Pay Raise Joy in Cuba Amid Tense Economic Times

The average monthly wage of employees in Cuba’s public sector will increase from 643 to 1067 pesos (approx. $26 to 43 USD), amid a complex economic situation which is the result of both national problems and shortages and the US tightening down on its economic embargo of the island.

By IPS Cuba

Recently announced by President Diaz-Canel and other high-ranking members of the Cuban government, overall pay-rises in the public sector have become a mandatory subject of any conversation in Cuba. Photo: Jorge Luis Banos IPS

HAVANA TIMES – Cuba is experiencing a climate of growing tension as August draws near. Nearly half a million employees are waiting (somewhere between excited and anxiously) for the day they receive their pay-checks for July. They are waiting for the first benefit of a spectacular pay-rise that the government announced last month for the public sector.

This understandable enthusiasm goes hand-in-hand with the anxiety of knowing how much of a pay-rise they will receive, implying an overall 66% increase of average monthly wages for public sector employees: from 643 pesos (24 USD) which had been maintained since 2017, to 1067 pesos (43 USD). A third of the country’s total workforce belongs to this sector and 48% of employees work in the state sector.

Why this move? The government is trying to start the rearrangement process of a deformed wage distribution model, which academics and society have described as an “inverted pyramid”. Employees with higher qualifications and a greater contribution to society, were the least paid in lots of cases.

This included teachers and university professors, doctors and health professionals, accountants, employees in public administration, the justice system, culture and the press, who will now receive the greatest pay-rises when they get their July paycheck through.

In one of the many speeches the Cuban president gave to explain this move, Miguel Diaz-Canel said “we will now have a minimum monthly wage of 400 pesos (16 USD) in the public sector, and a maximum of 3000 (120 USD), which will allow us to improve this pyramid which is inverted when it comes to wages.”

The pay hike implies an annual outlay of 7.05 billion pesos, as well as another 700 million for an overall increase of pensions (much less in comparison) for over 1.2 million people who are protected by social security.

In order to uphold this investment, the minister of Finance and Prices, Meisi Bolanos, announced that funds that hadn’t been made in certain State Budget programs would be used, without increasing the fiscal deficit or putting public services at risk. At the same time, she asked for every government body and organization to contribute towards saving and spending projected revenue efficiently. However, she hasn’t given any further details.

The hasty mission to reprogram every paycheck in the public sector and at every government body has also been the cause for huge tension not only in accounting departments, because the Government insisted on this measure being implemented in August, after it made its surprise announcement on June 27th.

In the meantime, the decision has put Ministry of Labor and Social Security employees, as well as every other ministry involved in coming up with these pay-rises, under a great deal of pressure with the long list of employees in the country’s diverse and multi-faceted public sector.

US sanctions on oil shipping companies and ships who dare to transport Venezuelan oil to Cuba have spiked tensions in the country’s fuel supply and problems in electricity generation. Photo: Taken from Cibercuba.

President Miguel Diaz-Canel and the highest economic bodies gave some examples of new wages, when the general measure was announced. The wages of university professors, doctors, journalists and justice system employees have even tripled. However, pay-rises for most positions have been redefined and announced for each sector, over this month of July.

The adjustment has also come in the middle of an especially critical moment for the national economy. The US government has repeated, time and time again, its explicit objective to further block the Cuban economy. The effects can be seen. The Cuban Ministry of Tourism has forecast a 10% drop in the number of foreign visitors to the island, a hard blow for an economy that heavily depends on its tourism industry. Washington is also on the heels of and sanctioning any oil ship that dares to carry black gold from Venezuela to Cuba. The domestic effects can be felt at empty gas stations, or at long lines for buses, and less electricity generation, which the government has precisely focused on the public economy, in order to protect the residential and business sector.

Such pressure is boiling in a pot of marked instability in food supplies and other essential items between late 2018 and the first half of 2019. Fears of a new Special Period breaking out have appeared on the street and social media.

This unstable economic landscape hasn’t stopped the government from taking a step that will increase pressure on the retail sector in August. Foreseeing this, Diaz-Canel himself announced measures to prevent inflationary pressure, including surveillance warnings for private businesses.

