Cuba has had an average annual GNI of 2.5% over the past five years. The exception was 2016 when the country experienced a slight decline (- 0.9%) for the first time in 20 years. This was largely due to the continuation of the US economic blockade and economic challenges in their most important partner countries, China and Venezuela.
The reforms launched in 2011 appear to be of a permanent nature. They still depend on several legislative changes, including a constitutional reform. Among other things, paid work in private companies is not allowed in the current constitution, but is regulated in the new working environment law.
In the last five years, the number of government employees has been reduced by around 600,000. This is about 12% of the working population. In total, about 30% work outside the state apparatus. In comparison, the share was only 5% in 1989. The majority work in professions that do not require higher education, including in the service and tourism industries. Self-employed people have always existed in Cuba, but usually in the informal sector. The new law intends to formalize this sector.
The reforms have so far produced fewer results than expected. Several key measures, such as removing the double currency, have still not been implemented. Many Cubans, including government officials, believe that the reform process has been too late and that bureaucracy has too much hindered/restricted it. In an evaluation conducted by the Communist Party in 2016, it is stated that only 21% of the 313 guidelines from 2011 have been implemented.
Access to foreign investment that can reactivate production for both the internal market and exports remains a priority need. A new law aimed at attracting foreign investment and better access to technology, knowledge and capital has been introduced. In 2014, the port and industrial park in Mariel (east of Havana) was completed. It is strategically located and is one of the few ports in the Caribbean with the capacity to accommodate post-Panamax vessels. It thus has the potential to be an important stop on the transport route between Asia and the east coast of the United States. However, the long bureaucratic processes for obtaining approval for investment projects, in combination with the US blockade, have not yet seen the major progress.
Change in demographics and economics
The huge social progress Cuba achieved after the 1959 revolution has also brought about major demographic changes. The country has an aging population similar to developed countries. 20% of the population is over the age of 60, the highest proportion in Latin America, which puts greater pressure on the economically active population
At the same time, the country’s economic structure has changed dramatically. Services currently account for 69% of Cuba’s BN I. Exports of technical and professional services are the country’s most important resource outside the country. Today, there are about 51,000 Cuban doctors and health care providers offering health services in 67 countries, as part of bilateral agreements between countries. However, there has been a decline in the number in recent years, due to the change of government in Brazil and Argentina, as well as the economic downturn in Venezuela. Tourism is the second major source of income, and the industry is growing. In 2016, over four million tourists came to Cuba. Tourism from the United States represented only 6% of visitors. The proportion could have been greater, but limited by travel restrictions in the blockade.
Good social indicators
The economic challenges have not had a clear impact on the social indicators. Pregnancy-related deaths and child mortality are still among the lowest in the entire continent. 97% of the population has access to electricity, and no children live or beg on the street. Cuba also has a higher degree of equality than the rest of the continent in several areas: in 2015, 66% of graduates and 63% of university graduates were women.
Health services and education are still universal and free, but the quality of services has deteriorated in recent years. It has become more common for students to receive extra tuition, which also gives teachers an extra income. In the hospitals, there are now longer waiting lists, much due to the large proportion of doctors and health professionals working outside Cuba. The US economic blockade is hampering infrastructure maintenance on the island, as well as restricting access to equipment and medicines. Housing policy and public transport are also under pressure. The state controls the land property in Cuba, and therefore there are no unregulated settlements and slums like in the rest of Latin America. In contrast, there is little construction, the building stock is decaying and overcrowding is becoming more common, with up to three generations in the same apartment. When it comes to public transport, private providers have grown in urban areas, with high prices. The price of public buses is equivalent to two cents, but the offer is not sufficient. On the same route you can take a private sharing taxi, but at a price of between one and two dollars.
At the beginning of the 1990s, Cuban society was characterized by high equality. However, recent economic reforms and the rise of the private sector have brought with it increased social inequality. Wage disparities in the state have increased dramatically. Retirees and employees in sectors outside the tourism or dollar-driven economy are at a disadvantage, with an average salary of $ 25. Those who work in the export industry, health or tourism industry earn much more. However, it is not entirely fair to compare with other countries, as basic welfare services and cultural services are free or heavily subsidized.
