Cuban Economic Problems Essay
MAIN PROBLEMS FACED BY THE CUBAN ECONOMY AND
WHAT THE GOVERNMENT IS DOING TO TRY TO SOLVE THEM
Joaquín P. Pujol
For quite some time the Cuban economy has been facing a number of economic problems. There has been minimal recovery from the near 80% collapse in the population’s real income levels since the suspension of the subsidies provided by the Soviet
Union in 1989; in fact, the official wage rate remains at about 25% of its 1989 level (See Figure 1).
Figure 1. Cuba: Real Inflation-Adjusted
Wages, 1989–2009 (Pesos,
Moneda Nacional)
Source: Pavel Vidal Alejandro, “Política Monetaria y Doble Moneda,” in Omar Everleny Pérez, et. al, Miradas a la Economía Cubana, La Habana: Editorial Caminos, 2009, p. 35.
For most of this period, economic …show more content…
Cuban official statistics report a very low level of open unemployment. According to official figures, unemployment in 2010 was 1.7% and it has not risen above 3% in the last eight years.1 But this ignores the thousands of Cubans who are not looking for jobs because they find the monthly salaries that the government pays—worth only US$20 a month on average—not attractive, and prefer to seek alternative illegal ways to earn a living. The pay government workers receive is so low that Cubans joke that “the state pretends to pay us and we pretend to work.”
Substantial portions of the goods and services produced are pilfered and distributed through the ubiquitous underground economy for resale or personal use. Thus, the revenues of State enterprises seem seldom to permit higher wage and salary payments. If more is produced, it leaks out of the official economy. In fact, many individuals want to maintain their jobs with the State companies, despite the low pay, because that gives them the opportunity to appropriate goods available at the company (whether
WHAT THE GOVERNMENT IS DOING TO TRY TO SOLVE THEM
Joaquín P. Pujol
For quite some time the Cuban economy has been facing a number of economic problems. There has been minimal recovery from the near 80% collapse in the population’s real income levels since the suspension of the subsidies provided by the Soviet
Union in 1989; in fact, the official wage rate remains at about 25% of its 1989 level (See Figure 1).
Figure 1. Cuba: Real Inflation-Adjusted
Wages, 1989–2009 (Pesos,
Moneda Nacional)
Source: Pavel Vidal Alejandro, “Política Monetaria y Doble Moneda,” in Omar Everleny Pérez, et. al, Miradas a la Economía Cubana, La Habana: Editorial Caminos, 2009, p. 35.
For most of this period, economic …show more content…
Cuban official statistics report a very low level of open unemployment. According to official figures, unemployment in 2010 was 1.7% and it has not risen above 3% in the last eight years.1 But this ignores the thousands of Cubans who are not looking for jobs because they find the monthly salaries that the government pays—worth only US$20 a month on average—not attractive, and prefer to seek alternative illegal ways to earn a living. The pay government workers receive is so low that Cubans joke that “the state pretends to pay us and we pretend to work.”
Substantial portions of the goods and services produced are pilfered and distributed through the ubiquitous underground economy for resale or personal use. Thus, the revenues of State enterprises seem seldom to permit higher wage and salary payments. If more is produced, it leaks out of the official economy. In fact, many individuals want to maintain their jobs with the State companies, despite the low pay, because that gives them the opportunity to appropriate goods available at the company (whether