{"id":204372,"date":"2019-08-17T12:57:02","date_gmt":"2019-08-17T16:57:02","guid":{"rendered":"https:\/\/oncubanews.com\/en\/?p=204372"},"modified":"2019-08-17T12:57:02","modified_gmt":"2019-08-17T16:57:02","slug":"inequality-and-population-at-risk-of-poverty-in-cuba","status":"publish","type":"post","link":"https:\/\/oncubanews.com\/en\/cuba\/inequality-and-population-at-risk-of-poverty-in-cuba\/","title":{"rendered":"Inequality and population at risk of poverty in Cuba"},"content":{"rendered":"

After the 1990s, there have occurred phenomena in Cuban society that suggest that the population at risk of poverty tends to increase. This results in a high inequality of income, inequality of opportunities and their being used by a part of society in the face of changes that have not included the entire population.<\/span><\/p>\n

In the Cuban case, a set of characteristics are present that differentiate it from the idea of poverty in other parts of the world, especially due to the existence of social programs of universal access without direct cost to the beneficiary\u2015education, health, culture, sports, among others\u2015and universal subsidies for a small part of rationed food. These are public policies that limit the impact of poverty and inequality, although by themselves they do not prevent them.<\/span><\/p>\n

Is poverty in Cuba a forgotten cause? Certainly not, but it seems to be far from resolved in the short term. Is there a specific program to eradicate it? It is not clear. So far there are specific policies to alleviate it, but not to eradicate it.<\/span><\/p>\n

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Photo: Alain L. Guti\u00e9rrez Almeida.<\/figcaption><\/figure>\n

Poverty is not a coincidence<\/strong><\/p>\n

Due to the policy that is being implemented and the existing restrictions, under current conditions there is no significant accumulation of national capital that confronts the group of winners with other social groups in poverty. Differentiating one group from another could only be done by analyzing the population\u2019s income.<\/span><\/p>\n

An important area should be labor relations, especially the analysis of wages or income according to the weight of workers who work for the Cuban State, but there could be other dimensions of the process, including those that are not of an economic nature.<\/span><\/p>\n

To work in the eradication of poverty, certain social relations would have to be modified so as to allow the reintegration of the social groups today afflicted by it. This is not simply a problem of material shortages but also a symptom of the functioning of social relations. Poverty is not a coincidence. “Something” must have had to happen in society for certain people to be placed in that spot, and not in another.<\/span><\/p>\n

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Photo: Alain L. Guti\u00e9rrez Almeida.<\/figcaption><\/figure>\n

Work is the fundamental means of subsistence. The employment and salary situation is the first cause of income inequality in any society. In Cuba, 70% of those employed are state workers who receive a salary. That is why low wages represent the main cause of the existence of persons at risk of poverty.<\/span><\/p>\n

Article 31 of the recently approved Constitution clearly states the role of wages: “Paid work must be the main source of income that sustains decent living conditions, allows raising material and spiritual wellbeing and the realization of individual, collective and social projects. Remuneration according to the work contributed is complemented by the free and equal satisfaction of universal social services and other assistance and benefits.”<\/span><\/p>\n

In 1980 it was estimated that 56% of the total consumption of goods and services was covered at the expense of work. The remaining 44% was obtained through redistributive means; that is, by transfers from the State to the population in the form of subsidies, social security or gratuities. Low wages, together with state guarantees and protections for employment and consumption, homogenized Cuban society.<\/span><\/p>\n

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Photo: Alain L. Guti\u00e9rrez Almeida.<\/figcaption><\/figure>\n

The gigantic State<\/strong><\/p>\n

In the 1980s academic studies were undertaken to calculate the Gini coefficient in Cuba. In 1986 they placed it between 0.22 and 0.25, one of the most equitable societies of the time. At present it has amounted to more than 0.40, denoting a very unequal society. The country had to take measures to face the 1990s crisis, but did not do the job with the necessary seriousness to resolve the internal causes that led to the Special Period. Many decisions were postponed, more by politics than by economy.<\/span><\/p>\n

The State remained gigantic, with little productive supply and high centralization. Many measures that encouraged increased work and improved business efficiency were eliminated, passing on to the State\u2019s single account. This affected the Cuban state enterprise from then until today.<\/span><\/p>\n

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Photo: Alain L. Guti\u00e9rrez Almeida.<\/figcaption><\/figure>\n

After the 1990s the income pyramid in society was inverted. Before the Special Period, teachers, medical staff, public administration and culture workers, etc., were on the top, a sign of the importance given to wages as a source of the population\u2019s income and to qualification as a determining factor in the amount of these salaries. Today, those employed in the non-state sector, in any of its variants\u2015family remittances or from informal commerce\u2015receive incomes much higher than those of salaried workers.<\/span><\/p>\n

From the monetary and financial point of view, remittances are an important means for the benefit of a significant group of the population, but at the high cost of widening income gaps and devaluing work in any of its forms. And the people who receive them are generally “white,” which entails racial differences. But there was also no effective way for the State to attract these remittances, which would allow it to have an amount of foreign exchange to make investments or other activities.<\/span><\/p>\n

