How Poor is Cuba?
The image above was being tossed around the internet a few days ago. It basically states that the average wage in Cuba works out to about 5 cents per hour. I have received a few emails from readers asking me if Cuba is really this poor? If the average citizen really makes this little money per hour and per month? And how it is even possible for anybody in the world to survive on a salary this low? In this short article, I will explain how the Cuban work environment functions and what the true wages are, when accounting for government subsidies.
Average Cuban Salary
It has been stated many times from international government sources and from NGO’s worldwide that the average Cuban salary equates to only about $20 per month. Starting with this figure, we can work out, that based on a worker working 9 hours per day, 5 days per week and 4 weeks per month, (total 180 hours), that the average hourly salary is about 11 cents per hour. Now, this takes into account many assumptions which may or may not be correct. It is likely that if you are only earning 11 cents per hour, then you are probably not really working hard for 9 hours per day. I would say that the average work day is closer to about 7 hours. So, already, simply making some simple assumptions and using internationally recognized wage figures for Cuba, we arrive at an average hourly wage of about 12 to 15 cents per hour. This is much higher than the figure shown in the graphic above.
Further to that, I can say that with the recent government programs to stimulate private business and limit government intervention in the workforce, I believe that the average wage in Cuba is slightly higher than the $20 per month figure. I would peg it as being closer to $30 per month. It’s not a huge difference in nominal terms, but it is significant. From this, we get to an approximate hourly wage of more than 20 cents per hour.
Government Subsidies
Despite the average wage in Cuba looking like it is extremely low by western standards, we must now factor in the actual cost of living in Cuba. As most people know, Cuba does not have a capitalist economic system. The fact is that the country is communist/socialist, meaning that most workers work for the state and they receive low monetary salaries, but the state provides for them in different ways. We can take a look at some of these economic subsidies to see how they influence buying power for the average Cuban.
- Cubans get free food allowances and are allowed to purchase additional rations of staple foods at cost price from government run bodegas and depots.
- Cuban utility bills are all highly subsidized. The monthly phone, electricity, and gaz bill is only about $2, which is basically nothing when compared to western bills.
- All medical coverage is provided free by the government.
- Gasoline is sold as subsidized costs.
- Education is completely free, even for older people wanting to return to school just for a few classes.
- Beer, alcohol, food is all sold by the state at cost or near cost.
- Rental rates for properties are controlled and most Cubans own their own homes.
- Property taxes and goods and service taxes are zero.
Conclusion
Bottom line, Cuba is not nearly as poor as you think. It has large, developed cities. The population in general is happy with their lives and the economic system. This would not be the case is there was rampant starvation and economic unrest. It is not enough to simple dismiss the lack of upheaval as being attributed to a communist hard line regime which would crack down on opposition. History has shown that opposition to the government has been low since the Cuban revolution and even when there was dissent, the government was not particularly harsh and actual jail time is low. Things were generally worked out peacefully. If the Cuban government was really simply a dictatorship, it would not still be around and thriving after 60 years of reform.
And in Cuba, it’s not all about money. We can look at some of the other benefits that the average Cuban enjoys. The World Health Organization rates Cuba’s water quality as among the best in the world and ranks its citizens nutrition levels, health and life expectancy as among the best. Despite the average Cuban salary being about $30 per month, it is just enough for the average person to cover all their expenses and to enjoy a few outings with their friends once a month. The lifestyle is not that different from the average westerner. There are less comforts and fewer high end products (no large screen TVs or deluxe computers), but overall, Cubans are far better off than some of the poor African countries where people starve to death daily.
Do you want to learn even more about Cuba?
The Real Havana guide describes the average life in Cuba and Havana in full detail.
You can download a free copy of the Havana Tips and Tricks guidebook for a great preview of all the interesting topics.
I love Cuba!
Cubans don’t get free food allowances. They have to pay for the rations then go to the store for other items the government doesn’t provide.
At the bodega, the food is priced at heavily subsidized prices. At the panadería, a Cuban can get a bread roll for 5 cents Moneda Nacional. To give you an idea, this would be equal to $0.002 dollars USD. So, you can get 5 of them for 1 American penny. Is it free? Not exactly, but practically. After you surpass the limit indicated in the Libreta (the ration booklet), you can buy other goods at a Venta Libre depot. The prices are marginally higher, but you can buy in unlimited quantities. To give you an idea, eggs cost about 1.50 MN. That’s 6 cents USD each. At the bodega you can get your ration for 0.15 MN each, so, still less than 1 penny per egg. Either way, you are definitely not getting ripped off if you get food from a bodega or venta libre depot.
