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
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
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
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.
Follow the debate as the news develops:
For updates and analysis of Cuba’s economic reforms, visit AQ Online ( www.americasquarterly.org)