Wednesday, April 14, 2010

With beauty shops, Cuba may be inching toward capitalism

Posted on Wednesday, 04.14.10
With beauty shops, Cuba may be inching toward capitalism

The Cuban government is getting out of the beauty business. The
communist country that acknowledges it has an extra million people on
the government payroll has come up with a solution to battle fraud and
cut costs: Turn salons over to employees to operate.

Experts say the move is a ``capitalism light'' step toward the kind of
economic measures that Cuba hopes will help alleviate its heavy economic
burden amid a financial crisis. But the industry affected is so small
that experts say it's too little, far too late.

Although Cuba allows self-employment in some sectors, this measure is
the first time employees were offered the chance to operate state-run,
retail establishments since they were nationalized in 1968. Experts say
this government move could lead to others, such as allowing employees to
run the restaurants where they work.

The decision, which was not announced by the Cuban state-run media, was
first reported by the British news agency Reuters.

Barbers and hair dressers told the agency that they would now rent the
space where they work and pay taxes instead of receiving a monthly
salary. The people who aren't interested are being transferred to other
positions or offered retirement.

``There's a little uncertainty,'' hair dresser Nerelys Martínez told the
BBC, adding that they were still waiting for details about their pay.
``I think there are a lot of people who think it's a good idea. They are
all for it.''

The action by the government follows a series of other changes to the
state economy aimed at reducing government costs, cutting graft and
increasing productivity.

Cuban leader Raúl Castro doled out state land to farmers in a quest to
get them to increase production, and taxi drivers are allowed to run
their business independently.

But the Cuban government still controls more than 90 percent of the
economy, which economists say has been in a free-fall since hurricanes
wiped out much of its infrastructure in 2008 and a global drop in the
price of nickel, one of othe country's largest exports.

Castro took office two years ago amid high expectations that he would
make sweeping changes that would help ease the economic strain on the
household wallet. But Castro moved decidedly slower than expected,
dashing hopes for reform and frustrating the millions of Cubans who earn
about $20 a month.

``This is the beginning of Raúl's government beginning to open space to
give people the opportunity to make ends meet -- 52 years too late,''
said Cuba expert Andy Gomez, vice provost at the University of Miami and
senior fellow at its Institute for Cuban and Cuban American Studies. ``I
think it's a Band-Aid on a 12-inch cut that will continue to bleed.''

Antonio Jorge, a professor emeritus of political economy at Florida
International University, agrees.

``If you tell me they are increasing the amount of state land given to
independent growers or tell me that factories are being turned over to
workers, then I could see the significance,'' Jorge said. ``I don't
understand the rationale of this. What does it mean in terms of Cuba's
labor force? It's beyond me.'' Jorge pointed out that Cuba has an
``erratic history'' on self-employment. Past measures that permitted
small business endeavors were often later revoked.

Cuba legalized self-employment in 1993, but the number of licenses
issued have been cut drastically over the past decade.

``Every time the Cuban government makes a concession, it is under
duress,'' he said. ``I think these measures now are simply opportunistic
and are promptly reversed as soon as the emergency that dictated them
are past.''

The new measure, which is subject to adjustment and local conditions,
sets a monthly fee for each person based on 15 percent of the average
revenue generated by haircutting and styling in each area, Reuters reported.

Stylists will be able to charge whatever the market will bear. Many hair
dressers do that already -- illegally.

Three years ago, the Cuban press published a rare series documenting the
problems in the retail sector, including theft by employees.

Beauty salon managers told the Juventud Rebelde newspaper that they
often had to pay for nail polish out of their own pockets because
government supplies ran out. It was no wonder, state employees said,
that most establishments cheated customers.

If more businesses are in the hands of employees, the government will
rid itself of not just the payroll, but of having to supply everything
from shampoo to hair dye.

Experts are waiting for more business, such as restaurants, to come next.

``It would not make sense to document all these problems in the retail
sector and then only fix hair salons and barber shops,'' said Phil
Peters, a Cuba analyst at the Lexington Institute think tank. ``They are
deliberately going very slow.

``It's political caution.''

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