Wednesday, April 18, 2012

Cuba's capitalists struggle

Cuba's capitalists struggle
Former state employees now earn more, but pay high taxes
MCT April 17, 2012

As Denia Ojeda Oliva combs a sable tint into a customer's hair at the
Ibis beauty salon, she laments the high cost of beauty supplies.

But that's just one of the concerns at Ibis since it was converted from
a state-run salon to one owned by the employees who now pay taxes to the

As cuentapropistas - the term for Cuba's self-employed - they must worry
about paying the electric bill, maintaining the shop, and, of course,
paying taxes they find a bit too high for comfort.

"We're grateful for the new sys-tem, but we need a little help
maintaining the level of beauty we want to guarantee," says Iminsy Ross,
a manicurist who presides over a tray of brightly coloured nail polishes.

Faced with the reality that it could no longer afford to keep nearly the
entire working population on state payrolls, the government began
embracing the concept of self-employment in ear-nest about two years ago.

First it announced it wanted to get out of the beauty and barbershop
business and turn such shops over to the workers. Then, in September
2010, leader Raul Castro revealed plans to move 500,000 state workers to
self-employment by last March and double that number by 2014.

But the transition is moving much slower than anticipated and state
furloughs haven't approached those goals.

According to the latest figures from Cuba's Ministry of Labour and
Social Security, 371,000 people now hold self-employment licences. But
some of them were already working under the table and took advantage of
the change to legalize their status.

Still, in this southeastern Cuban city, one doesn't have to look far to
find budding entrepreneurs, including wedding photographers,
manicurists, locksmiths and piano-tuners. By far the largest category is
food vendors, who offer peanut candy, pizza and soft-serve, ice-cream
cones on the street and grilled lobster and shrimp at private
restaurants called paladares.

Self-employment is permitted in 181 job categories, but some of the
cuentapropistas have stretched the definition of what they're permitted
to do.

Meanwhile, the cuentapropistas at Ibis are butting up against the
realities of being their own bosses.

Before the changeover, Ross earned 250 pesos a month, or about $10, as a
state employee. Minimum wage in Cuba is 225 pesos. Now she earns more
but must pay taxes of 360 pesos a month. The hairdressers pay nearly
400, she says.

"We need more support with this new system," she says.

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