They helped the nation weather an economic low, but the government is
making things tougher now
By Laurie Goering. Tribune foreign correspondent. June 20,
2001. Chicago Tribune
HAVANA To get to Teresa Zayas' bridal shop you walk up nine flights of
stairs, knock on the door to Apt. C, walk through the family kitchen where lunch
bubbles on the stove, greet her grandfather resting in the living room and
finally arrive at a back bedroom full of white satin shoes, silk flower bouquets
and little ceramic wedding-cake brides and grooms.
"I'll be with you in a minute," says Zayas as she loads a taffeta
fantasy into a carrying bag for a waiting client.
In socialist Cuba, Zayas is a capitalist exception who, with the
government's permission, runs her own business rather than working at a state
job.
Across the island, such businesses--reluctantly permitted to soften the
economic blow after the fall of the Soviet Union--are coming under pressure as
Cuban leaders try to wrestle Cuba back onto the socialist straight and narrow.
"We're not growing capitalism here. It's a totally different approach,"
noted one Cuban Foreign Ministry official.
For six years now, Zayas--one of more than 150,000 legal private workers in
Cuba--has been renting used wedding gowns to Cuban brides who can't afford new
dresses. For about $15, clients get their choice from a long rack of silk,
netting and pearl-studded dresses, plus shoes, bouquet and a tiny bride and
groom for the wedding cake.
In exchange for her license, Zayas pays the government 800 pesos a month in
taxes, about $40.
"For me it's better to be self-employed. I like working at home and
there's always business--some months more, some less," said Zayas, 45, who
taught kindergarten for seven years before switching careers.
The pay is not bad either. In her old job she earned 200 pesos a month,
about $10 at the current exchange rate. Now she brings in about $80 a month
after taxes, more than four times Cuba's average wage and enough to support her
retired father, grandfather and her teenage son, though not enough for the
delivery car she hopes to buy.
"We're not going out to eat at restaurants or anything like that, but
it's giving us what we need," she says of the job. "I like this
business and I want to keep working in it."
An economic low
While Cubans have long worked on the black market as everything from tire
patchers to shoe repairers, legal private enterprise got its start in 1993, at
the worst point of Cuba's post-Soviet depression.
Nearly 80 percent of Cuba's trade had vanished. Overstaffed state
enterprises were laying off workers. Cuban officials, worried about a social
backlash, opened the door to self-employment, and overnight thousands of Cubans
rushed to apply for permits and start their own businesses.
They became restaurant operators, window repairmen, pizza vendors, art
teachers, car washers, sign painters, bicycle-taxi drivers, locksmiths, dog
groomers, electricians and pony ride operators, among more than 150 approved
occupations. By early 1996, Cuba had 209,000 cuentapropistas, or "workers
for their own account," and Cuban officials were talking about private
enterprise as a vital part of Cuba's economic future.
Today the picture is very different. As Cuba's economy has recovered,
largely because of dramatic growth in tourism, the island's officials have cut
off new licenses for private work and have come to see existing private
businesses as little more than a stopgap measure on the road back to
restructured socialism.
"It's not our policy to eliminate self-employed work," said Jose
Luis Rodriguez, Cuba's economics minister. "There's no reason why, if
certain regulations are followed, this sector should not remain. But we do not
stimulate it because we do not believe it is the way to get the country out"
of its economic difficulties.
Strict regulations, taxes and simple competition--from other private
enterprises and from increasingly efficient state companies--have combined to
thin the ranks of the self-employed. Today self-employed workers account for
just 3 percent of Cuba's workforce.
Even at low levels, however, private enterprise has created its share of
problems for Cuba's government.
Self-employed workers generally earn more than other Cubans, except for
those in the booming tourism industry. To help ease growing social inequalities,
Cuba in 1996 began taxing the profits of private businesses.
Today, Cuban economic officials say, the maximum tax rate is about 35
percent to 38 percent; Cuban workers report an average of 41 percent, according
to a study by Philip Peters, a U.S. economic researcher.
Disguising income
Even so, they continue to take home larger-than-average salaries, a fact
many disguise by underreporting income or by avoiding conspicuous consumption.
"What's important here is equality," said one self-employed
worker, who did not want his name published. "You can't have more than
anyone else or they'll shut you down."
Inspectors rigorously check that the rules governing private employment are
followed. Supplies must be bought from state enterprises. Detailed income and
tax records must be kept. Private businesses cannot hire employees, although
paladares, Cuba's popular family-owned restaurants, can employ family members,
and food-stand operators are allowed counter relief.
Many private enterprises survive by bending the rules. Restaurant owners,
who say they sometimes find only spoiled fish at government markets, buy a few
pounds to get an official receipt, then throw out that fish and buy under the
table from illegal private suppliers to stock their kitchens.
Many popular paladares set out more than the legally mandated limit of 12
seats. Others, unable to find enough family members to wait on the busy tables,
manage to dredge up distant "relatives"--some obviously of different
races.
Bending the rules, however, can be risky. Despite their enormous popularity
with foreign tourists, more than two-thirds of the private restaurants once open
in Havana have closed, some because of repeated fines or lost licenses.
Cuban officials blame the majority of the paladar closures on improvements
in Cuba's once-dismal state-run restaurants.
Proving 'competitive'
"What [private restaurants] have remained are those that have proven
competitive," said Rodriguez, the economics minister.
Hector Higuera, the owner of La Chansonnier, a French palader in Havana's
Vedado district, said he pays $800 to $1,000 in taxes a month on his restaurant
and guest house. He said inspectors have even checked the bar codes on his cans
of soft drinks to see if they match his purchase receipts.
Because the government could revoke his licenses at any time, planning for
business expansion is difficult, he said.
"For instance, I'd like to buy a $1,000 coffee machine but then maybe
we'd be closed and I'd have it just to make coffee for me," he said. "That
can't happen." | 
