Friday, September 24, 2010

Mucho mas que una "alternativa" - Granma details new Self-Employment regulations

Today's Granma has a long and detailed article about the "new rules" that will regulate Self-Employment in Cuba, entitled, "Much more than an alternative." The article includes a list of the 178 legal occupations, 83 of which will be permitted to hire labor. (Thanx to my friend Carlos Alzugaray for alerting me to the article.)

It's easily the most the national daily newspaper has ever said about self-employment. And while there is still an underlying attitude of control, the article includes some breathtaking passages of economic pragmatism and autocritica (self-criticism) that I, for one, never thought I'd read in this "Organo Oficial del Comite Central del Partido Comunista de Cuba."

Given that my own dissertation on the struggles of the self-employed workers was entitled "Condemned to Informality," I felt a special surge of vindication when I read the following words:
"The aim is to distance ourselves from those policies that condemned self-employment to near extinction and stigmatized those who decided to joint its ranks legally in the decade of the 90s."
I guess I can safely say that Granma and I now finally agree on at least one thing! (Perhaps I should sue for plagarism or at least demand a footnote!)

What follows is my own quick description and assessment of today's announcement.  You can also go to The Cuban Triangle for Phil Peter's adept analysis of the article.

* The article begins by trying to assure Cubans that this new measure is not just an experiment or a stop-gap measure that will later be rolled back in better economic times or because of the whim of some bureaucrat (or old man), as happened in the 1990s.

For example, self-employment is described as "a solution that, far from being improvized or ephemeral, will make possible an increase in the supply of goods and services while simultaneously asuring income to those who decide to engage in it.  It will also allow the state to shake off a good portion of its excessive subsidies while leaving in non-state [private] hands productive activities that had been the responsibility of the state despite the difficult economic juncture."

* The next passage is about as open a repudiation of Fidel's economic approach to micro-enterprise as you're ever likely to see in Granma:

"The measure of making self-employment more flexible is one of the decisions taken by the country as it redesigns its economic policy, in order to increase levels of productivity and effeciency.  The aim, in addition to providing workers with another way to feel useful with their personal effort, is to distance ourselves from those policies that condemned self-employment to near extinction and stigmatized those who decided to joint its ranks legally in the decade of the 90s."
* At the same time, the article includes the following boilerplate passage reminding doubters, critics, and true believers alike that the intent is "to perfect socialism, not to destroy it" and that all these changes will take place "under the watchful eye of the state":

"Todas estas medidas relacionadas con el trabajo por cuenta propia, que Granma irá detallando en próximos reportajes, contribuirán a que esta forma de empleo sea una alternativa más, bajo el ojo atento del Estado que, como representante del pueblo, está mandatado para buscar soluciones que mejoren el nivel de vida de los cubanos, respetando siempre los principios socialistas que rigen nuestra Constitución. Como dijera el General de Ejército en el Tercer Periodo Ordinario de Sesiones de la VII Legislatura del Parlamento, el primero de agosto de 2009, el fin es defender, mantener y continuar perfeccionando el socialismo, no destruirlo. Por esos caminos sigue desandando nuestra Cuba."

* Then the article goes on to give prelimary answers to the following questions:

"¿Cómo se ampliará el trabajo por cuenta propia?
¿Cuáles actividades se incluyen en él?
¿Qué prohibiciones se derogan?
¿Cómo se organizará y se controlará?
¿Qué impuestos se pagarán?"

* The article indicates that new regulations will begin to tale effect in October and that licenses will be available in 178 activities, 83 of which will be able to hire workers. These workers do not, as in the past, have to be household or family members. This is a significant change from the past where ONLY those self-employed in food service (like the famous paladares) could hire workers who had to be household or family members.

Yoani Sanchez blogged about this past absurdity recently when she described her friend Humberto's efforts to convince his daughter to marry a famous chef so he cold legally hire him to work in his paladar!

* The announcement quotes an official who clarifies, "we will give licenses in 29 new activities that, despite being currently exercised, have not been allowed to expand through new licenses for a number of years."

* Licenses will NOT be granted in 9 specific areas (for now) since there is currently no legal market to obtain inputs to make and sell those products. There will be an effort to make these legal supply chains available in the future. The prohibited activities are: chapistero; elaborador vendedor de artículos de granito y mármol; elaborador vendedor de jabón, betún, tintas, sogas y otros similares; fundidor; herrero; oxicortador; productor vendedor de artículos de aluminio; pulidor de pisos; y productor vendedor de artículos de fundición no ferrosa.

* The article quotes Marino Murillo Jorge, vice president of the Council of Ministers, who said, "estamos diseñando en el plan de la economía teniendo en cuenta las nuevas transformaciones que demandarán ferreterías, exigirán de equipamientos gastronómicos que hoy no se venden. Lo óptimo es un mercado mayorista con precios diferentes para ellos. Pero eso no lo vamos a poder hacer en los próximos años. Ahora tenemos que lograr un mercado donde ellos puedan comprar lo necesario aunque sin diferenciar los precios minoristas".

* The past tendency to micromanage some activities, such as the famous private "paladar" restaurants, is still evident. For example, whereas earlier these places were legally prohibited from having more than the infamous 12 chairs, now they can have a whopping 20!

* One good thing, however, is that the past prohibition against selling any foods made with potatoes, seafood, or beef has been removed.

* Also one no longer needs to be retired or connected to a state job to become self-employed.

* The article also specifically mentions the rental of casas particulares (private homes) and vehicles, announcing the repeal of a number of prohibitions that, the article admits, led to a whole gamut of "clearly visible" illegalities in the past. Now Cuban who have permission to reside abroad (PRE) will be able to rent out their homes and cars back in Cuba. This INCLUDES for the very first time the right to rent out one's home to someone who will then set up a private business there. Owners of houses and vehicles (who are out of the country) will have the right to name a "representative" to obtain a license for them.

* Self-employed individuals will be allowed to have more than a single license and permitted to operate anywhere in the country.

* Products and services can also be sold to state enterprises.

* Ways to extend bank credit to self-employed workers are also being examined by the Central Bank.

* Those who wish to rent out entire homes will be able to (in the past they had to continue living there, at least on paper). It will also be possible to rent by the hour? And to rent homes assigned to Cubans by the state after 2001.

* Those who rent their homes will also be allowed to hire workers and engage in other types of self-employment.

* The article also reitterates that these new self-employed will be obliged to pay the following kinds of taxes: personal income taxes, sales taxes, public service taxes (?), and labor force or employee tax if they hire other workersm. Licensed self-employed workers will also be required to contribute to Social Security.

* The article closes with a full page spread listing all 178 self-employment occupations that will begin to issue or re-issue new licenses in October.

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