Revelations about wages

According to official data, the average wage in Cuba is slowly increasing. Most interesting is the results by territory behind these numbers and the studies undertaken about consumer spending.

Jorge Luis Baños-IPS/jlbimagenes@yahoo.es

The average Cuban worker's monthly wage was 466 pesos in 2012, according to the ONEI.

In the last two decades, wages have unleashed in Cuba multiple tensions in Cubans homes and interpretations, controversies and all types of confusions among economists, sociologists and other doubtful experts. The umbrella of monetary duality and exchange rates rarefies any estimate. Even so, a few days ago the National Office of Statistics and Information (ONEI) risked presenting a report regarding this.

 

According to a study by the Centre for Population and Development Studies of the ONEI, Cubans’ average wage reached 466 pesos at the close of 2012, a moderate growth of 2.4 percent as compared to the previous year (455 pesos), but a bit higher, 20.4 percent, than the 387 pesos earned by an average worker in 2006.

The information specifies that the data only includes the money in Cuban pesos (CUP) earned according to the amount and quality of the work done by each wage earner. It also specifies that it includes the incomes that come out of the entity wage fund, but excludes the incentives in hard currency or in convertible pesos (CUC), a retribution formula to which many sectors resorted, like tourism and industry, for example, to make up for the low wages assigned in the weaker currency.

That first definition does not support the much used conversion of the amount of wage according to the rate in force in the Exchange Desks (CADECA): 1 CUC x 24 CUP. If applied, the average salary would drop to 18.95 convertible pesos. If we add that one CUC is equal to one USD, according to the official Cuban exchange rate, then an average worker would be in a bad way compared to any other country, including the poorest in the world: it would become the equivalent of 18.95 dollars – a sum that the antagonists of the Cuban government cite and recite without foundation.

And how much do the aforementioned retributions parallel to the CUC amount to? It’s difficult to know. Neither is the amount of hard currency remittances sent from abroad by family members known exactly. Data from the Miami-based The Havana Consulting Group (THCG) concluded that the sending of cash in 2012 amounted to 2.605 billion USD, an increase of more than 13 percent as compared to the previous year. But that institution never makes it clear from where it gets such precise figures or how it makes its estimates. In addition to the Western Union, that money gets to the island through not very orthodox means that escape all accounting.

Participants in the usual Annual Seminar on the Cuban Economy and Business Management, organised by the Centre for the Study of the Cuban Economy (CEEC), put in doubt the THCG data. Several experts coincided, however, in placing the total amount between one and two billion dollars, an amount that has an impact on consumption and on the most recent investments of the persons who have undertaken private businesses.

Another factor complicates the simple mathematical conversion of the average wage in CUP into CUC: the State subsidises an important part of what Cuban homes spend in basic foodstuff and expensive services are given free of charge, like health and education. One pound of rice bought in dollars on the world market costs the island’s consumers centavos of the devalued Cuban peso.

Cuban family expenses

But since the ration book does not cover all the needs, consumers have to resort to other markets – agricultural markets, shops selling in hard currency and others -, with bills that are aggressive for pockets with a lower income.

A study of the monthly per capita expenses in Cuban homes with diverse features and incomes, which has been carried out since 2005 by economists Anicia García and Betsy Anaya, both from the CEEC, confirm that food items have “the biggest impact on the total consumption expense.” Persons in Cuba spend between 59 and 74 percent of their income in the purchase of food items, according to that study titled “Gastos básicos de una familia cubana urbana en 2011. Situación de las familias estado-dependientes” (Basic expenses of a Cuban city family in 2011. Situation of the state-dependent families).

Presented at the mentioned Seminar, the study indicates that “even with the increases in wages and pensions put in place in 2005, it was very difficult for the families whose incomes exclusively come from these sources to assimilate expenses that go beyond those considered basic.” As an example of the services to which they did not have access it mentions purchasing household equipment, furniture and fittings, paying private workers for repairs and caring of the elderly to be able to work, among others of which the state sector is in short supply.

“In 2011 that situation worsened as a consequence of the combination of the contraction of rationed goods….with an increase in average wages and pensions that does not compensate for the increase in the cost of living in Cuba,” the study by García and Anaya concludes.

Territorial signals

Despite the ambiguities and confusions derived from the monetary duality system and exchange rate duality prevailing in the Cuban economy, the recent ONEI data contribute some interesting signals.

The province with the highest average wages is far away from the capital: Ciego de Avila, in the centre of the island, with 515 pesos, 10.5 percent more than the national mean, confirming the benefits of having a strong tourist destination to the north – Cayo Coco and Cayo Guillermo -, some industry and one of the few competitive agricultural enclaves beyond the western Havana-Matanzas plains.

The capital (467 pesos) is not far from the national average wage, while the country’s second province in importance, Santiago de Cuba, in 2012 held the lowest place – coinciding with Hurricane Sandy’s lashing – which Guantánamo held a year before, with an average wage of 433 pesos.

Matanzas, another province blessed by tourism – Varadero beach resort – and productive agriculture, ranks second (483), one more confirmation of the paths the Cuban economy has taken and the change of direction the State must make sooner than later to maintain the fiscal and territorial balances. (2013)

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