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The Cuban government opened the doors to the expansion of the private sector by eliminating the restrictive list of 127 self-employed activities that were allowed until now and replacing it with another that includes 124 limited or prohibited occupations.
The measure comes at a critical time for the island’s economy, which contracted 11 percent last year as a result of the coronavirus pandemic, the reinforcement of United States sanctions and the delay in implementing the reforms approved a decade ago to promote its inefficient centralized court model.
Although the decision was announced several months ago within a package of measures to face the crisis, it was not approved by the Council of Ministers until this week, according to a review published this Saturday by the official newspaper Granma.
The Cuban Minister of Labor and Social Security, Marta Elena Feito, advanced during the ministerial meeting that self-employed workers – known in Cuba as “self-employed”– they must present a project and the procedures will be carried out through a single window, “which will make it possible to unleash the productive forces in this sector.”
FROM 127 TO MORE THAN 2,000 ACTIVITIES
At the moment it has not been specified which are the 124 prohibited activities, but the elimination of the list of permitted occupations implies that the private sector can enter the more than 2,000 collected in the National Classifier of Economic Activities, the minister pointed out.
It is to be expected that sectors such as health, education, telecommunications, energy or the press will remain among the restricted areas.All of them strategic for the Cuban State for economic or political-ideological reasons, and in some of which foreign investment is not authorized either.
The private sector employs 600,000 people and accounts for 13 percent of the employed population, according to official data, although in practice the number is much higher. Those 600,000 are the holders of a “self-employment” license, but in turn employ more workers in their businesses.
Cuban economists and the sector itself had been demanding for years the elimination of the list of permitted activities, considering it a drag on the country’s economy, and “self-employment” as the greatest potential source of job creation.
The autonomous is also one of the areas hardest hit by the most recent US sanctions and by the pandemic.
A good part of it was dedicated to tourism and services, hit first by the new punitive measures in Washington and then completely paralyzed by the covid: among the most coveted licenses for years have been those of private restaurant (“paladar”), rental of rooms for tourists and carrier.
IN THE RIGHT DIRECTION
“This is good news. A step in the right direction that unfortunately took too long.”said the economist Ricardo Torres.
Torres also trusted that this measure will be complemented as soon as possible “with similar changes in relation to the possibility of establishing private companies up to medium-sized (SMEs) and cooperatives”, in reference to the long-awaited Company Law, whose approval is still pending.
“It is a huge and historic step. It implies a paradigm shift with respect to self-employment, which was always subject to a list of activities that could be carried out, leaving everything that was not authorized illegal, “he said. Oniel Diaz, co-founder of the AUGE strategic consultancy, which advises on the creation and management of entrepreneurial businesses in Cuba.
For Díaz, the measure “promotes and creates better conditions for the constitution” of SMEs and cooperatives.
“If with a meager list of authorized activities with inflexible scope, shortage of raw materials, deficient regulations and economic sanctions we have been able to build undertakings against all odds, this new scenario opens a path in which there will be no setback for us to play a increasingly important role in the national economy, “he said.
ACCELERATED REFORMS
Also the Cuban Minister of Economy, Alejandro Gil, rated the removal from the list as “a very important step in terms of expanding the possibilities of employment in self-employment, to give a timely and positive response to the implementation of the monetary system in the country “.
The measure comes a month after Cuba, beset by the crisis, launched its long-postponed monetary and exchange unification.
It is a far-reaching economic reform that includes the elimination of the convertible peso CUC (parity to the dollar), a significant devaluation of the Cuban peso within the state sector, the increase in wages and prices, and the withdrawal of generalized state subsidies .
Regarding the “ordering task,” which is how the Cuban government has baptized this process, the fear of inflation weighs however. For now the dollar has already skyrocketed in the informal market at twice its official rate of 24 pesos per dollar, While the shortage of food, medicine and basic products grows for days.
