Saturday, September 25, 2010

79. Granma Sheds Some Light on Cuba's New Economic Policy

Since I wrote on the recent and ongoing reorganization of the Cuban economy, more information has come to light that deserve careful examination.  Associated Press reported that CTC has begun organizing union meetings to "brief" workers on the lay-offs "and suggest ways that those fired (sic, laid-off) can make a living."  Granma has featured an article that shed more light on the new economic policy.  This important article is reproduced below.  It asks "experts" about the new policy, including Admi Valhuerdi Cepero, first deputy minister at the Ministry of Labor and Social Security, who "explained that there will be 178 categories of self-employment, within which 83 may hire additional employees who do not have to be members of the same household or relatives of the business owner. " The article also refers to a new tax system details of to be explained later. There is no discussion of the probable rise in unemployment or of any recourse for those affected.  There is new information about further development of a housing rental market.   

So far, there is no information on how these new economic policies will work with the long-term socialist direction of the Cuban society.

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Leticia Martìnez Hernàndez, Granma, September 24, 2010 (translated into English by Granma International)
This past August 1 President Raúl Castro Ruz announced to the National Assembly the decision to extend the self-employed sector and use it as an another option for workers seeking alternative jobs after the necessary process of reducing the country’s inflated employment registers in the public sector. In the Assembly session it was made known that various current restrictions would be eliminated in order to allow the authorization of new licenses and the marketing of certain products, in addition to providing greater flexibility to hire a workforce within certain activities.
Since then many people have been awaiting a solution that, far from being improvised or ephemeral, makes it possible to increase the availability of goods and services, while assuring an income to those who decide to do this work. It will contribute to the state being relieved of the burden of excessive subsidies, while placing in non-state hands goods and services which it has provided for years in spite of a difficult economic context.
Increasing the opportunities for self-employment is one of the decisions which the country is making in terms of restructuring its economic policy, in order to increase levels of productivity and efficiency. It is also an attempt to offer workers another way of feeling useful in terms of personal effort, and to distance ourselves from those concepts that almost condemned self-employment to extinction and stigmatized those who decided to legally join that sector in the 1990s.
On August 1, the approval of a tax system of taxation for the self-employed sector was also made public, in line with the nation’s new economic scenario. Whoever contributes more, will receive more is the principle of the new tax regime that will help to increase sources of income to the state budget, and achieve an adequate redistribution of that income to society.
But, how is the self-employed sector to be extended? What activities are included in it? What restrictions are being eliminated? How is it to be organized and regulated? What taxes are to be paid? Granma went out to seek the answers to these and other questions by consulting specialists from the Ministries of Economy and Planning, Finance and Prices; and Labor and Social Security, which are preparing the regulations for self-employment, to be implemented from this October.
Self-Employment, Not Anothers
Admi Valhuerdi Cepero, first deputy minister at the Ministry of Labor and Social Security, explained that there will be178 categories of self-employment, within which 83 may hire additional employees who do not have to be members of the same household or relatives of the business owner. "Authorizations are to be given for 29 new activities that, while they are currently exercised, were not given re-authorization a number of years back." Among them she mentioned food vendors of various categories, winemakers, saw operators, stonemasons, engine and ignition coilers, wreath and flower sellers, panel beaters, sports trainers (except martial arts), refuse recycler, masseurs, etc.
Seven activities have been added to the existing categories, which include bookkeeping, with the exception of accountants and bookkeeping working in that specialty; park and public place restroom attendants; subject revisers, excluding active teachers; casual agricultural workers; roadside stand or cart vendors of agricultural produce in sales outlets or highway kiosks; and travel assistants, referring to those people who organize passengers with private taxis at the terminals.
Valhuerdi also explained that the granting of new authorizations for self-employed work would remain limited for now to nine kinds of work, because there is no licit market for raw materials, although viable alternatives are being studied. They are: auto body workers, marble and granite carvers and vendors; sellers of soap, shoe polish, dyes, ropes and similar items; smelters and blacksmiths; flame cutters; vendors of aluminum items; floor waxers; and vendors of non-iron cast metal items.
