On September 13, the Cuban government made a stunning announcement: Within the next six months, state payrolls will shed half a million workers. Additionally, the government will allow a great expansion of self-employment—known in Cuba as cuentapropismo—which it hopes will offset the planned layoffs. The new measures signal the end of full employment as a right of citizenship and the arrival of a new relationship of the state and private sectors. In a way, they will turn the clock back to the mixed and undoubtedly more vibrant economy of the 1960s, when small, privately owned shops and kiosks still dotted Cuban streets, until the 1968 “revolutionary offensive” nationalized all small businesses. And while these measures clearly come at a time of great economic hardship for Cuba, there is no indication they are meant to be temporary.
It is expected that many Cubans will embrace the opportunity to engage in legal self-employment. Currently, 85% of Cuba’s some 5 million workers are employed by the state. About 600,000 work in the legal private sector, mostly small farmers, and an additional 143,000 Cubans are licensed cuentapropistas, running tiny bike-repair shops or selling craft goods to tourists. An unknown number engage in petty commerce off the books, doing everything from baking birthday cakes for neighbors to running informal taxi services. This is exactly the kind of activity the government now hopes to formalize and tax, in order to bolster state income. Indeed, the new list of activities approved for self-employment licenses are generally restricted to the urban services, like transportation, the building trades, food services, and housing rentals. The government also hopes that extending the legal private sector will have ripple effects in the economy.
Will the new cuentapropista licenses have any organized relationship to the planned layoffs? So far, government announcements give the impression that the expansion of the private sector will more or less automatically sop up the jobless. Yet given the vast black market that already exists, it seems likely that many of the licenses will merely legalize existing small businesses or go to other informally employed Cubans. Those who are laid off from state jobs may be unable to procure licenses or start businesses for various reasons—for example, the lack of materials or start-up funds. Since acquiring licenses in the past has tended to involve political connections and frequently bribes, the new reforms may include tighter regulation of that process.
If past recessions in Cuba have taught us anything, it is that layoffs tend to exacerbate social inequality. For example, the introduction of some market reforms in the 1990s tended to disproportionately favor light-skinned, better-educated Cubans, who managed to maneuver into highly desirable positions, especially in tourism. In fact, La Cofradía de la Negritud, an association of black Cubans, released an open letter that warned of the “injustices that could accompany this process” and asked Cuban workers not to passively accept any actions that might be discriminatory. Meanwhile, the government-aligned Confederation of Cuban Workers (CTC) called for workers to support the new measures, at least implicitly raising the question of whether dismissed workers will have any recourse.
The new changes culminate a series of economic reforms implemented during the past few years, roughly coinciding with Raúl Castro’s rise to power and the significant economic hardship generated by two damaging hurricanes and the global recession. Small, state-owned plots have been parceled out to farmers for their private use; the age of retirement has been extended by five years; with some restrictions, foreigners can now purchase property in areas designated for tourism; Cubans can officially hold more than one job; and the products available on the ration book have progressively declined. Cumulatively, these changes add up to a massive transformation of the economy under Raúl’s watch. Whether political changes may follow will partly depend on the U.S. government’s actions. But without question, we are entering a new era in Cuban history.
Michelle Chase is a NACLA Research Associate. A longer version of this article was published October 15 on nacla.org.