Growth of private business

New entrepreneurs on the rise in socialist Cuba

Tue, May 24 2011
By Jeff Franks
HAVANA (Reuters) - The salvation of socialism in Cuba is taking some odd turns, with words like "competition," "marketing" and "opportunity" being heard for the first time in decades on the communist-led island.
Under reforms by President Raul Castro, a new entrepreneurial class is developing and with it some new ways of thinking in a country that has long resisted economic change.
The government reported recently that 310,000 Cubans are working legally for themselves, of whom 221,000 have received their licenses for self-employment since last fall, when Castro announced an expansion of the private sector.
The move was part of a broad package of reforms to modernize Cuba's sluggish Soviet-style economy with the goal of saving socialism, installed after the country's 1959 revolution, for future generations.
U.S. President Barack Obama recently dismissed the changes as too small, but on the island 90 miles from the United States many Cubans welcome them and believe they are just the first of many to come.
The reforms are "an opportunity for Cubans, they are a start," said Giselle Nicolas at her new paladar, or private restaurant, La Galeria in Havana's Vedado district.
"I think Cuba is already changing for the better," she said.
In Havana and elsewhere, there is no question the economic landscape is changing.
People are setting up shop in doorways and on sidewalks, selling a variety of items ranging from food to household goods and offering repairs on shoes, cell phones and watches.
They are giving haircuts on their front porches and walking through neighborhoods hawking flowers, pastries and farm products. State-run press reported this week there are now 1,000 independent retailers of construction materials.
The Council of Ministers recently expressed concern about the number of vendors clogging sidewalks and taking away from the beauty of Cuba's historic architecture. They may have to move off main streets and into rented spaces now occupied by moribund state-run businesses, it said.
PALADAR BOOM
The government said 49,000, or 22 percent, of the new self-employment licenses have gone to food vendors, which has touched off a boom in the number of paladares and growing competition among them.
Alejandro Robaina, owner of La Casa, one of Havana's oldest paladares, said the newly crowded market makes it necessary to offer new services and do as much marketing as possible in a country where traditional advertising is almost non-existent.
Since January, he has opened a website for his restaurant (restaurantelacasacuba.com), a blog and a Facebook account to reach out to the privileged few in Cuba with Internet access and to international visitors.
He gives regular customers a discount on their meals and is offering Cuban cooking classes to foreign tourists.
On the blog, he has a photo at La Casa of him, his mother, Led Zeppelin guitarist Jimmy Page and British actor Clive Owen.
Other paladares are offering 24-hour service, home delivery and frequent-diner plans -- once you've had $1,000 worth of meals, you get a free one worth $100.
"You always have to be one step ahead so the competition doesn't catch up to you," Robaina said. "Let the competition come."
Castro's reforms also aim to infuse new thinking in state-run enterprises.
The government recently took foreign journalists to state-owned plants and agricultural operations in central Ciego de Avila province where workers were paid based on production, not the usual state-set salary given to all whether they worked or not.
Most said they earned double or triple the country's average monthly salary equivalent to $20 and were pleased about it.
"I'm working six days a week, but I am very happy," said one female worker as she cleaned a recently harvested red cabbage.
"The key thing is that the one who works hard gets the benefits," said Jorge Felix Martin Iglesias, overseer of agricultural production for the provincial Communist Party.
STILL COMMUNIST
If all this smacks vaguely of capitalism, there are reminders that Cuba is still communist.
Nelson Blanco, chief executive of a large state-run farming and food processing operation, said his monthly pay was equivalent to about $40, which was less than most of his workers. It was only fair, he explained.
"The worker that does the most physical labor, the most work, is the one that earns most ... the one that's on the land under the sun with his hoe," Blanco said. "I am very much in agreement."
Cuba's malaise is tied in part to state domination of all aspects of the economy, so Castro hopes greater emphasis on private initiative will increase productivity and prosperity.
Castro has said it planned to hand out 250,000 self-employment licenses, but as that number quickly approaches it looks likely to go beyond it. Castro wants to cut 1 million workers, or 20 percent of the workforce, from government payrolls and needs something for them to do.
Whether his reforms will be sufficient to keep socialism afloat is unknown but a Cuban psychologist who asked not to be identified said they had had a positive effect on the population.
"People were dead before," he said. "Now at least they are thinking, trying to come up with ideas for businesses, even if they are small ones."
Government opponents complain that bigger economic changes are needed, along with political reform away from the one-party state now in place.
But there has been little talk of the latter by Cuban leaders and, according to Richard, a newly licensed shoe repairman, no need for it.
"The Cuban cares about partying, dressing well and enjoying life," he said as he worked on a pair of women's shoes. "The Cuban doesn't care about politics or things like freedom of the press."
(Editing by Jane Sutton and Cynthia Osterman)

http://www.reuters.com/article/2011/05/24/us-cuba-reform-entrepreneurs-idUSTRE74N6NL20110524