For the first time in decades, Cuba is (slowly) privatizing its economy.
Cuba still has two currencies, which makes its system rather complicated.
The government introduced taxes in 2012, which had not existed in Communist Cuba before.
One of the last great communist bastions in the world, Cuba’s economy remains largely centrally planned. It will be nothing new to expats working in Cuba that most of the country’s industry and the majority of the workforce rest mainly within the government’s purview.
However, as expats working in Cuba will have noticed, since Raúl Castro’s ascension to the premiership, following his brother Fidel Castro's refusal to stand for reelection due to illness, the Cuban economy has leaned further toward the market.
Due to troublesome international relations, including but not limited to the US trade embargo, Cuba’s economy has been in perpetual trouble since the fall of the Soviet Union in 1991, which had once offered Cuba preferable trade conditions. Although Venezuela has stepped up and somewhat filled this void, the country’s political instability has led Cuban officials to once more court Russia and China for foreign investment and increased trade.
Moreover, since the beginning of Raúl’s tenure as President of Cuba, new economic reforms have been underway. In April 2011, the Communist Party signed a package with over 300 measures, taking the country closer to a market-oriented economy.
In addition to this, the 2016 edition of the Cuban Communist Party Congress approved a plan for privatizing small and medium-sized businesses. This new plan will allow private businesses to avoid dealing with the government bureaucracy, which used to maintain inefficient monopolies on exports and imports. Although over 80% of the Cuban workforce was employed by the state only in 2012, increased privatization has seen a steady decline in this percentage. For example, in just three years, the number of self-employed Cubans has more than tripled, from 150,000 to 500,000 as of December 2015. All in all, there are more than two million Cubans employed in the private sector, which constitutes 34% of the country’s total labor force. Furthermore, the government has begun to promote the creation of co-operatives, especially among farmers, with more than 5,500 agricultural cooperatives having been established as of 2015. Expats working in Cuba and tourists visiting the country will also notice the number of privately owned co-operative restaurants popping up around country.
Although the economy had remained relatively stable under Raúl Castro from 2008-2013, seeing an average GDP growth of 2.7%, the year 2014 has seen a marked decline with projections estimating a final growth of 1.4%. However, more cordial relations with the United States helped the Cuban GDP to grow by 4% in 2015. While working in Cuba is an attractive prospect for many, the country still faces a number of challenges restricting steady growth.
Not only is the country still dealing with the collapse of the Soviet bloc, but it also has to contend with falling nickel prices, and the effects of several hurricanes. Moreover, the sugar industry, once Cuba’s main exporter, has come under increasing strain.
Falling prices, heavy rainfall, outdated equipment, rundown mills built more than sixty years ago, and disorganization have all led to the decline of the sugar industry. Now that sugar is not among the country’s top exports, the industry’s failures have put increasing pressure on the government to open the sector to foreign investment. There are, however, some hopes for the industry, with the recent detente between the US and Cuba. In fact, a US American agricultural delegation arrived in 2015 in order to analyze business opportunities and increase the productivity of the sugar canes to return to their previous levels, with the help of Cuban government incentives.
As mentioned above, the government is doing its best to fix the economy and one of its greatest gestures towards this end can be found in its opening of the tourist industry. Moreover, those living and working in Cuba might be surprised to hear that the government plans to unify the currency. In fact, this reform was announced by Fidel Castro in 2014. However, as of 2016, it has not yet been implemented.
The country still maintains two currencies, the national currency, the CUP and the CUC. While the former is the standard currency, the latter was created after the fall of the Soviet Union to shield the country’s communist project from the capitalist market.
Thus, the CUC is a transferable currency mainly used in the tourist industry. However, since it is fixed to the US dollar, the CUC is worth 25 times more than the CUP. To make matters worse, only the CUC is accepted in some places, like parts of Havana, meaning that those who have access to it, such as those with official ties, can lead a more lavish lifestyle than the normal citizen.
Those thinking of working in Cuba should be aware that, while the planned currency reform is an important step in revitalizing the economy, economists have warned that the dual project of devaluing the CUC and revaluing the CUP might shake up the social structure, lead to inflation and result in discontent.
The economic reforms mentioned above are just some of the ongoing reforms in Cuba. Expats will be happy to learn that it is now easier for them to purchase and sell private property, for instance. Unfortunately, for a number of reasons (ideology first and foremost among them), none of these reforms have led to true market liberalization. Instead, there are many restrictions which still keep companies from investing and expats from working in Cuba.
Nevertheless, there are still some job opportunities available for expats who plan on working in Cuba. For instance, you can always find employment in Cuba-based offices of foreign companies or agencies. However, as most of these are joint ventures together with Cuban companies, Cuban applicants are usually treated preferentially.
Within the tourist industry, expats interested in working in Cuba may find employment as tour operators or representatives. You can, however, not expect to be hired as a bartender, entertainer, or cleaning staff. These types of jobs are reserved for Cubans. Many expats with plans on working in Cuba also find employment as freelance writers, photographers, or journalists. However, you should be aware that you need a work permit for this.
Keep in mind that almost all jobs are distributed by the state. Securing a work permit, the prerequisite for working in Cuba, is definitely not easy as Cuban citizens are treated preferentially. For more information on business visas, have a look at our article on moving to Cuba.
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