Uhm, really? What about the fact that you get paid in national currency and have to pay CUC for anything?
The salary figures are in CUC. The average wage is about 20 to 30 cuc per month. This would equal to about 480 to 720 MN per month. Goods can be purchased in MN or CUC, and with the starting of the unification of the currency, prices have started to be equalized over the 2 currencies and many stores accept payment in either currency already. Further to that, everything you need to live is priced in MN. The CUC currency is reserved for hard goods like televisions, computers, cell phones, appliances. You can buy all your food and most other Cuban made products in MN, and most people do.
Can a foreigner also benefit from this low costs?
For sure. Just look on my website for great tips on experiencing Cuba like a local and check out the Real Havana guidebook, which is filled with info on how to live in Havana cheaply, like a regular Cuban.
is the 30$ a month usd or cuban pesos?
It’s the equivalent of 30$ USD, which would be 30cuc per month in Cuban pesos.
“The population in general is happy with their lives and the economic system” and “The lifestyle is not that different from the average westerner”.- I have been to Cuba many times and stayed with Cuban families, and this is definitely NOT the case…..they are unable to buy many items that we would consider essential to every day life. It’s true they don’t starve to death but the standard of living, especially for those without access to tourists who pay in CUC, is extremely low by our standards. Nearly all young Cubans would chose to leave the country and work abroad if they could.
Hi Rebecca. Thank you for your comment.
I have lived in Cuba for quite a while. I still spend several months out of the year there. I studied the country a lot before going my first time. I was really surprised when I arrived, because everything looked so normal. When I first heard that the average salary was only $20 per month, I thought that there would be so much poverty that people would be starving in the streets. I learned a lot on that visit. I made some great friends and they really changed my perception.
Basically, in every country in the world, there are poor people. Starving people. People who fall through the cracks and are ignored by society. I live a lot of the year in Canada, a very rich country, and I see people begging on cold street corners every day. In America, the homeless population is estimated to be over 600 000, with almost 400 000 of those living in emergency shelters or similar. I read a study that said 15 million children in America live in food insecure households. Staggering numbers. And that’s in the richest country in the world.
My best friend in Cuba lives in La Lisa. That’s a distant suburb of Havana. She’s 26 years old. She lives, with her two parents, in a house that is about 500 sq.ft large (46 sq meters). They all share the same bedroom. It’s not ideal… Her father is an insurance estimator and makes 16$ per month. Her mother works at a school and probably makes about the same. My friend works as a secretary and makes $22 per month.
It took time for my friend to tell me all these details. She was hesitant at first. But she explained to me how her life is.
The family has a washing machine in their house. A color television (and a black and white one). A laptop and a PC. They have an air conditioner in the bedroom, but they only recently got it. My friend also has a cell phone. Obviously, they are not rich, but they have many basic things that you would not expect a “poor” person to have. She can go out for drinks and dancing about 2 times per month. Her father prefers to relax by staying home with a bottle of rum. They watch television, chat with friends. They have a nice, modern collection of clothes. The mother loves collecting handbags. Nothing expensive, but nice, Cuban crafted ones.
I have since met hundreds more people who are in the exact same situation as my friend. I ask them if they wish they had more money. Of course, the answer is always, YES! But I think anybody in any country would always answer yes to that kind of question. I asked these same people if they had enough money. Most of the people said YES. I was surprised, but they explained that they did not want to be greedy and they had enough to be happy. Maybe that surprised me more. I asked what they would do with more money. The top answer, by a huge margin, was “Travel.” I asked them if they intended to “travel” and then seek exile. No… they just wanted to travel and see other countries, like France (top answer) and Europe in general, and Egypt… They didn’t mind living in Cuba, they just wished they could make enough money to visit other countries from time to time too.
I know that the common perception is that Cubans must not be happy with their situation and everybody wants to leave the island. I learned that the opposite is actually true. I will post a few interviews that I did. With Cubans. I ask them about the stereotypes and the perceptions. Of course, there are people who are unhappy in Cuba. People who are poor. Probably even people who go to bed hungry. But is it the majority? No. It’s a vocal minority. And if you look at every other major country in the world, you will see this same vocal minority. If you turn on the American news for 5 minutes, it will give you the impression that the USA is descending into a blood bath of anarchy and Europe has been bankrupted back to the middle ages. People have a way of exaggerating things in order to push their point of view.