The overall pay increase in the public sector accompanies other measures in the finance, business and trade sector, announced by the authorities at the same time, which might speed up in the short-term and make the economic reforms the Cuban government outlined as the “Actualization of Cuba’s economic and social model”, even more tense too.

14 thoughts on “Pay Raise Joy in Cuba Amid Tense Economic Times

  • August 8, 2019 at 11:56 pm

    Cuba can (and does) trade all it wants with Spain, Japan, Argentina, Mexico, Canada, and the EU. Yet the largely symbolic and failed embargo imposed by JFK in 1962 still remains the mainstay excuse given by the castristas for all their failings.

  • August 4, 2019 at 6:09 pm

    If you think Nelson that the US embargo is the cause of all the sins, errors, incompetence and mismanagement of the Castro communist dictatorship, you have a ripe imagination. Cuba can never prosper by adhering to the antiquated 19th century philosophy of Marx and Engles, as interpreted by Lenin, practiced by Stalin and adopted by the Castroi brothers following Raul’s visit to the USSR in April, 1953 and introduction to the KGB. That has nothing to do with the US!
    I will lay 5 to 1 that you have never read the US Cuban Democracy Act. If so, please describe the listed
    purposes of the Act with which you disagree? It is obvious that the Act failed in its purpose and ought after some years to have been replaced by a change of policy, but the purpose of introducing electoral democracy, freedom of speech and open media remain good – unless of course you care naught for Cubans having similar opportunities to those which you evidently enjoy?
    Cuba can only prosper by adoption of capitalism. Both China and Vietnam would agree with that!

  • August 4, 2019 at 6:46 am

    How long would it be until everybody sees the suffering of a nation caused by another nation, and do not do anything about it?…lift the criminally minded embargo now and Cuba will prosper!

  • August 4, 2019 at 2:38 am

    Yes, but Fidel and Che are now dead too, yet everybody is still listening to what they say! LOL

  • August 4, 2019 at 2:34 am

    WOW! A new wage scale in Cuba of from 400 through 3000 pesos!

    Fidel only made 100 pesos monthly, which was supposedly the highest salary in Cuba in his day! lol

  • August 4, 2019 at 2:31 am

    Yes, but what is there to buy with the non-convertible version of the peso, which is what I assume is the only currency the masses will have access to?

  • August 3, 2019 at 6:59 pm

    Pigs might fly Thomas !

  • August 2, 2019 at 7:35 pm

    Think of the benefits that could accrue if Cuba were to negotiate a deal with the U.S. where Cuba publicly breaks with the current regime in Venezuela. Cuba might take an short term economic hit by severing what ties are left with Caracas, knowing they could be rebuilt under a different administration.

  • August 1, 2019 at 2:19 pm

    I liked your comment Bob about accountants.
    Many years ago I commented in response to an accountant who claimed that his profession was “The essence of good management”, that I could not agree as:
    “A manager is a surgeon,
    An accountant is a pathologist.”
    It was heard by a newspaper owner – who gave me an embossed copy to hang on my office wall.

  • August 1, 2019 at 10:19 am

    The total of all goods and services available for consumption by the Cuban people is unimpacted by raising salaries. Having more money means nothing if there is no more to buy. The result can only be inflation. The Cuban government can establish price controls but that only means shortages when supplies run out.

    If prosperity could be created by pen and paper, accountants would rule the world.

    Cuba only needs to look at Venezuela to see this concept only provides short term hope until the laws of economics come into play.

  • July 31, 2019 at 4:42 pm

    Manuel E.G.,
    ‘The proof of the pudding is in the eating…..’
    This phrase predates George H.W. Bush, his dumbf**k namesake son or his very dubious Pappy (who make a tidy sum working for Nazi Germany) by several centuries……
    However, a payrise is a payrise.
    We shall see……..

  • July 31, 2019 at 2:14 pm

    Since when was there “an increase in the quality of life” in Cuba Kevin Corcoran? Bet you can’t even say when the Poder Popular last discussed improving the quality of life for Cubans? Bolivar like Marx. has been dead for a long time and so is unable to express a view. Viva Cuba libre!

  • July 31, 2019 at 8:31 am

    ” The proof will be evident in the pudding.” George Bush Sr. US President.

  • July 30, 2019 at 7:47 pm

    Well done comrades!! An increase in the quality of life is an investment we can all be very happy about!! Viva Simon Bolivar!!

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