Concerning the market for these activities, Marino Murillo Jorge, minister of economy and planning, explained, "We are designing within the economic plan for the coming year, what we have to incorporate bearing in mind the new changes which will demand hardware stores and kitchen equipment which is not are currently not on sale. We have to manage the plan to fit in with what has been done. The ideal is a wholesale market with different prices for the self-employed. But we are not going to be able to do that in the next few years. Right now we have to find a market where they can buy what is necessary although without differentiating retail prices."
Valhuerdi commented that, when the resolution comes into force it will allow up to 20 seats in "paladares,"(independently owned house restaurants) where places were previously limited to 12; it will allow the sale of food products made from potatoes, seafood and beef. It will also abolish the requisite of being retired or having some workplace link in order to have access to this form of employment.
With these regulations university professionals and technicians who graduated before 1964 may continue to work for themselves. In this way the work undertaken for more than 40 years by a small number of people registered in the Taxpayers Registry has been respected.
In creating greater flexibility in the self-employed sector an extension in the rental of housing has been borne in mind, which eliminates the old restrictions that involve a "highly visible" network of infractions. Those prohibitions, which at one point fulfilled a function, now constitute an obstacle in the difficult problem of housing. Therefore new regulations authorize people who have authorization to live abroad (PRE) or those who, while living in Cuba, leave the country for more than three months to rent their residences. Similarly, and to support self- work, they provide the possibility of renting homes, rooms and spaces for exercising their work.
It is worthwhile to note that the homeowners can appoint a representative to request a license to rent, to facilitate those who are not in the country and who wish to rent their homes. The approval will be in all cases, up to the municipal director of housing. The same situation will apply to transportation providers who decide to work in a self-employed capacity. Those who have authorization to live abroad or travel for more than three months may also name a representative to rent their vehicles.
When these new regulations come into effect, those linked to the self-employed sector, and those who join it, will be obligated to pay taxes on personal income, on sales, on public services, and for utilizing a workforce, as well as making in Social Security contributions.
A special mention should be made to self-employed workers’ Social Security contributions, because in order to offer them protection for old age, total disability, maternity or, in the case of their death, to their family, a special scheme has been organized that these workers are required to join, with the exception of those also working in the state sector, who are retirees, receiving a pension or who are beneficiaries of another Social Security program.
All of these measures related to self-employed work, which Granma is to continue detailing in upcoming issues, will make it possible for this form of employment to provide another alternative, under the vigilant eye of the state which, as the representative of the people, is mandated to seek solutions to improve the standard of living of Cubans, while always respecting the socialist principles that govern our constitution. As the president stated at the 3rd Ordinary Sessions of the 7th Legislature of Parliament on August 1, 2009, the objective is to defend, maintain and continue improving socialism, not to destroy it. That is the road along which Cuba continues to travel.
The Ministry of Labor and Social Security (MTSS) regulation on the extension of self-employed work lays down that those in this sector can engage in more than one activity, within their municipality of origin or in any part of the country, as long as they meet the regulations established by the Administration Councils. Thus they will have the possibility of undertaking work at home or in any other rented premises or space. The document lays down that workers can market their good and services to state agencies within the financial limits that these have.
At the present time discussions are underway with the Central Bank of Cuba on how to facilitate bank credits for persons deciding to become self-employed in order to set up the activity they have chosen.
Officials at the National Institute of Housing have announced, from October of this year, the abolition of the prohibition on renting out entire houses in CUC; time-limited renting; and renting out buildings assigned by the state after 2001, and in those in which construction work has been carried out in recent years. These measures have been approved without exception in all of the national territory. The new regulation permits owners who rent to hire a workforce and undertake other self-employed activities.

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