And just to add. I know so many people in Canada who have moved abroad because of the “poor job opportunities” in Canada. I meet Europeans in Montreal every day who are trying to immigrate here because they say the economy in Europe is finished. I hear Americans complaining all the time about the degrading culture in American and how they have no choice but to leave. And how many people in China and Asia aspire to leave those places to start a new life in Europe or North America. Honestly, I think it is human nature to have a burning desire to leave the country you were born in. Maybe somebody else can explain it.
In the end, I’m not totally disagreeing with you. There are many unhappy people in Cuba. I’m just saying that there is a huge other side to this story.
This rings true… Thanks Mario
Mario. Why to star with how many homeless in Canada and US? These people often drug addicts, drop outs and choose that life. Still, they don’t starve and exist food stamps and other government help. Your friends in Cuba educated and work full time, yet they are very, very poor. Also I if Cubans are so happy, why so many try to get to Maiami? Risking their life?
A
There are no starving people in Cuba. Food is provided to everybody in Cuba. There is more than enough to go around. And if you want more, you can easily get more. There is much more mal nutrition in the USA and the rest of the world than in Cuba. Many Cubans risk their lives to get to Miami. Many Mexicans risk their lives to get to Los Angeles. People move for many reasons. Most of them are economic. Many Cubans believe that if they can get to the USA they will get rich and live rock star lives. They don’t know the USA, but they have seen it on MTV and think it is all like that. Tell me, when a poor, Spanish speaking person, with little practical education arrives in the USA, what kind of a job can he expect to get? Lawyer? Doctor? Accountant? Manager? …. No, they become gardeners and shop workers and day laborers. And yes, some can make it big, but on average, the opportunities are not high. If you can’t find work and make a living in Cuba, then I don’t think you have much chance to live a great life in the USA.
As a whole, Cuban immigrants do rather well for themselves when they come to this country or any other country for that matter:
http://www.pewhispanic.org/2015/09/15/hispanics-of-cuban-origin-in-the-united-states-2013/
Thanks for the link Dawn. Did you actually read the article? Because basically the main point is that while Cuban immigrants do well compared to other Hispanics, they generally are much worse off than all other immigrant groups.
Here, maybe this will clear things up for you.
Fundamentally, most of the Hispanic immigrant population entering the USA is from Mexico. As you might know, Mexicans living in dire need, stream across the Mexico boarder each day in search of opportunity in the USA. In Mexico they often live in poverty. There is tremendous gang violence. Education is a joke. Healthcare is a joke. Living situations in the Mexican ghettos are atrocious. Corruption is through the roof. The government is a democracy in name only and despite being a relatively rich country, the average Mexican citizen is dirt poor and missing all basic services.
Compare that to Cuba, which you might have trouble doing since you have never been. Healthcare is top notch and completely free. Basic needs are covered by food rations. Anybody who wants a job is given a job. Education is completely free. Major crime is almost non existent. Corruption is low. The government takes pride in helping people with their living situation, and despite not everybody having their own private home, progress is being made. And all this while Cuba has faced an economic embargo for over 50 years.
Now, seeing the difference between the average Mexican and the average Cuban, you cannot fairly compare them to each other. It is far better to compare Cuban immigrants to the USA with all other immigrants to the USA, rather than just to Hispanics.
Making that comparison, you see that the average Cuban immigrant has trouble adjusting to the American lifestyle and is worse off.
Mario–the key phrase being “many Cubans risk their lives to get to Miami.” Any country that won’t give its citizens the freedom to leave is problematic.
Hi Mark. I think there is some confusion here. Cubans have full freedom to leave the country. They can travel to wherever they want to go. The issue is that other countries often deny visas to Cubans. There are many reasons for this, the main one is that the Cubans often try to stay in the other countries once they arrive.
But Cubans are free to travel. Let me just make that clear.
Now, the secondary problem in this matter is that as a tactic to undermine Cuban autonomy and to degrade the society, America has a unilateral open boarder policy with Cuba. Wet foot, dry foot. The Cuban Migration Agreement states that when Cuban citizens arrive in the USA (risking their lives to cross the straits of Florida), they are automatically grated residence and fast tracked towards citizenship.
Do you think the USA does this out of the goodness of its heart? They don’t do this with countries which are war torn or are in far worse economic shape than Cuba. This policy is done by the USA government in order to drain Cuba of its most talented and prized people. The best doctors, lawyer, politicians and athletes. And yes, many regular Cubans too choose to go across the water on rafts to arrive in the USA.
