire repairmen, and taxi drivers to name some of them — who are self-employed. The rest are involved in private cooperatives. The state still employs the other 84 percent of the 5.1 million-member work force.

But the government of President Raul Castro sees expanding private initiatives as a way to relieve state payrolls bloated with unproductive workers. It's part of a larger push to scale back a social safety net that provides Cubans not only with state jobs but also subsidized housing, utilities, transportation and basic food.

At the same time, authorities plan to beef up the island's tax code, taking a cut of the revenue generated by new businesses.

Like all self-employed islanders, Rivero pays a monthly quota to the Labor Ministry in order to remain in business. His is 315 pesos, or the equivalent of about $15.

Economists both on and off the island think the reforms are overdue, but many Cubans say they won't amount to as much as authorities hope.

Luis Ramirez, who runs a state air-gun shooting concession — the kind you might find at a U.S. state fair — on a street near Havana's Central Park, said he's not worried about being laid off since "here they say so many things they never follow through on."

"Undoubtedly, we need change. But change that makes things better," he said. "Nothing ever gets solved. In Cuba, we have 52 years of more of the same."

But Rivero said Cuba should welcome the switch.

He even displayed a canny understanding of what it takes to make it in a free-market system, saying he wasn't concerned that the newly self-employed would cut into his business.

"There is going to be more competition," he said. "But ... maybe I'm selling things others aren't and it won't be so bad."

Rivero's secret weapon might be his special ham biscuits: They are flavored with pork patties from stores that cater to tourists and offer higher-quality meats — but are just slightly more expensive than the rest of his menu.

For decades, Cuba banned even tiny forms of private enterprise, hoping to guard against Cubans getting rich and jeopardizing the egalitarian system former leader Fidel Castro has sought to build since his band of rebels took power in 1959.

Oscar Espinosa Chepe, a state-trained economist who became a political dissident, applauded the announced reform, but said Cuban authorities will need a full ideological change of heart in order for it to work.

"They'll have to do away with a series of dogmas about private property," said Espinosa Chepe, who was jailed for his political beliefs during a sweeping state crackdown on dissent in 2003, but paroled for health reasons.

"The cooperatives need to be real initiatives of those doing the producing," he said, "not created from on high."

Indeed, Cuba has been down a similar road before, only to backtrack.

In the early 1990s, when the fall of the Soviet Union cost the island billions in annual subsidies and brought its economy to the brink of collapse, Cuba's government authorized tens of thousands of people to go into business for themselves.

Many of those reforms were later rolled back once Venezuela and its socialist president, Hugo Chavez, began providing subsidized oil that helped the Cuban economy recover.

Still, no government sector appears to be safe from this round of cuts, with the vaunted athletics program — a favorite of sports-crazy Fidel — and even its Health and Education ministries scheduled to lose employees.

Since Raul Castro took over for his brother in 2006, Cuba has embraced a string of reforms, including handing some state barbershops over to their employees — thus allowing them to charge whatever they want per customer but making them pay rent and buy their own supplies.

Not everyone jumped at that chance — like Gilberto Torrente, a 68-year-old barber who elected to remain on the state payroll at his shop in Old Havana.

"At my age, I don't want to lie down, with my head on the pillow every night, and worry about how I'm going to make my living," he said.

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JG: Very good analysis by Mr. Weissert. Cuba is trying to help people, not hurt them. The economic level of the island and their standard of living will rise. Cuba IS NOT trying to re-import the savage capitalism of the United States. Cuba's sovereignty will remain in the hands of the people in the island.

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