Wednesday, March 23, 2011

Juventud Rebelde: Blast Off for Self-Employment?

Here's the English version of the latest detailed report on self-employment in Cuba from the Cuban newspaper Juventud Rebelde.

My own quick read of the article indicates three things:

1) The self-employment reforms are attractive to Cubans, both the previously unemployed and the newly laid-off.  There is a worry that the sprouting of scores of little negocios in town and city centers is overcrowding and uglying some areas.  The numbers continue to grow at a steady rate (the last report had the number of new licensees at 117,000 and now the number is up to 171,000).

2) The most common, chronic obstacle encountered by new entrepreneurs is lack of access to goods, lack of availability of inputs/raw materials, no credit, and no wholesale markets.

3) There is new entrepreneurial activity all across the island but a bureaucratic learning curve among those hesitant or slow to issue licenses in some places.

This last point leads the authors of the article to quote President Raul Castro at length once again:

At this point, it would be good to recall what Cuban President Raul Castro said during his speech to the National Assembly of the People's Power (Cuban Parliament) on December 18, 2010:

"Regarding the need for a change of mentality, I want to highlight the following: if we have come to the conclusion that self-employment is a valid employment alternative for Cuban citizens, which can increase the production of goods and services, thus relieving the State of its responsibilities regarding such activities and providing it with the opportunity to concentrate on more decisive issues, then the Party and the government should facilitate its implementation, instead of fueling stigmas and prejudices against these kinds of activities. In this regard, it is essential to change the negative perception many of us have of private labor."

In this regard, the final section of the article is also noteworthy.  Entitled, "The Definite Answer," the section is excerpted here:

"On August 1, 2010, Cuban President Raul Castro announced before the Cuban parliament the decision to boost self-employment as an option for those who lose their jobs in the restructuring process of Cuban companies. He made reference to the elimination of the exiting prohibitions regarding the granting of new licenses and trade in certain products.

"His instructions have been followed. But there are many practical issues that still need to be addressed in order to increase production and services, while improving the quality of life of those who engage in authorized business activities. The State just couldn't continue to afford subsidies.

"The implementation of self-employment certainly plays an essential role in the new economic policy aimed at efficiently increasing production, and it gives those who want to be of use to their country the opportunity to get involved."

Self-Employment Takes Off in Cuba

More than 171,000 licenses have been granted in Cuba to small business owners since the government passed a new law in 2010 broadening the scope of self-employment as a viable employment option. Young people from different parts of the country share their first impressions and experiences with Juventud Rebelde

By: Julio Martínez Molina, Juan Morales Agüero, Roberto Díaz Martorell, Haydée León and Mayte María Jiménez; Email: digital@juventudrebelde.cu

