Government reports private businesses slowly growing

Government reports private businesses slowly growing
Ray Sanchez | Direct from Havana
7:38 AM EDT, March 27, 2008
Havana, Cuba

A new report by Cuba's National Office of Statistics estimated that the
cost of goods and services purchased from private sources rose 4 percent
in the last year.

The report, titled "Survey of Prices in the Informal Sector," represents
an unusual admission by the state of the role played by a private sector
that occupies about three percent of the Cuban labor force.

The report defines the informal market as the sale of goods and services
from sources outside the state, including sales at farmers markets and
by licensed entrepreneurs. It also includes the thriving black market
trade and the sale of goods such as food and medicine stolen or legally
obtained from the state and then resold.

The creation of an informal sector was among the measures that helped
Cuba survive the economic crisis brought by the collapse of the Soviet
block in the early 1990s. Self-employment, however, became less
necessary as the island's economy recovered in recent years.
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The government subsidizes many goods and services such as education,
health care, housing, public transportation, utilities and monthly food
rations that include five pounds of rice per person, cooking oil, beans,
chicken, sugar, soap and toothpaste.

Still, many Cubans – who earn the equivalent of about $20 a month – are
forced to rely on private sources, both legal and illegal, for other
goods and services that come at heftier prices. This vast informal
economy is greased by remittances from abroad, which are estimated at
between $500 million and $1 billion a year.

The government report said the goods and services most frequently
obtained from the private sector were rice, pizzas, eggs, pork,
manicures, cooking oil, lard, and the exchange of Cuban pesos earned by
state workers for convertible pesos needed to shop in hard currency stores.

In late 2006, a report on the informal sector by the Lexington
Institute, a think tank outside Washington, called the labor force a
significant alternative to state employment.

"Even as they operate under policies that reflect the state's discomfort
with the concept of private enterprise, they pay taxes and earn
higher-than-average incomes," it said. "For Cuba's future, this
entrepreneurial sector is significant as a potential starting point for
new policies, if Cuba's government were to decide once again to use
market mechanisms to generate jobs and growth."

http://www.sun-sentinel.com/news/local/cuba/sfl-0327havanadaily,0,3045972.column