Friday, September 17, 2010

Reform in Cuba Towards a mixed economy

September 16, 2010

Ever since Raúl Castro took the reins of power in Cuba in 2006, he has seemed to hint that he wants to reform the island’s moribund centrally planned economy. But the changes he has introduced have been either limited or almost inconsequential, such as giving more freedom to farmers, allowing self-employment for barbers and letting Cubans have (unaffordable) mobile phones. Until now. On September 13th the government announced, through the mouth of the official trade-union confederation, that more than 1m people—a fifth of the workforce—will be made redundant from state jobs, half of them by April 1st 2011.

Some of the unemployed will be offered new government jobs, including in the police and tourism. But hundreds of thousands will be expected to fend for themselves. To help them, self-employment is to be legalised in dozens of areas, from transport to construction. The reforms will also allow many small state-owned businesses to become co-operatives, run by their employees. They will have to pay taxes, though how much has not yet been spelled out.