THIS month staff at four government ministries in Havana had to make new arrangements for lunch. The ministries’ free canteens were shut down and workers given a wage increase of 15 pesos ($0.60) a day in compensation. Since that raises their salaries by more than half in return for losing an often poor-quality lunch, on this occasion Granma, the daily newspaper of the ruling Communist Party, may have got it right when it headlined the news, “Giving, more than taking away”.
Small though the change is, it is of huge symbolic import. It is the first step in a wider, albeit stealthy, abandonment of Fidel Castro’s half-century effort to forge a “new man” in Cuba by limiting individual reward in favour of all-embracing social provision, with the state imposing its choice of consumption as well as of production. Granma said that after the plan was “perfected” some 3.5m Cubans could expect their 24,700 workplace canteens to close too, and would get a similar wage increase.
The government is also organising thousands of public meetings across the island to discuss a wider ten-point plan that proposes an end to the monthly ration of free staples and a host of perks, such as free wedding cakes. Instead, the focus is on creating incentives to work harder by raising wages, and thus productivity.
All this reflects the ideas of Raúl Castro, who after almost half a century as defence minister replaced his elder brother as Cuba’s president last year and who has been much franker in discussing the country’s economic failures. While acknowledging the damage inflicted by hurricanes last year and by the American economic embargo against the island, he has stressed the economy’s inefficiencies. “Nobody, no individual or country, can indefinitely spend more than she or he earns,” he told the National Assembly in August.
Cuba is close to bankruptcy. Foreign businesses have been waiting for months for permission to transfer abroad hundreds of millions of dollars in profits from joint ventures that are sitting in local banks. The government has slashed imports by more than 30% this year, and budgets for state companies and ministries have also been cut. Cuba does not produce enough and its population is ageing. Theft and absenteeism are rife in workplaces across the island.
Raúl has placed trusted military men in charge of economic policy. Their aim is to save foreign exchange and raise output. They reckon that Cubans do not value the true cost of free services. Workplace canteens used some $350m in imported food last year, according to Granma.
On the streets, reaction was mixed. A finance-ministry worker who had brought from home a lunch box of chicken breast and mashed malanga (a starchy root) supported the change. Another grumbled that 15 pesos would buy only a bun and a slice of ham and was no substitute for a hot meal. Menierva, a woman who sells pizzas at her front door next to the ministry on Havana’s Calle Obispo, said that her sales were rising. Cubans grumble, too, that the monthly ration of staples only lasts 10-15 days, and many items are often unavailable. But when it goes, they may miss it.
Raúl is cautiously decentralising the economy, giving state companies more autonomy and leasing idle state land to private farmers. Officials at the Ministry of Economy and Planning are mulling over whether to introduce greater flexibility to other activities, by using co-operatives, say. Some local economists want to encourage family-owned restaurants and takeaway businesses, such as Menierva’s, to fill the lunch gap.
Although Fidel Castro has withdrawn from day-to-day decision-making since an abdominal operation in 2006, big changes still require his consent. He continues to abhor markets. After the collapse of the Soviet Union and its generous subsidies to Cuba, Fidel allowed limited foreign investment and self-employment. When the economy briefly recovered, he cracked down: only 200,000 Cubans now have licences allowing them to run micro-businesses, such as restaurants or hairdressers, down from a peak of 350,000.
The government said state-run restaurants will now provide more lunches. That is a recipe for appalling food and service. Some farmers complain of the state’s continuing monopoly over inputs and sales. Bumper crops of tomatoes and rice were partly wasted because of transport and processing problems.
What nobody is saying publicly is that Raúl is tossing into the dustbin of Cuban history the idea espoused by Ernesto “Che” Guevara, at the start of the revolution that Cuba’s communist economy should be based on “moral incentives”, rather than material ones, and that this process would create a “new man”. Through various zigzags Fidel never wholly relinquished that idea. When opponents criticise Cubans’ derisory wages (averaging $20 per month), officials always point to the additional “social wage” of free housing, health, education, transport and food rations.
Some of this will now go. Raúl, a practical man, has no time for Utopianism. He gives every sign of knowing that if Cuban communism is to survive its founders it will have to supply people with a few more material goods. But he may find it hard to raise wages by much without more radical reform.
Cuban society no longer resembles that of the Soviet days. In real terms wages are still less than 50% of their level of 1989. Meanwhile, remittances from abroad, self-employment, tourism, foreign investment and the informal economy have lifted the incomes of a large group of Cubans. Some local sociologists say that around half the population is doing fine by developing-country standards, whereas the other half is living on the edge of poverty. “Maintaining subsidies and gratuities for all once ensured greater equality, but today they only exacerbate inequality,” a recent report for the Communist Party concluded. That seems to presage a move towards targeted social policy—radical indeed for Cuba.