The Cuban workforce is highly educated: 22% have university education. Several are now leaving the state sector precisely because of low wages. Many, especially young people, also do not find job opportunities in the private sector and migrate out of the country.
In the emerging private sector, wage levels can be much higher. The most profitable businesses are concentrated in the larger cities and are related to the tourism industry: cafes, restaurants and accommodation. Among the middle class it is common to rent out part of their apartment. Up to 20 days of rental over a month can earn up to $ 600. Even after tax, you are left with about $ 380, which is 15 times the average salary in the state apparatus.
Both owners and employees of private companies are organized in the same trade union. There is thus a need for the establishment of a Cuban employers’ union, so that the trade union movement has a counterparty with which they can negotiate on several levels. The government has recently recognized that what has long been referred to as “work for its own resources”, is in fact a growing private sector. The emergence of small and medium-sized enterprises has also contributed to an increase in wage differentials, mainly between employers and employees.
An organic and diverse agriculture, with limited food production
Cuba has great potential to increase its own food production due to particularly good natural conditions for agriculture. In 2008, however, they imported about 80% of the food they ate. At the same time, about 50% of arable land was broken. This was due to both lack of investment and manpower, and a steady increase in non-precious soil due to an invasion of foreign plant growth.
Several measures have been implemented. Between 2009 and 2016, more than 280,000 farmers gained access to land on annual targets. Having previously used only 25% of the arable land, cooperatives and small farmers today control 70% of the land. Cooperatives and small farmers have also become less dependent on imported deposit funds, and have expanded the use of means of production that makes food production both more economically and ecologically sustainable. At the same time, government prices for agricultural commodities have improved significantly.
Despite this, total food production has not increased significantly. According to public figures, it has increased 0.9% annually between 2008 and 2016. Still, almost as much food is imported, which costs Cuba about $ 2 million annually.
The ever-strengthening role of cooperatives and small farmers is what can improve the country’s food production. However, it depends on increased subsidies, and the removal of some bureaucratic regulations and intermediaries between producers and consumers.
In recent years, there has been a noticeable cultural change among the Cuban people, and the collective self-image in Cuba has changed. Up to the 1980s, he had an idea that the country’s progress was closely linked to collective welfare and benefits. The government was seen as part of “devotees”, while today they are increasingly referred to as “them”. The rise of the private sector and increased market management are underpinning this trend. The solidarity and patriotic values still weigh heavily, but ideas on individual progress and problem solving are gaining a foothold.
The crisis of the 1990s was seen as a state and economic crisis. With that, an idea has also emerged that it is in the private sector that effective solutions are found.
According to Countryaah.com, it was an achievement that Cuba survived the crisis without extensive structural adjustment measures and without major human costs. But they failed to complement it with a good recovery of the economy. It has provided a basis for liberal and individualistic visions. The deterioration in the quality of education and a certain fatigue of hegemonic discourse also strengthen the foothold of the new visions. The changes are most visible in the younger generation who have not known neither the hard times before the revolution nor the golden years of the revolution Many of those who have had the opportunity to travel and compare themselves with other countries now seem to be focusing on a society that is more open and diverse, without losing the great social victories that Cuba still shows. What is happening in Cuba today is a cultural dispute about a future in education.
Population: 11.18 million (2016)
Life expectancy: 78.7 years (2016)
Infant mortality: 4.5 per 1,000 (2016)
GDP per capita (pp): $ 11,600 (2016)
Religion: Catholicism 85 %
Official languages: Spanish
Currency unit: Cuban peso and convertible peso
Export items: Oil, sugar, nickel, tobacco, fish, medical products and services, citrus fruits and coffee.
Regional relations: Member of ALBA, CELAC, PetroCaribe, OAS (excluded 1962-2009, formally resumed but not currently participating)