Private entrepreneurs, in a legal limbo
The private SMB sector is one of strategic importance to the country's socio-economic development, claimed Esteban Lazo, President of the National Assembly of People's Power, at the body's meeting held on December 30.
Lazo said: "You have to see them as part of the country's development, and if through these modalities we are able to achieve higher-quality services, we will gain a competitiveness that will allow the municipalities to directly advance."
This is not, however, the policy of the Government, which does not seem interested in the expansion and consolidation of the country's private sector.
The Minister of Economy and Planning, Marino Murillo Jorge, addressing the deputies at the National Assembly in December 2013, was clear enough when he said that the Government's policy is aimed at creating Non-Agricultural Cooperatives (CNA) and slowing the growth, through higher taxes, of SMBs in order to prevent the consolidation of a wealthy and influential middle class.
These guidelines have remained consistent over the past two years.
At the close of 2015 the Ministry of Labour and Social Security reported that 496,400 people had licenses to do business in the private sector. At the end of May, for various reasons, licenses were taken from 7.213 people of the 504.613 who were authorised to operate in the private sector.
As stated by the Minister of Economy and Planning, the Government's priority is for people to be associated with the CNAs, rather than to be engaged in private economic activities. Therefore, he explained, the cooperatives would have priority access to the wholesale market and a reduced tax rate, not available to those licensed to conduct private business.
When the Decree/Law that authorised the creation of the 498 CNAs went into effect, the procedure employed was that of a notarial deed which grants them their own legal personality. After being constituted they are recorded at the Commercial Registry, the administrative institution charged with officially listing the entrepreneurs registered.
For those who are authorised to operate in the private sector, legally their rules are totally different from those governing the CNAs.
Ministry of Labour and Social Security (MLSS) Resolution 42, of 26 September, 2013 authorises the performance of only 1 of the 201 authorised activities, pending a license to perform the work.
In the cases of owners of cafes, pizzerias and restaurants, the activities authorised via Resolution 42 do not include small business owners. Activities 35, 36,37, 38 and 39 refer to the preparation of food and drink that can be sold at a fixed location, a home, or at mobile stands.
Activity 166, referring to renters of homes, rooms and spaces that are part of a home, does not include an authorisation to use them as hostels.
Activities 188, 189, 190, 193, 195, 198, 199, relating to the transportation of cargo and passengers, authorises licenses for the use of trucks, vans, cars, jeeps, tricycles, horse-pulled carriages, and the celebrated pedicabs. But it happens that in the case of the rental of cars, trucks, cars and pedicabs, 90% of those who work as drivers are not the owners of these vehicles, but rather are contracted workers.
Activity 145 authorises hiring for any activity, in which employees perform the activities assigned them.
In 2015, of the 496.400 persons with licenses, 114.000 were contracted workers, representing 22% of the total. These people work at cafes, pizzerias, restaurants, and pensions, and as the drivers of cars and pedicabs.
Many people seek employment in SMBs and avoid state companies like the plague, due to the miserable wages they pay.
In an article by the journalist Lissett Izquierdo Ferrer, published in the newspaper Granma on January 20, it was reported that in Havana 8.000 houses have been cleared to rent rooms. And the tourism promotion bureaus include 100 of them amongst the accommodations offered domestic and foreign tourists.
In the tourism-oriented areas of Trinidad, Varadero and Cienfuegos, there are 161 hostels. In Viñales and Baracoa most visitors opt for private hostels and restaurants because those owned by the State cannot accommodate the large volume of tourists.
To appreciate the importance of the private sector in tourism in Cuba, Minister, Manuel Marrero, in the newspaper Juventud Rebelde, on April 22, 2015 described "non-State tourism" as enjoying a "magnificent" period.
According to the official the private sector dedicated to this area was on the rise.
The hostels operating in Cuba offer a total of 8,000 rooms for rental to tourists, which represents 13% of the 60.000 rooms making up the total hotel capacity managed by the State.
To the accommodation capacity of private entrepreneurs must be added 1.600 private restaurants, which, with their more personalised offerings pose stiff competition to the buffet tables at hotels and the State's chain of “Palmares” restaurants.
The owners of these private establishments, which furnish the Tourism industry with efficient service, perform their activity in a setting rife with illegalities, because they are natural and not legal persons whose activities are authorised by a license that the state can rescind whenever it wants. They are also not entitled to the wholesale market, to have hired workers, and other privileges enjoyed by State enterprises and cooperatives.
The journalist Manuel Valdés Paz, with the weekly Trabajadores, in his article "Los cuentapropistas muestran credenciales" (The self employed show their credentials), published on 18 January, cites Carlos Escalona Serrano, the owner of the restaurant bar and grill San José 1930, located in the city of Holguín. At his establishment, opened to the public on October 30, 2012, work nine contracted employees. In response to complaints about the high prices of the dishes they offer, Escalona explains that are due to the absence of a wholesale market, heavy taxes, and the expenses he incurs.
Carlos Escalona stated an obvious truth: "We are retail resellers."