Now, on the face of it, you might say, well, Cuba is so bad that no wonder Cubans are crossing the water to land in the USA. Come on, that is ridiculous. Yes the USA is better economically than Cuba. But the USA has many, many problems, and we can see those every day in the news. The social problems in Cuba are far fewer. Moreover, if all countries adopted open boarders, then not only would there be millions of economically impoverished people arriving yearly to the USA in search of more opportunities, but there would also be millions of Americans (well off and average) leaving the USA to go live in safer, more progressive countries like Canada, many parts of Europe and Scandinavia. But clearly, the world is still divided by country boundaries and according to the rules of law, you cannot just pack your bags and move to another country and become a citizen.
So, saying that the problem is that Cuba ” won’t give its citizens the freedom to leave” is both false and ridiculous. Because in fact Cubans have the freedom to leave, and, the freedom to leave (I assume you mean to leave and start lives in another country) is restricted worldwide, in all countries, by immigration policies.
Hi Mario, could i perhaps ask you some questions regarding the Cuban economy? I am writing a report about it and some things just don’t make sense to me. Your sincerely David
You are correct Rebecca
Hi Randy, I will say that the original post was made in 2015. That was a time of change and Cuba was on an upswing. In the last 2 years, things have gotten progressively worse due to internal an external factors. And at the moment, there is a lot of unrest and the underlying problems in the Cuban economy are in full view. So, as an update to my previous comments on Cuba, right now, in 2020, Cuba is facing every problem imaginable and the people living there are scared for their future and worried about basic necessities. And overall, support for the government seems to be falling even among previous fans.
I wanna visit cuba one day, i love cuba❤️❤️
I’ve just came from Cuba and loved the country!! BUT we have to be more realistics!!
For sure, there less hunger ans misery there than anywhere in the world. The government provides the needed and they, despite having zero luxury, are happy.
Although, there’s a much valuable principle that they doesn’t experience: FREEDOM.
With very low income (compared to the World’s reality), even with much less restrictive rules to leave the country today, one is very little likely to have money for tickets an so on.
Further, I talked with many Cubans and they aren’t that happy with there economic system and one-party politics.
Besides all of that, every one should go there once. We hava A LOT to learn from them
What you say can be said about almost any other country in the world too. I don’t know of any country which gives its citizens money to spend on international travel. Even in the USA, arguably the richest country in the world, only less than 5% of the population takes an overseas vacation each year. You might think that overseas vacations are very common, but in fact, when you consider the overall population, travel is rare. It’s rare in Cuba, in the USA, in Canada, in Europe, in China.. everywhere… You can see this article for some added facts. http://www.huffingtonpost.com/william-d-chalmers/the-great-american-passpo_b_1920287.html
when I was in Varedaro…I tipped at least 20 cuc a day… mind you I never waited for anything…but on holiday what is an extra $150-200 a week for a Canadian for the best service…
I too just came back from Varadero. Tipped a lot but was well worth it. Cubans are very appreciative of what they have. They are all happy people and so loveable.
mario thanks for providing me with all these deatails helped me out on my report
Mario, it is NOT “the human condition” to want to one’s country. A minority of Americans do it. The reason Cubans don’t travel, is because they simply don’t have extra funds, period. The recurring feature that Cubans like about their country is that it is safe in the streets. What I like is that few people walk around with their attention glued to their smart phones. Kind of refreshing
Actually emigration has been a huge theme since mankind started. On a macro level it is very common for people to desire to leave their country of origin in search of a better or different life somewhere else. In a smaller scale, it is very common for people to want to leave their small towns or cities where they grew up in order to live in a different place. This is almost a quintessential part of American history and pop culture. The USA was settled by people wanting to move West in search of something different.
Now, what you say about most Cubans not being able to travel because they cannot afford it… Ok, fine. I agree. And, what’s your point? Studies have shown that only about 4% of the American public travels to other countries. Does that mean that 96% don’t want to travel? Or maybe they can’t travel because they can’t afford it either.
Traveling is expensive for everybody. European, American, Cuban, Canadian. Nobody gets a free ride. But Cubans can save up and travel just like anybody else. Cuba permits everybody to travel but foreign countries are the ones who often deny Cubans the visas to enter their countries, because Cubans often try to stay in the country they are visiting.
Seems like a good place to ask a few questions. With the likelihood of the U.S. embargo ending, what are the prospects of the ‘average monthly salary’ going up considerably in Cuba? Is there some formula that dictates salary? Will the law of “Any firm wishing to hire a Cuban must pay the Cuban government, which in turn will pay the employee in Cuban pesos” continue on? So if the per capita GDP goes from $7000 to $17,000, will those salaries go up? I’m not an economist, but it seems like if needs are already being met and they can get $30 a month, any additional state income is profit and could boost those salaries considerably.