Juventud Rebelde, March 22, 2011- In Cuba, the term self-employment became popular in the 1990s, when, faced with the collapse of the socialist camp in Europe, the Cuban government had to take measures to palliate the ensuing economic crisis without sacrificing its sovereignty or principles.
Understood as an activity through which people earn their living by their own business or freelance work, rather than as employees, self-employment became legal in Cuba in the early 1990s.
Thousands of Cubans were granted licenses to trade in different products and build up limited private property, something unheard of in socialist Cuba. Tight control measures for these businesses were implemented however, with a view to avoiding undesired developments. 
Following a period of stagnation in the early 2000s, the option of self-employment has recently reemerged in Cuba, this time not as a temporary solution, but as a promising alternative in the new national economic strategy.
The announcement by the government in 2010 that a long list of private ventures would be allowed has been more than welcomed by the people, as the 171,000 licenses issued by March 11, 2011 show, according to reports by the Ministry of Labor and Social Security (MLSS).
Isla de la Juventud
The implementation of self-employment in Isla de la Juventud, an island municipality to the south of mainland Cuba, is still, as in the rest of the country, in the organizational phase. Local authorities are finalizing details, perfecting procedures and tying up loose ends. The law regulating these types of activities still has flaws, as some of its detractors like to point out, but overall, most people approve of it.
The Jose Marti Street, the main artery of the city of Nueva Gerona, is a boulevard that in the last few days has witnessed frenetic and unprecedented levels of activity. From a quite walkway flanked by a few businesses, it has become a space crammed with folding tables, shelves, tents and strings.
This transformation is the first palpable consequence of the spread of businesses which are not operated by the State. The new merchants literally took over the area to sell all kinds of products, and the resulting picture is a sea of voices, noise —supply and demand.   
Ivan Eduardo Crombet, a craftsman, secured a license to sell burnt CDs and DVDs. Now he advertises and sells his merchandise outside El Dragon Restaurant, like any other of his competitors.
"It's hard to work here," he said while pointing at his surroundings. "Look at all these people, announcing their products. This place could be better organized to avoid crowding. I trust this is just temporary. This beautiful boulevard does not deserve to end up like this."
"Allowing people to have their own business is a step forward," he added, "It will improve both production and individual finances. Those with the means to do it should give it a try. It's something new and some people are suspicious, but I'm optimistic. We need better organization and more discipline though."    
Another problem pointed out by Crombet was the irregular availability of the articles he needs, such as blank CDs and DVDs, at state-run stores.
Zulia, a homemaker, and Elder, formerly a harbor security agent, are the new owners of a pizza business. They are doing great, they said, their pizzas are very popular, but they have to deal with the problem of a lack of ingredients.
"Sometimes it is just impossible to find cheese in the market, and that has a negative impact on our production, of course" said Elder. "When we find some, we always try to buy as much as possible, but we usually run out of it before we can find where to buy some more again. We'd need state-run stores to stabilize supply."
Another concern is that flour is only sold at hard currency stores, and as the owners of a business that operates with a different currency, that is, Cuban pesos, they would prefer to be able to buy this product in the Cuban peso markets, like those currently offering rice, sugar and other products. 
Guantanamo
When Marcelino Simon Laime was 17, he was granted a license to trade in carnival paraphernalia in the eastern province of Guantanamo. It was the year 2000.
The young man was sure that it was a decent way to make a living, although self-employment was rare in that part of the country at the time, and many people were prejudiced against it.
But Laime persevered and soon he was traveling from one city to the next in eastern Cuba, furnishing local celebrations with his items. However, these trips interfered with his studies, and no matter how hard he tried, he could not settle down.
This went on for many years, until three months ago he decided to benefit from the new self-employment law. He was issued a new license very fast. All he had to do was go to the local office of trade licensing with his identity card and two photos, and request for an official permit to manufacture and sell household goods.
"Thanks to this license I can work in my hometown now, without having to travel to other cities," he said. "But the paperwork needs to be improved. They made me apply for three different types of licenses before giving me the one that suited me."
At this point, it would be good to recall what Cuban President Raul Castro said during his speech to the National Assembly of the People's Power (Cuban Parliament) on December 18, 2010:
"Regarding the need for a change of mentality, I want to highlight the following: if we have come to the conclusion that self-employment is a valid employment alternative for Cuban citizens, which can increase the production of goods and services, thus relieving the State of its responsibilities regarding such activities and providing it with the opportunity to concentrate on more decisive issues, then the Party and the government should facilitate its implementation, instead of fueling stigmas and prejudices against these kinds of activities. In this regard, it is essential to change the negative perception many of us have of private labor."
Havana
One of the first things that catches the eye while walking the streets of the Cuban capital, where small private ventures are rapidly proliferating as part of this self-employment process, is the large number of young people engaged in food, crafts and hairdressing businesses. 
Many of these young men and women are under the age of 25, and yet they have managed to make their way into the labor market. Some of them, however, said that they still dream of continuing studies someday, and then find a different way to earn a living.
This was the prevailing opinion in a group of 20 people surveyed in Havana, a city where the competition is tougher, since there are more people opting for this form of employment and the most profitable options are generally already taken.
More than 50 percent of them, especially those who had completed high school and were unemployed, said that this was a timely solution to their financial problems.
Most of the young people surveyed were men who have opted for souvenir, and arts and crafts businesses. Others are engaged in different types of work, such as in the construction sector and food service industry, many times under the advisement of more experienced people.
Harold Neceno, 34, set up a business with his girlfriend Katia. They sell sandwiches, pizzas and soft drinks. They get up very early and begin work. Their workdays are exhausting; it's not easy to cook 300 pizzas every day.
"This is not something we have a passion for, but it helps us cover the basic needs of our family," said the young man who lives in the municipality of Plaza de la Revolucion. We must be patient. We know that with time, we'll get a hang of things, and the work will become easier."
