Americas Quarterly - Spring 2011

be available for conducting business not only in one’s hometown but anywhere in the country. Private restaurants can expand from 12 to 20 seats. And in a move toward ensuring food self-sufficiency and eliminating rationing, individuals will be allowed to lease state facilities, including those in the food industry.

Among the measures, those targeting self-employed workers will undoubtedly have the greatest positive impact. The policy is being encouraged at all levels of government, and for good reason. Under its reorganization plan, the Cuban state intends to move between 1 million and 1. 3 million state workers off state payrolls within the next few years, making self-employment policies the most urgent.

The openings providing for self-employment will permit the creation of microenterprises. Since October, the number of licenses granted to microenterprises has surpassed 113,000, a nearly 50 percent increase from before the start of the reforms.

These developments will expand supplies of consumer goods and services. There are already signs that the measures have had a positive impact. The number of workers hired by other self-employed workers has increased.

So has the number of microenter-
prises dedicated to the preparation
and sale of food, the manufacture of
household goods and transportation.
For many people, microenterprise has
constituted an alternative source of
income to state salaries and pensions.
For the state, it will provide a source
of new tax revenue.

The new measures also focus on balancing public finances by decreasing public payrolls and unemployment compensation. And as the state reduces total payroll expenses and increases revenue from taxes on self-employed workers, it will be able to increase public-sector salaries.

To improve productivity, details have also emerged about a more efficient form of contracting labor. Com-

panies will be able to count on greater funds for salaries to distribute among fewer employees.

This will be done through a system of results-based payments, which will mean an increase in productivity and, consequently, growth in the economy as a whole. Under the proposed adjustments, it has been estimated that new non-state annual tax contributions will exceed $1 billion per year.

At the core of the reforms is an ac-
knowledgement by the Cuban state
that it must relinquish control over
those activities and sectors, such as
retail, that do not serve it strategically
and that it believes have the capacity
to absorb the growing labor force in
coming years.
However, the proper functioning of
the private sector depends on nondis-
crimination and competition. For this,
a number of conditions will be impor-
tant. Among them: access to technical
and material supply markets; access to
sources of financing and insurance to
cover risk; access to fair and competi-
tive domestic consumer markets and
export markets; regulations that do
not impose undue burdens in their
compliance or administration; and
a tax burden consistent with the de-
sired activity and size of the project.
If these conditions are established,
non-state employment will meet its
expected contribution to the econ-
omy, above all in terms of job creation
and the production of goods and ser-
vices. I estimate Cuba could grow at
a rate of 5 percent after the reforms.
It will be a complex task to effec-
tively design and implement the
steps needed to unleash the produc-
tion forces of a “handmade” econ-
omy, where discretion has prevailed
over rules, institutions and respect
for regulations.

Time has changed the functions and needs of our socialist project. Those changes, along with the success of other countries’ experiences, demonstrate that the Cuban state is in vital need of updating its economic model.

This means the market must play an ever-increasing role in the Cuban economy, even if planning will officially prevail over the market. The measures that the authorities have taken are a first step in the right direction.

Omar Everleny Pérez is an economist at the University of Havana’s Centro de Estudios de la Economía Cubana.

(CON TINUED FROM PAGE 24)

Omar Everleny Pérez yes

Businesses will be granted greater autonomy, and multiple licenses will be available for conducting business not only in one’s own hometown but anywhere in the country.