The capitalist mentality of the Cuban State of taxing remittances with high taxes in the foreign exchange market was not eliminated, which has allowed them to return to other destinations and serve as a source of inputs for both the private sector and the general population. Nor was the state tax on the dollar removed, while in the parallel currency market there are more stimulating exchange rates for the holder of dollars. Today the exchange can be made at 1 CUC for 1 USD in certain territories.<\/span><\/p>\n

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Photo: Alain L. Guti\u00e9rrez Almeida.<\/figcaption><\/figure>\n

Salaries<\/strong><\/p>\n

The stagnation of wages <\/span>until June 2019<\/span><\/a> generated a scenario different to international trends. Poorly differentiated and with slow and low growth, they did not compensate for the increase in inequality, given the gap between the two extreme income groups\u2015say social transfers and per capita income.<\/span><\/p>\n

The loss of wages\u2019 participation in the population\u2019s total income and purchasing power, led to an intensification of income inequality and the deterioration of the equity achieved during previous decades, creating a widening gap between wages and income outside the state and labor sector.<\/span><\/p>\n

Before the 1980s, wages were stable, low and with little differentiation from 1 to 4, between those who earned less and those who earned the most. They later became very diverse, with very low purchasing power and dissimilar schemes that worked depending on the sector in question.<\/span><\/p>\n

Based on resolutions 16 and 25 of 2019 of the Ministry of Labor and Social Security published in the Gaceta Extraordinaria number 13 of July 18, 2019, the new salary increase constitutes a necessary step to begin an improvement in the purchasing power of the budgeted sector, since it covers more than 40% of State workers. The authorities recognize that it is not a wage reform, but rather a wage increase because a wage reform includes a reform in the price policy, monetary and exchange rate unification, among other measures.<\/span><\/p>\n

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Photo: Alain L. Guti\u00e9rrez Almeida.<\/figcaption><\/figure>\n

The increase mitigates the despair of some of the Cuban workers. It is more than 68%, but it is still distant from the deterioration of the population’s purchasing power after the 1990s.<\/span><\/p>\n

According to researchers Anicia E. Garc\u00eda and Betsy Anaya (1), in 2016 the average monthly consumption expenditure of a three-person household was 2,245 Cuban pesos (CUP). It is higher in other studies, but the figure can be considered correct. Although this study should be updated for the immediate future, the purchasing power of the Cuban population in the 1980s has not yet been achieved, something that remains ingrained in the popular imagination.<\/span><\/p>\n

With this increase, the data would change, but since 2016 prices have also increased, especially in the agricultural, private markets, transportation and black market based on insufficient products in the state markets in foreign exchange or in national currency.<\/span><\/p>\n

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Photo: Alain L. Guti\u00e9rrez Almeida.<\/figcaption><\/figure>\n

What is poverty and who are poor?<\/strong><\/p>\n

In recent years there has been a debate about approaches to establish a poverty line. The traditional one allows for establishing a determined amount of money that would serve as a standard to differentiate who is “poor” or who lacks income with respect to those who do not need it.<\/span><\/p>\n

What should be the level of income to consider that a Cuban citizen is “poor,” that is, that their income is insufficient? A simple answer could be the following: to live in a family nucleus where the income is less than a monthly 2,245 CUP. Citizens whose households have an income of less than three average monthly salaries would be poor. So how many people are there in Cuba at risk of poverty?<\/span><\/p>\n

The recent salary increase is significant. Although workers located below Group XI, who would earn about 790 pesos per month, would remain in a still tight situation, those in Group XII through XXXII, which are in the range of 865 to 3,000 pesos per month, would improve their situation.<\/span><\/p>\n

What has not been disclosed is the percentage of workers that would be located in the different groups, which would allow for a more detailed analysis. In one of his recent works Professor <\/span>L\u00e1zaro Gonz\u00e1lez Rodr\u00edguez<\/span><\/a> stated that the average salary should operate according to the existing prices of 4,725 pesos. This leads us to other results, but the conclusions are valid: there is a significant mass of people at risk of income poverty in Cuba.<\/span><\/p>\n

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Photo: Alain L. Guti\u00e9rrez Almeida.<\/figcaption><\/figure>\n

The relatively high probability of having income problems in Cuba is 41.7% of the state labor force (1,343,800 workers), which in 2016 worked in activities with an average salary lower than the national average salary. Assuming that a family nucleus is made up of 2.9 persons, that would give a total of 3,897,020 individuals who would live in households at risk of income poverty.<\/span><\/p>\n

Pedro Monreal<\/span><\/a> adds two other relatively large groups: pensioners (1,676,988 people), who receive an average pension of just 37% of the average salary in 2016, and 179,796 beneficiaries of social assistance, who by definition would classify as “poor.” The three categories added together would be 5,753,804 persons. And it would be equivalent to approximately 51% of the Cuban population.<\/span><\/p>\n

Defining who is and who is not poor by adopting a “poverty line” is, without doubt, a limited criterion. Poverty has many dimensions that exceed a certain quantification of material shortages. However, no public policy against poverty operates without quantification. <\/span>Data<\/span><\/a> such as the following must be taken into account:<\/span><\/p>\n