These are all good questions. Before we try to answer some, we should look over some numbers.
For the salaries, the figures in the article come from government sources. In reality I would say that the average income earned by working people is already considerably higher than 30cuc per month. The average salary for state workers is about 20 to 30cuc per month, but for independent workers it is probably closer to 200cuc or 400cuc per month. (Let’s say 300cuc on average for an independent worker). So that’s about 10$ per day. It’s not a lot, but definitely a lot more than the state salaries. (this includes casa landlords who make a thousand per month, as well as waiters who make 100cuc per month.so I say the average is about 300cuc.)
Now we also have to say that most state workers also have side jobs, either with the state or in an independent field. So maybe they earn an extra 30cuc to 50cuc per month from side jobs. So we can say they make maybe 70cuc per month on average from their state and side jobs combined. Things are already looking better, right?
Now, we also have to consider that the labor participation rate in Cuba would probably be far higher than in the USA or most other coubtrues. In Cuba, if you want a job, you get a job and there is not much else to do on a daily basis but to work. (Internet use is low and television media is mostly boring, so people work in order to spend their time). It’s very common to see 80 year old men working as security guards or street sweepers… It’s not really for the money, it’s for maintaining a purpose in life.
All students have side jobs too. It’s a cultural thing in Cuba. People work. And they don’t all work well, or a lot, but they go to work. Even if they spend all day just smoking in a warehouse, they earn a small salary and are included in the labor participation rate.
A higher labor rate naturally lowers the average salary as you are including lots of people who earn low wages, but also don’t really have meaningful jobs.
Anyway, all that to say that despite official salaries being low, the actual income that most Cubans earn is considerably higher than the government states. The government knows this, but there are many incentives for the Cuban government to understate the average income.
So, in my educated opinion, I would say that the most wage growth will occur in the government sector. State workers will see wages rise as the economy improves. Also, the government will need to raise wages in order to keep their best workers from going to the private sector. Doctors salaries have already doubled in the last 3 years. Other professions have seen wages increase too. It’s a process, but it is happening.
In my opinion, foreign companies will still have to hire workers through the government. This is how communism works. It has its pros and cons. But that’s the system, and honestly in Cuba it’s been working out relatively well, so far.
Finally, we have to consider that as the economy improves, any extra money will not automatically go to workers. The government has to spend a lot on rebuilding dilapidated infrastructure and to construct infrastructure to maintain the tourist industry. This will be a major drag on salaries, and the payoff will only come if the tourist boom continues and once the new hotels are built and running well.
Cuba just today announced that they want to build 100 000 new hotel rooms in the next 10 years. If it happens it will be great for Cuba, but it seems like a very lofty goal. If we say that each hotel will have 500 rooms (very lofty size), that means they want to construct 200 hotels in the next 10 years. That’s 20 huge hotels per year. That’s never been done before. The cost would be huge. It seems impossible and I think it will be impossible. But it is their goal. Salaries will not rise much if the government is spending so much cash on building hotels…
Government salaries will rise enough to maintain the workers that the government needs. And I think the government hopes that more people join the private sector and are able to sustain themselves on their own independent earning. If the tourism boom continues then this should be possible.
Time will tell.
soy de cuba. mucho de eso articulo esta la verdad. bueno trabajo
Hi, I am just wondering how a tourist form Cuba would be able to feed themselves or where would they get shelter? I love Cuba and after reading this page I am so excited about how well Cuba is going even after America screwed them over.
Hi, I am not certain I understand you question. A tourist from Cuba would be able to travel to other countries if they receive a visa from the other countries. Cuba does not restrict its citizens from traveling. The Cuban tourist, if he/she gets a visa from the country they want to visit, can simply go and visit the other country like any other tourist.
Also, I would caution you against having the idea that “America screwed them over.” This is not really the case. Although the embargo against Cuba had a detrimental effect economically, it was political gold for the communist movement in Cuba. Nothing builds nationalism better than a superpower country (USA) hating on your little island (Cuba). And, moreover, the embargo helped Cuba build diverse trade relations with China, South America and Europe, and allowed Russia to make great inroads. The world did not abandon Cuba. Just the USA did… And the fact that Cuba is still around, is communist and is in fact doing pretty well for itself, all things considered, is a great testament to the power of Cuban ingenuity, perseverance, courage and pride.
