Informal Work in Cuba: Attractive Option in Times of Crisis
HAVANA TIMES¡ – Informal employment in Cuba is an underlying reality. Without official figures but clearly evident, it emerges in the country’s labor market among those seeking better income in a context of economic crisis and low wages.
“There are hardly any job options for young people. Legal alternatives for effective work that really pay,” said Amalia, 19, who asked to keep her real name anonymous, to IPS.
The young woman spent her last year juggling her university career with long shifts as a waitress in bars and restaurants, subjected to exploitation due to the lack of a contract, sexual harassment from bosses or clients, and above all, the fear of losing her job.
“You have no job security. They can fire you for anything. And who are you going to complain to? If you don’t like it, pack your bags and find another place that suits your needs. The boss is the almighty lord,” she said.
For the Cuban authorities, informal employment includes those who perform paid activities without a work contract or social security protection, as long as it is legal and can be formalized, said Ariel Fonseca, Director of Employment at the Ministry of Labor and Social Security (MTSS), in a television program on the topic aired in April.
Latin American countries differ on the concept of informality. However, most consider informal workers to be those who are self-employed without legal backing and employers whose businesses are not legally constituted, according to data from the Economic Commission for Latin America and the Caribbean (ECLAC).
An informal worker can face fluctuating income, lack of long-term stability guarantees, limitation of labor rights, exploitation, discrimination, sexual harassment, dismissal in cases of illness or pregnancy; in general, a broad framework of lack of protection.
The phenomenon has been reinforced by the worsening economic crisis in Cuba, rising inflation, and the emergence of the private sector in recent years.
A significant difference between Cuba and some countries in the region is that the pay offered by the informal sector, despite the accompanying inconveniences, is often much higher than those of formal employment.
Especially in the state sector, where two-thirds of the 4.5 million employed people (out of a total population of 11.1 million) work, according to the latest figures from the National Office of Statistics and Information (ONEI).
The average monthly salary in state enterprises is 4,856 pesos, equivalent to about 40 dollars at the official exchange rate of one dollar per 120 pesos, and becomes about 15 dollars on the real life informal foreign exchange market rate.
The minimum monthly wage is 2,100 pesos ($7 dollars on the street), less than the cost in commercial markets of a carton of 30 eggs or would purchase around 10 pounds of rice. The state-subsidized price at ration stores for a few basic items is much lower but the shelves are often bare.
The “Game” of Informal Work
Alejandro Candelaria, 26, has been working informally for five years. Between 2018 and 2020, he worked a regular shift at a state elevator service company, while from 8:00 PM to midnight, he worked as a promoter for the Elegguá bar, handing out promotional flyers to tourists in the historic center of Havana.
“The payment was like a game,” he told IPS. There were two teams, and the one that managed to invite more clients at the end of the day, each of its members earned 17 dollars. The losers, only three dollars. However, Candelaria, sometimes winning and sometimes not, earned ten times more per month than with his job at the elevator company.
Later, Candelaria worked at a small business selling sweets, this time with a contract declaring 44 hours a week, the maximum allowed by law, but in reality, it was from 8:30 AM to midnight, two days on and two days off. “I didn’t even have a lunch break,” he said.
Still, he earned a minimum of 1,000 pesos a day, around $3 dollars.
From there, he moved to a café run by what he described as a “despotic” Italian woman who, at the first mistake by her subordinates, would deduct from their salary (a 10% commission on daily sales, shared among all employees) or simply say “go home” permanently.
The downside of informal status is not only excessive hours or irregular payments but also the objectifying perception of employers towards their “human resources.” Women suffer more from it.
Amalia experienced how bosses mistreated or fired female staff more easily, imposed uniforms that exposed their bodies, and suffered sexual “jokes” from customers.
“Once, the manager told me on the second day of starting: ‘With that short hair, how do they grab you by the hair?’ I felt such shame, such an uncomfortable sensation,” she recalled.
IPS consulted several private retail business owners about their criteria for selecting employees. Most were blunt: they should be young, “good-looking,” have no children, or plans to have them; or even that boyfriends or relatives do not visit them at work.
Without Data, There Will Be No Solutions
There are no precise statistics on informal work in Cuba. Despite this, the MTSS official stated that this phenomenon in the country “does not approach the high levels of informal employment observed in many Latin American countries.”
According to a study by the International Labor Organization (ILO), in mid-2023, the average informal employment rate in the region was 48%. The research sampled 11 countries, not including Cuba.
Few figures from Cuba compare: most informal workers are young, and women represent less than 30%. There is a higher concentration of informality in the agricultural sector and the private sector of the economy, added Fonseca.
On the other hand, approximately 82 out of every 100 caregivers are women, although most do not receive any remuneration for their work because they are family members.
Cuba has seven million people of working age, starting at 17 and going up to 60 for women and 65 for men. However, only 4,590,600 make up the economically active population. The remaining group’s apparent disinterest in formal work with the state companies and institutions can be found in the informal sector.
Fonseca stated that, unlike other countries, many Cubans enter informality voluntarily, as they could legalize their status and contribute to social security.
However, in many cases, employers choose to avoid contracts to evade tax responsibilities or compliance with labor rights.
The challenge for the authorities is to formalize these relationships between employer and employee and mitigate the economic causes that push people into informal work.
By the end of this year, the government plans to update the existing Labor Code to address informal work.
To do this, accurate figures on the problem will be necessary. To this end, ONEI conducted the National Employment Survey in 60,000 households between April and June, which should provide relevant information on the country’s labor landscape.
“Informal employment is a distortion that we are obliged to address; it must be seen locally by the Municipal Administration Councils and social workers in the communities,” Fonseca concluded.