• Submitted by: admin
• Business and Economy
• 04 / 14 / 2010

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The Cuban government is getting out of the beauty business. The communist country that acknowledges it has an extra million people on the government payroll has come up with a solution to battle fraud and cut costs: Turn salons over to employees to operate.

Experts say the move is a ``capitalism light'' step toward the kind of economic measures that Cuba hopes will help alleviate its heavy economic burden amid a financial crisis. But the industry affected is so small that experts say it's too little, far too late.

Although Cuba allows self-employment in some sectors, this measure is the first time employees were offered the chance to operate state-run, retail establishments since they were nationalized in 1968. Experts say this government move could lead to others, such as allowing employees to run the restaurants where they work.

The decision, which was not announced by the Cuban state-run media, was first reported by the British news agency Reuters.

Barbers and hair dressers told the agency that they would now rent the space where they work and pay taxes instead of receiving a monthly salary. The people who aren't interested are being transferred to other positions or offered retirement.

``There's a little uncertainty,'' hair dresser Nerelys Martínez told the BBC, adding that they were still waiting for details about their pay. ``I think there are a lot of people who think it's a good idea. They are all for it.''

The action by the government follows a series of other changes to the state economy aimed at reducing government costs, cutting graft and increasing productivity.

Cuban leader Raúl Castro doled out state land to farmers in a quest to get them to increase production, and taxi drivers are allowed to run their business independently.

But the Cuban government still controls more than 90 percent of the economy, which economists say has been in a free-fall since hurricanes wiped out much of its infrastructure in 2008 and a global drop in the price of nickel, one of othe country's largest exports.

Castro took office two years ago amid high expectations that he would make sweeping changes that would help ease the economic strain on the household wallet. But Castro moved decidedly slower than expected, dashing hopes for reform and frustrating the millions of Cubans who earn about $20 a month.

``This is the beginning of Raúl's government beginning to open space to give people the opportunity to make ends meet -- 52 years too late,'' said Cuba expert Andy Gomez, vice provost at the University of Miami and senior fellow at its Institute for Cuban and Cuban American Studies. ``I think it's a Band-Aid on a 12-inch cut that will continue to bleed.''

Antonio Jorge, a professor emeritus of political economy at Florida International University, agrees.

``If you tell me they are increasing the amount of state land given to independent growers or tell me that factories are being turned over to workers, then I could see the significance,'' Jorge said. ``I don't understand the rationale of this. What does it mean in terms of Cuba's labor force? It's beyond me.'' Jorge pointed out that Cuba has an ``erratic history'' on self-employment. Past measures that permitted small business endeavors were often later revoked.

Cuba legalized self-employment in 1993, but the number of licenses issued have been cut drastically over the past decade.

The new measure, which is subject to adjustment and local conditions, sets a monthly fee for each person based on 15 percent of the average revenue generated by haircutting and styling in each area, Reuters reported.

Stylists will be able to charge whatever the market will bear. Many hair dressers do that already -- illegally.

Three years ago, the Cuban press published a rare series documenting the problems in the retail sector, including theft by employees.

Beauty salon managers told the Juventud Rebelde newspaper that they often had to pay for nail polish out of their own pockets because government supplies ran out. It was no wonder, state employees said, that most establishments cheated customers.

If more businesses are in the hands of employees, the government will rid itself of not just the payroll, but of having to supply everything from shampoo to hair dye.

Experts are waiting for more business, such as restaurants, to come next.

``It would not make sense to document all these problems in the retail sector and then only fix hair salons and barber shops,'' said Phil Peters, a Cuba analyst at the Lexington Institute think tank. ``They are deliberately going very slow.

``It's political caution.''

BY FRANCES ROBLES

Source. Miami Herald