I was lucky to visit Cuba on holiday in 2012. Lovely country and lovely people also.
I loved reading this article. I am American born with a Pro Castro father and anti Castro mother. I’ve always been interested in finding out the truth about Cuba and it’s people. Are the Happy? are they Hungry? do they live in fear of the Gov’t? Are they educated? I don’t believe the American media reports accurately on how Cubans live..Many Cubans that flee Cuba also have stories of people starving and how bad things are in Cuba. How can I argue with someone that lived there…I guess I will have to plan a trip and see for myself.. Do you have a suggestions?
Hi, if you want true, honest answers, then here they are. Cubans are happy. Cubans are not hungry. there is plenty of food in the country and it is cheap and often government subsidized. They do not live in fear of the government. They are in a functional society and there is mostly harmony. They are educated, however this is often overrated. The country does not have modern equipment throughout the whole country so while you might be educated and know how to operate a certain machine or device, the fact that the device is 10+ years old might imply that your education despite being good, is not modern.
Here are some negative points to counterbalance. Not all Cubans are happy. Think of it as any other country. Are all Americans Happy? No… So not all Cubans are happy either. But there is harmony in the country. Cubans have enough food. But imagine that you have a fridge full of food but you keep opening the door and cannot find exactly what you want to eat. That happens everywhere i the world. Some Cubans like to complain that there is no food or that the food they have is not what they want… There is plenty of cheap food in Cuba and NOBODY on the island is going hungry, unless they want to, for some strange reason. There is no government fear but some people (a select few) will complain that they want more freedoms to do things. Honestly, I don’t know what they are talking about. In Cuba you can do 99% of the things that you can do in the USA or Canada or any other country. They are generally educate, but education is something that not all people want. School is free in Cuba (or almost free) and if you want to learn anything, you can. But if you are a lazy person with no goals, then you can simply not go to school.. and you are just a dumb person. There are many people like this in Cuba (and the rest of the world too).
“Many Cubans that flee Cuba also have stories of people starving and how bad things are in Cuba.” They are lying. It is as simple as that. Or they are so uneducated and lazy that they could not participate at all in society. This happens everywhere in the world. Some people just prefer to chase sex or alcohol or steal money or cause trouble. And then they complain that the world is against them. Also, some people are never happy. Many Cubans have aspirations of going to the USA because they believe it to be “THE BEST PLACE IN THE WORLD.” Many Americans believe that the USA is a terrible place, filled with hate, violence, corruption, drugs, with a terrible economy. So you see, you will always be able to find people who hate things. And these people complain and cause trouble, while the average people are working and leading productive lives. The people who complain the most are not those who want change. They are simply the people who want to complain the most. They are professional complainers. We see them in Cuba. We see them in Canada. We see them in the USA. We see them everywhere.
My last comment will be that, the USA is a much harder country to be successful in than Cuba. Cuba has more potential and less competition. In the USA it is easy to borrow money and you have a population of 350 million people chasing the dream to become rich. And they can all borrow money to finance their lifestyle and get rich quick scam. In Cuba, borrowing is difficult. You have to earn your money and your dream. If you are smart in Cuba, you can make it. In the USA it is far more about being lucky. I can go on and on, but I think the question has been mostly answered for now. But my advice.. don’t get into an argument with complainers. You will never beat them. They are professional complainers. Logic never works.
probably should have proofread that…Sorr….y just wrote it quickly thru my phone
thanks Mario
i’ve just come off a cruiseship with an overnight stopover. Wish i had read your comments first.
interesting about the hotel building being planned. with so much beautiful architecture on the run down buildings in Havanna i would have thought this should be the first for hotel building.
Interesting article. I myself have never been to Cuba, but would love to visit someday.
People often have misconceptions about the rest of the world, or places they have never visited. This applies to Cuba and many other countries. We often formed images about places in our minds, based on the media, which often times, portrays the worst about a place- after all, that is what makes the news. One of the beauties about travel is that you get to see a place for what it really is and form your own opinions. I recently went on a trip to India, and it was quite different than what I expected it to be, based on what I have been told my whole life- all from people who have never set foot there.
I know I am diverging, but the point is, we all have misconceptions about places that are not true. Even if you are never get the chance to visit a place, at least be enlightened enough to understand there may be far more to a particular country than what may be portrayed in the news.
