{"id":237550,"date":"2021-04-15T15:27:01","date_gmt":"2021-04-15T19:27:01","guid":{"rendered":"https:\/\/oncubanews.com\/en\/?p=237550"},"modified":"2021-04-15T15:39:08","modified_gmt":"2021-04-15T19:39:08","slug":"expansion-of-private-sector-in-cuba","status":"publish","type":"post","link":"https:\/\/oncubanews.com\/en\/cuba\/economy\/cuban-economy\/expansion-of-private-sector-in-cuba\/","title":{"rendered":"Expansion of private sector in Cuba"},"content":{"rendered":"

In early February 2021, the Cuban government reported new measures that are inserted in the logic of the transformation of the economic model. They take up pending aspects that imply areas of confluence of popular consensus, academic criteria and political will, having been successively included, since 2010, in the most important official documents governing economic policy.<\/span><\/p>\n

These measures entail the expansion of the spectrum of activities available to self-employed workers, taking as a reference the <\/span>National Classifier of Economic Activities (CNAE)<\/span><\/a>. This would offer more than 2,000 options, except for work in <\/span>124 categories<\/span><\/a> included in a negative list. This statement was followed by the appearance in the media of senior officials who advanced other complementary actions. In what context do these decisions take place and what can be expected of them?<\/span><\/p>\n

This article explores some possible repercussions for the domestic <\/span>private sector<\/span><\/a>, in light of the information disclosed, while some unknowns remain to be cleared up.<\/span><\/p>\n

Political and economic environment<\/b><\/p>\n

By the end of 2020, official figures from the Cuban government indicated a drop in GDP in the order of 11%, more pronounced than the <\/span>ECLAC<\/span><\/a> forecasts. The numbers ended up showing the acuteness of a crisis that, beyond any statistics, has been suffered on a daily basis by the population in an arduous battle to survive, between pandemic, shortage of supply of goods and services (essentials included) and declining nominal and real income. Although for 2021 the authorities have foreseen a recovery of the product of between 6% and 7%, this growth objective becomes more complex given the permanence of the conditions that generated the crisis.<\/span><\/p>\n

COVID-19, which ended up precipitating and exacerbating a crisis that would inevitably ensue, again expresses itself locally in 2021 with a re-outbreak of greater proportions, claiming human lives, hindering productive recovery and the normalization of tourism and travel, essential in Cuba for economic reactivation.<\/span><\/p>\n

Externally, even when the Biden administration in Washington seems to consider a position prone to retaking the rapprochement and dismantling the most hostile measures deployed by the previous president, these remain active and continue to limit the access of the Cuban government and people to income in hard currencies, energy carriers, restrict the flow of imports and intimidate foreign investors. And in the domestic sphere, insufficiently audacious measures have been implemented, rather associated with crisis management and immediately capturing foreign currency while a coherent economic policy system, aimed at transforming the Cuban economic model and promoting the necessary growth and efficiency dynamics, has still not been deployed. The postponement of the transformations ends up reinforcing a loop that deepens the crisis and prevents it from going beyond its mere management.<\/span><\/p>\n

At the end of 2019, 1,506,600 Cubans made up the domestic private sector, almost 33% of those employed in the economy, a space much more important than the 20% at the beginning of this century and qualitatively more diverse in terms of activities and ownership\/management typologies involved. The Cuban private sector is today a heterogeneous group composed, fundamentally, by self-employed workers (the regulatory euphemism includes private medium, small and micro entrepreneurs that operate legally, but without legal status, their contracted and self-employed workers), members of agricultural and non-agricultural cooperatives and private farmers, owners or not of the land they work.<\/span><\/p>\n

The \u201cself-employed\u201d are particularly notable, since they were part of the objectives of the reform implemented a decade ago,<\/span>1<\/b> and because of their growth and diversification in a complex context. In 2010, a list of some 180 activities that self-employed workers could develop was published, with entry procedures relatively simple for most, along with authorization for these businesses to hire a workforce. It was the most daring opening since in 1968 the Cuban State came to control practically the entire economy in the non-agricultural sphere.<\/span><\/p>\n

The interesting thing is that the mere authorization to work made the private sector grow from 157,000 workers registered in September 2010 (one month before the entry into force of the opening) to more than 630,000 during the first quarter of 2020. This occurs in a context of:<\/span><\/p>\n