Lena Fernandez, 28, a hairdresser, said that the cost of the products she needs for her business are too high.
These products are for sale at retail stores, of course, but for those who, like Fernandez, need to buy them in large amounts, retail prices are too high, and she explained the necessity to open wholesale stores for the private sector.
Self-employment, especially for young people who are unemployed, could be a very good option, but it is necessary that the country implement strategies to provide them with the materials they need to develop their line of work.
Their demands are not excessive, they know that the country is making great efforts to stimulate the economy, but they cite the necessity to be able to purchase the referred-to products in local markets and stores. They also asked for a review of current prices, something the government is already undertaking.
Most of the people surveyed agreed that self-employment options should also increased, especially for young people, who would like to earn their living doing something that bears more relation with their professions and particular areas of expertise.
Cienfuegos
Self-employment has found an excellent breeding ground in the central province of Cienfuegos. According to Deputy Head of the Provincial Labor and Social Security Head Office Leonel Alonso, licenses for the food service industry represent the largest number of applications.
"Other popular métiers are courier services, carpentry, construction, watch repair, hairdressing and manicuring," Alonso added. "Some 4,300 people have registered to practice these jobs, and many of them are very young."
According to Yania Garcia, an official with the same office, approximately 2,450 of the people who applied for licenses have chosen to pay social security taxes. This group includes students, homemakers, and workers who lost their jobs in the recently started process of labor reform.
Around 900 of them used to work for state-run companies. Now they are trying their luck at this new form of employment that diversifies work opportunities, boosts production and increases the supply of goods and services.
Thirty-four-year-old Lesvis Odanis is the new owner of a food stand. He is young, married, has a young son, and at the time of securing the license was unemployed.  
The people at the Caunao community, where he resides, have a high regard for Odanis. He sells pastries and pays a monthly tax of 400.00 Cuban pesos (16.00 dollars).
"How's business?" we asked. "Is it worth it?"
"I can't complain," he replied, "Young people like me enjoy working and to see the fruits of our work. We cannot let this opportunity pass by."
Odanis went into business only two months ago, but he is already making a profit. He knows that people don't become rich selling pastries, but that is not his purpose. He just wants to attain a certain income level and provide for his family, together with his wife, who has a fulltime job at a state-run store.
"So far, I have a good number of customers and my pastries are selling well," he added, "Problems? The problems I have are mainly regarding the unavailability of ingredients. Many of these ingredients I must buy in hard currency stores, but I sell my product in Cuban pesos. Also, the supply is very unstable and sometimes I cannot find what I need at all."    
Ariadna de la Caridad Barcos, 33, works at a cultural institution managed by the state. She might lose her job in the process of reform currently underway at Cuban workplaces. She has not been notified yet, but she prefers to be ready, should anything happen. Thus, she already applied for a self-employment license and is alternating her fulltime job with her private initiative.
It consists in the manufacturing of piñatas and all kinds of birthday party supplies, such as paper bags, masks, happy birthday cards, etc. In La Juanita community where she lives, she is renowned for the quality of her work and receives many orders.
"I just have to pay for the license; my workplace is covering the social security fee," she explained. "As most self-employed people, the main obstacle for me is the lack of materials, such as thread, cardboard, colored paper, glue, and so on. Sometimes they are available at stores, but at a very high price. I know the government cannot fix this problem overnight, but I trust the situation will improve."
Despite difficulties, Odanis and Barcos agreed that this new option is a step forward. Both said that, as soon as the loose ends are tied up, there will be a future in self-employment. It's just a matter of will and time.
Las Tunas
In the eastern province of Las Tunas, local self-employment licensing offices have received more than 8,819 applications. So far, 2,893 licenses have been granted, and 4,505 are being processed.
Some people come just looking for information. Osmany Ruben, for instance, wanted to apply for a freelance photographer license but he gave up when he found out more about the applicable taxes.
"It's great that self-employed workers are included in the social security program," he said. "It's a guarantee of their and their family's future. But people should be able to decide whether they want to benefit from the program or not. It shouldn't be compulsory."
Another regulation troubling the locals is a prohibition on selling their products in the historic quarter of the city. Licenses are rarely extended to operate there because the authorities consider that the presence of vendors spoils the beauty of an area which, on top of that, is not suited for these kinds of activities.
Despite the logical ups and downs of a process that is just beginning, the good news is that Las Tunas residents are taking their businesses very seriously. They don't see themselves as peddlers, but as serious businesspeople. They treat clients politely and with respect, providing the proper material for take out, keeping their places clean, and some even play music or decorate their stands.
"Almost all the people registered were previously unemployed," said Roberto Cruz Tamayo, an expert from the provincial Labor Head Office. "Most of them (67 percent) are between 31 and 60-years-old. Also, many of them are people who used to do the same work before illegally, and have now legalized their status; 610 have jobs at state-run companies, and there are also 10 students."
In Las Tunas, licenses for freelance services and sales of household articles and food are the most popular, followed by coach and bicycle-taxi driving, while the least popular are those for wheelbarrow conduction, electrical automobile repair, woodcutting, animal raising, and palm tree pruning.
The Definite Answer
On August 1, 2010, Cuban President Raul Castro announced before the Cuban parliament the decision to boost self-employment as an option for those who lose their jobs in the restructuring process of Cuban companies. He made reference to the elimination of the exiting prohibitions regarding the granting of new licenses and trade in certain products.
His instructions have been followed. But there are many practical issues that still need to be addressed in order to increase production and services, while improving the quality of life of those who engage in authorized business activities. The State just couldn't continue to afford subsidies.
The implementation of self-employment certainly plays an essential role in the new economic policy aimed at efficiently increasing production, and it gives those who want to be of use to their country the opportunity to get involved.

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