A beautiful and enlightened comment. Thank you very much for this. I hope you get the opportunity to visit Cuba for yourself and experience this wonderful country and society. Have a great day. Mario
What are the taxes that Cubans who don’t work for the gov’t have to pay? Casa owners who, as already mention, earn many hundreds of CUCs per month surely have to give a substantial part of this away to be able to use all the free services the gov’t provides. Also, if all it took to earn 10x normal income was to rent out spare rooms, then everybody would want to do it, so it can’t be as easy as workers who are involved in the tourism industry (drivers, guides, etc.) earning so much more?
Hi, for independent workers (entrepreneurs) there are two main taxes.
1) All independent workers must have a work permit for the type of work they do. This usually has a cost associate, depending on the job. For example, a restaurant permit probably cost like 30 cuc ($30 USD) per month. A tailor or shoe repair guy probably pays like 1 cuc per month. The permit price is higher for places that make more money and also for places that use more resources and take more government oversight. (A shoe repair guy is a one man operation and there is no oversight, but a cafe has health inspections and probably uses a ton of water and throws out lots of trash, so it makes sense if they pay more to the government.)
2) Regular taxes. The tax code states that for those independent workers earning more than 2000 cuc per year, the marginal tax rate is 50%. This is the marginal rate for earnings over 2000 cuc. So, it is very high. But, in practice, not 1 single person on the whole island pays 50% tax. Everybody just lies and says they earn nothing. This is a major problem because it allows a few people to make lots of money and causes imbalances in the society. Generally speaking, if you and your neighbor are both poor, you won’t rob from him. But if you are poor and your neighbor just bought a fancy tv and air conditioner and phone and you know he is earning a lot and just not paying taxes, you might say, screw it, let me just try to rob some of his stuff. So, crime is increasing now, a lot.
Casa owners and renters are rich. They are the equivalent of the 1 percenters anywhere else in the world. An average casa owner renting 1 bedroom can make, easily, 5 to 6k per year. With 2 or 3 rooms, you make much more. By worldwide standards, it’s peanuts, but 5k in Cuba is living the life. The government charges a permit of 30cuc per rental room, per month. So a casa with 1 rental room pays 360cuc in permit fees per year (12 months x 30 cuc). Not a bad deal, right? Then the owner pays income tax. I am not certain how the income tax works on a rental apartment. The last time I asked at the rental office I was told it is a flat 10%. This seems confusing because the marginal rate as mentioned above, should be 50% for earnings over 2000cuc. I am not sure… But either way, let’s say it is between 10% and 50%. The average owner will pay maybe 500 to 1000 cuc in tax. That’s what they would pay based on what they reveal, and probably most pay a lot less in tax. Nobody reveals anything and the government is lazy and doesn’t check.
You wrote : “surely have to give a substantial part of this away to be able to use all the free services the gov’t provides.” Economics is not like that. This would take a long time to explain, but basically, just understand that the government (any government in any country) does not need to take in tax money in order to provide services. The government is not like a citizen. The government does not earn tax money, and it does not use tax money to spend on services. If there were no more taxes in Cuba or in Canada or in the USA, what would happen? Would the government not be able to provide any more services? The answer is, the governments would just print more money and provide the services. I know it sounds crazy, but trust me, I know what I’m talking about on this issue. Taxes are used to reduce the money in an economy. Without taxes, things would overheat and you would have massive inflation. But the government does not need to make money from taxes in order to spend it on services. But anyway, the Cuban government is not rich, but with the tourist dollars now entering the economy, things are much better.
As for everybody wanting to rent out spare rooms to make money…. yes, it is absolutely exactly like that. 4 years ago there were probably 4 or 5 rental casas in Havana per square city block. 3 years ago, probably 10 per city block. 2 years ago maybe 20 per city block. Last year, things got hot… And everybody started to notice the potential of just renting out a spare bedroom to make money. The number of casas went up substantially (maybe 40 to 50 per city block). And now? Last time I was there – just 2 weeks ago – I can tell you that there are probably 100 to 200 rental casas per square city block in Havana. Almost every single house in Vedado and Old Havana is renting rooms. Everybody wants in on the action. You can walk down some dead end streets in Old Havana and every single door will have a “For Rent” sign on the front.
In small towns like Vinales and Trinidad, these small country towns have been transformed in the last 2 to 3 years into ridiculous looking places where there is beautiful, untouched nature on one side of the road, and on the other, you can see a hundred signs for “Rental Apartment” and “Room Rental” lining the street as far as the eye can see.
