Self-employment continues to fall in Cuba, but economy improves

Self-employment continues to fall in Cuba, but economy improves
4.37 p.m. ET (2037 GMT) April 16, 1998

By John Rice, Associated Press

MEXICO CITY (AP) --- Cuba's small private sector became a little bit smaller early this year, but figures released Thursday indicate that state companies may be doing better than officials had expected.

The Cuban government's Prensa Latina news agency reported there were 155,538 self-employed workers licensed by the state in February.

That's about 50,000 fewer than were licensed at the peak in April 1996 and about 5,000 fewer than at the end of 1997.

The government ended a ban on nearly all private employment in September 1993 to help combat an economic crisis that had idled hundreds of thousands of state workers.

Many Cubans opened small restaurants, drove taxis, guarded bicycles or set up repair stands in their front yards and living rooms to take advantage of the opening.

But the government began imposing stiff taxes on such concerns in 1996, driving many out of business.

Prensa Latina, monitored here, reported that Finance Ministry officials have taken measures to soften the blow with new regulations that let taxpayers appeal fines and sanctions such as seizure of goods from those accused of violating the tax laws.

A total of 157 types of small businesses are now permitted, but only family members are allowed to work at them and self-employed workers often must show proof that their raw materials were purchased honestly, not stolen from state supplies.

Prensa Latina said food sales is the most popular sector among self-employed workers, with private restaurants, known as paladars, taking in an average of 106,400 pesos a year --- about $5,300 at the free-market exchange rate.

It said a recent study found that a few well-located paladars can gross 500,000 pesos a year --- about $25,000 --- despite a legal limit of 12 seats and little advertising other than word of mouth.

The average monthly wage at state jobs is about 215 pesos --- about $11.

The Cuban agency said officials believe that many of the private businesses fail to declare all of their income and sometimes illegally employ outside workers.

The success of a few in the sector also has led to public resentment at a relatively wealthy class of people in a society long accustomed to treasure equality.