Crackdown has resulted in drop in self-employment across the island.
By Vanessa Bauza. Havana Bureau.
Sun-Sentinel. Posted June 11 2001
HAVANA -- Cubans like to poke fun at their economy with a little joke: The
communist government pretends to pay us, and we pretend to work.
It is an oft-repeated saying that helps to explain why Juan, a former high
school English teacher who loved his job, grew disenchanted and quit in 1993 to
hawk pastoral paintings of smiling tobacco farmers at an independent, Old Havana
art gallery.
There, Juan could make $150 a month, about 10 times more than he earned in
his government job. Dozens of cramped galleries had blossomed in the historic
district as tourism boomed.
But this year, inspectors informed Juan, who fears giving his last name, and
his colleagues that all independent galleries were closed until further notice,
allowing only state-owned galleries to sell artwork.
Officially, the government said it was concerned with the proliferation of
mass-produced artwork — it wants to control the integrity of Cuban art.
But those working independently say it's a way for the state to make more
money and control the growing number of artists working for themselves.
This crackdown on independent galleries is only the most recent example in
an island-wide government effort to restrict self-employed entrepreneurs.
At the height in 1997, the island had about 210,000 licensed entrepreneurs,
or cuenta propistas in more than 150 occupations, from pizza maker to plumber.
However, that number has dwindled to about 160,000 largely because of
skyrocketing government fees and taxes. Overzealous inspectors slapping large
fines on businesses for even the smallest infractions and the increasing
competition from state-owned businesses have made self-employment impossible for
many.
Some cuenta propistas have opted to close their doors. Others have returned
to their government jobs. But many other entrepreneurs have been driven into the
black market, making ends meet and re-inventing a living outside the law, what
the Cubans call resolviendo.
Independent art galleries are not among the private enterprises that were
legalized by the government in the mid-1990's, and as such they never paid any
of the hefty taxes some other independent entrepreneurs such as taxi drivers or
restaurant owners were charged.
A legal limbo
For about 10 years, galleries operated in a kind of legal limbo, selling art
openly but without permission. The government left them alone, largely because
the galleries attracted tourists, especially in parts of Old Havana, and they
were good for other businesses.
Juan says he would gladly pay taxes if that meant permission to sell his
paintings freely. But to close all independent galleries and give dealers no
recourse smacks of an arbitrary punishment of those simply trying to make a few
fulas, or dollars, he says.
"This isn't even about getting rich," Juan said, reclining on a
lawn chair inside his now-illegal gallery. "This business simply allows us
to live, to buy some meat once a week, to buy some oil, some soap.
"But they want tourists to buy their paintings from a fancy,
air-conditioned government gallery where they'll charge you lots of money."
Juan is afraid to tell a stranger anything that might identify him to
government officials. Like many gallery owners, he has closed his doors, though
he still beckons to tourists who linger by his open windows.
"Have a look, friend," he says to one tourist peering curiously.
For what could be a $30 or $40 sale, he risks a $1,500 fine.
Taxes from cuenta propistas never have contributed much to the government's
overall revenue. However, for the families who have been able to surmount the
strict regulations, self -employment offers earnings unmatched in a government
job.
Room for rent
For 10 years, Elvira Parra, 55, worked as a waitress at the Seamen's Club by
the port of Havana. But in 1994, when restoration work got under way in the
historic district, the club became a Benetton Store and Parra lost her job. She
rented a room out of her home illegally at first.
In 1998, when the government legalized private room rentals in Old Havana,
she got a license.
Whether her room is rented or not, Parra pays $200 every month for the right
to rent one $30-a-night room in her apartment. In addition, at the end of the
year, she pays 10 percent of what she's made in taxes. Last year, she made a
profit of $4,500.
Despite the tax burden, the room-rental business is one of the few growing
self-employment sectors. This February, room rentals numbered 15,550 islandwide
compared with 10,916 in February of 2000.
With her dollars, Parra supports about nine relatives, some of them retired
cane cutters in the island's poorest eastern provinces. "My sister can't go
to a dollar store the way I can. She can't buy a new dress or shoes," she
said. "I've helped them rise out of poverty."
Some say the government is controlling independent entrepreneurs because
they create wide income disparities, something incompatible with socialist
austerity.
Inequalities of growth
However, with growing foreign investment and tourism the inequalities are
bound to continue.
"The country is supposed to develop, right?" Parra said. "We
can't deny growth for the sake of not creating inequality."
Independent entrepreneurs run the gamut from the peanut vendors who gather
outside movie theaters to those who run extremely popular paladares, privately
run restaurants, whose dog-eared business cards are passed from one tourist to
the other like the map to hidden treasure. Since 1996, no new licenses for
paladares have been issued.
"I don't know why they haven't shut me down yet," said the owner
of one paladar whose walls are lined with snapshots of dining celebrities. "They
could close my business at any moment."
This paladar is breaking the rules by seating more than 12 customers.
Other restrictions for the small restaurants include a ban on selling
shellfish or beef, so the menus tend to carry mostly chicken and pork. For other
entrepreneurs, there are more regulations: no businesses can enter into
partnerships to sell goods or provide services; private taxis cannot work the
tourist areas, like Old Havana or the beaches of Varadero, where they would
compete with state-owned taxis.
Some Cubans question why the government would make it harder, instead of
easier, for someone to earn a living.
Government responds
The government says that simply isn't true. They argue that many private
businesses haven't been able to compete with state enterprises and that former
entrepreneurs are gradually returning to their government jobs.
"There is no formula to eliminate self-employed entrepreneurs, but
there is also no interest in increasing the numbers," said Elpidio Alemán
Velazquez, of the Ministry of Work and Social Security. "The economy
recovered and many people felt better protected working for the state."
While many independent entrepreneurs frequently flout regulations, others
find they become insurmountable obstacles.
Several years ago, in the coastal town of Cienfuegos, several entrepreneurs
blossomed in every neighborhood. They turned their living rooms into video
theaters, screening newly released movies bought from friends with access to
satellite TV. For a time, customers flocked to the blue glow of the video halls.
However, in the span of two years, taxes shot up three times, from 300 pesos
($15) to 1,000 pesos ($50). Then, a law banned video theaters within about
1,600 feet of a school.
Finally, another law required that all video hall owners be affiliated with
a government entity, which enabled the state to keep 50 percent of their
earnings.
Today most of the video halls have closed or become clandestine.
"When you are legal they make things more difficult for you every day.
I didn't show pornography. I didn't show counter-Revolutionary material. I was
making money," said a 41-year-old one man who declined to be named.
He ran one of the most successful businesses, earning about $650 a month,
but he turned in his license after the many regulations cut down his profits.
Now he sells bootleg copies of popular cassettes. "I'm an engineer, my
diploma has been hanging on the wall for 10 years. But it's only a decoration,"
he said. "I can't make a living as an engineer. When salaries are in step
with the job I'll work for the state, but right now I can't."
Vanessa Bauzá can be reached at vmbauza1@yahoo.com
Copyright 2001, Sun-Sentinel
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