In the early days, the landlords were hesitant about putting signs on their houses saying room rental. Capitalism was a new thing and nobody wanted to push the limits. Now, nobody cares. Everybody has huge neon signs advertising their vacancy. If you have not been to Cuba, you have not seen anything like it. It is a sad and ridiculous sight. But everybody wants more money. Capitalism has arrived.
Will this last? So far there are many tourists and the casa owners are doing ok. But as these guys make money, even more people will try renting rooms. People are building rooms on their roofs in order to rent them. Everybody wants in on this game. Unfortunately, these things often end badly. A small speed bump in the tourism road and casa prices will fall hard. The competition is tough and logically, not everyone can becomes rich with the same gig. Time will tell.
Anyway, I hope I answered your questions. take care man. Mario
Thanks Mario very interesting i just got back from Cuba and i learn a lot from you!
Thank you. Cuba is a wonderful and crazy place and I am glad you got to experience it for yourself.
Al
Great insight Mario, thank you.
I have spent several decades visiting rural Cuba. Recently helping entrepreneurs in Marea in the southeast. The craziness has not hit there yet just two restaurants and one or two casa near the resorts.
Many of the resort workers are only hired part time or only part of the year. They must save their CUCs for their unemployed times. Also many are supporting several family members.Rural Cuba is much different than urban Cuba, even with CUCs many items are just not available.
Have heard of Canadian tourist on Facebook advocating “do not tip” and don’t support the entrepreneurs because they are the 1%. Most Canadian tourists to this area ignore this self righteous bleating and partner up with their Cuban amigos to help in whatever way they can.
Thank you Albert. You bring up some very good points. In the small towns and the areas far from Havana, there is far less. The atmosphere and culture is completely different than in the big cities. I love eastern Cuba. I’ve never met such kind and welcoming people anywhere else in my life. And as for tipping and gifts, I know exactly what you mean. I have been blessed with a lot in life, and I love to give and have no hesitation about approaching random people with items or giving large gifts to people I know. Some people say that it somehow negatively influences the society. Right or wrong, I do it anyway and I encourage others to give what they can. Life is short and small things can sometimes make a huge difference. Thank you for your comment, it really makes me happy to know there are people like you trying to make a difference. Take care and great luck!
Thank you Mario. All the explanations were on point and interesting. I learned a lot!
Norma
I lived in Cuba in the late 40’s early 50’s. ,On a train ride to Havana when I was 6-7 years old I saw “shanty” towns with children my age walking up dirt streets carrying pails of water(?) balanced on a stick across their shoulders. I assumed they lived in the little huts that lined the dirt streets. I would guess that the “campesinos” in Cuba are much better off since 1959, Their children go to school, they have medical coverage and way more food to eat then before the revolution.
I have been in Cuba many times and going back twice this year. This my favorite place in the world. The misconception that Cubans are poor is very misleading. All my friends dressed nice, have the latest smartphones. Even most of them have govt jobs earing around $30 US a month, they also have businesses on the side. My friend there told me with the Izquierda (black market) or just translate Left, most Cubans earn on average $150 per month. Food is subsidized, electricity cost $1.00 a month for my friend, education is free, kids gets to receive gifts during XMAS, health is free, no taxes on real estate, no homeless. I have been in Dominican Rep. as well where the average salary is $250.00 a month but Dominicans pay for everything and the poverty there can be blatant compared to Cuba. So my question was always for Cubans complaining, if their govt can drop all social services and allow total free market, and they start earning like $200 a month where they pay for everything, can they survive with that average? I think not.
Thank you for your comment. You are absolutely correct. Even the poor Cubans are doing far better than the poor in any other country. And they are hard working and always find a way to get what they need and want.
your comments Mario sum up Cuba pretty well , most older Cubans are happy with their lot , but the younger ones are definitely being seduced by all the images they get from elsewhere . personally I find Cuba the safest country I have ever visited , and I too live with Cuban families in the city of Ciego de Avila which is certainly not on most peoples holiday itinery and I hope it stays that way
Like mentioned above. More money gets you the freedom to do what you want and travel wherever you want.
I rather have the 0.1% chance to be a millionaire than have no chance at all.
What’s the point of being comfortable in one place but it takes you 2 years to save up and travel if not more.
Oh wow we. Love Cuba, best country! Unspoiled people! We been there 10 times! We won’t go anywhere else but our loving Cuba! We bring medical supplies to a few, resorts we, stay at. Very kind people! Thanks for the articles. Awesome work!
Im from holguin. We are a poor shithole country. Our government makes it this way. its so hard to operate my taxi business. My money transfer business helps these people
all true I was from havana and it was the exact same thing there