Entrepreneurship is no longer illegal in Cuba, but business owners on the island still face difficulties.
Antolin Perez Diaz, 63, bunches tobacco during a second cutting of his crop. Some Cuban farmers complain there is still no money for modern machinery or fertilizer.
HOLGUIN, Cuba — Sergio Luis Suarez, 24, is among the new faces of Cuba’s budding business class. He used to cut hair for profit before it was legal, but now he’s licensed by the government and has transformed the front of his mother’s apartment into a makeshift salon. His monthly profit: about $25, at 50 cents a cut.
Yaceli Hidalgo is another. She opened a small restaurant, using as start-up money nearly $4,000 sent by relatives in Italy. In this eastern city, hers is one of 19 such establishments, known in Spanish as paladares, catering primarily to tourists and European retirees who spend part of the year in Cuba. Business is good enough that her restaurant has stayed open 14 months.
All across Cuba, there are legions like Suarez and Hidalgo — entrepreneurs striking out on their own as locksmiths, plumbers, electricians and the like. They’ve always existed, but operated on a smaller scale, illegally, in the informal economy.
“I can make more money,” Suarez explains, comparing his take with the official government monthly salary of $20.
In the past 24 months, Cuba’s communist government has announced a series of economic openings intended to ease its announced plan to trim the country’s bloated government by 1 million jobs and to buy time as the country transitions away from the reign of two aging Castro brothers who’ve ruled since 1959 but now are both in their 80s.
The reforms include expanded self-employment, a liberalization of rules surrounding family-run restaurants, greater flexibility for Cuban farmers to sell their products and even creation of fledgling real estate markets in big cities such as Havana and Santiago.
Most of the 181 newly allowed self-employment categories involve menial labor and services that are most relevant in urban areas — beauty salons, barber shops, plumbers and the like. By the government’s count, it’s already granted 371,000 licenses.
The reforms, however, remain far from anything resembling free-market capitalism. Tellingly, not included among the openings are medicine, scientific research and a range of technical jobs that the government has kept under its control. There are no wholesale businesses to provide goods and services to the expanding class of entrepreneurs.
Programs to learn how to run a business also are rare, though the Roman Catholic Church now offers business-training programs in Havana. There are no trade or vocational schools to speak of. Capital for farming is all but non-existent.
Nevertheless, a week of interviews across the island, conducted by McClatchy during the recent visit of Pope Benedict XVI, indicates that Cubans welcome the change. However, many remain wary, mindful that a similar opening 20 years ago snapped shut when the economic crisis engendered by the 1991 collapse of the Soviet Union was overcome.
Among the complaints is the cut the government takes from their now-legal earnings — something that might feel familiar to an American at tax time.
Hidalgo pays taxes every month to the government and is unhappy that at the end of the year a government auditor pores over her receipts and then gives her an additional tax bill.
“You pay all year. Why do they do it to us [again] at the end of the year?” she complained.
But her biggest challenge is the lack of any wholesale market that caters to restaurants. To ensure she has food to serve, she must stand in line with ordinary Cubans doing their shopping, often crossing her city in search of items that invariably have run out.
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