Cuba economy – dwkcommentaries

Cuba’s Low Birth Rate, Increasing Emigration and Declining Population

Cuba is facing three demographic challenges: low birth rate, increasing emigration and declining and aging population. Underlying all of these are poor economic conditions on the island.

Low Birth Rate[1]

Cuba “has experienced a progressive decline in its birth figures since the beginning of this century {in 2000]. . . [In] 2000 the number of people born on the island stood at 143,528, and in 2018 the figure had dropped to 116,333…. This data ranks Cuba as one of the countries in the world with the lowest gross birth rates: 10.4 per thousand (compared to the 33.4 per thousand registered in 1965).”

Moreover, in 2019, “ infant mortality increased to 5.0 deaths per 1,000 live births.” For preschoolers (between one and four years), the mortality rate . . . also increased from 3.0 to 3.5 per 10,000. The main causes were accidents, acute respiratory infections and malignant tumors.” In addition, Cuba has one of the highest abortion rates: 72.8 for every 100 births.

“it is clear to all that these birth trends are owing to a wide range of very heterogeneous factors and causes, but the really important thing is that it has very specific consequences, especially financial and economic. In the specific case of Cuba the low birth rate is compounded by an increase in life expectancy, at 78.4 years, which represents a demographic time bomb for any country while representing a massive challenge to the financial sustainability of an economy based on a model like Castroist Cuba’s, in which everything depends on the State.”

This data can be explained, in part, by “the current economic situation (the average monthly salary barely reaches $30)” and the inability to accumulate wealth.” In addition, “the challenges that people face, especially women, regarding work, finances, and the raising of children. . . . In short, the social and economic conditions racking Cuban society are the main damper on birth rates.”

“The Communist authorities have refused to realize that in order to solve the birth-rate problem in Cuba, existing compensatory and allocative policies do not work.” Instead, “policies should be aimed at effectively promoting economic growth, prosperity, higher standards of living for all Cubans, the accumulation of capital and wealth, savings and investment.” In short, “the Communist authorities have refused to realize that in order to solve the birth rate problem in Cuba, existing compensatory and allocative policies do not work. In Cuba, to date, adequate policies have not been implemented to counteract the trends observed.”

“Policies should be aimed at effectively promoting economic growth, prosperity, higher standards of living for all Cubans, the accumulation of capital and wealth, savings and investment.”

Increasing Emigration[2]

Lisette Poole, who has Cuban heritage, but was born and raised in the U.S., decided to live in Cuba after the December 2014 announcement of the two countries’ move towards normalization of relations. However, in May 2016, she decided to return to the U.S. after she had observed that “most [Cubans] were struggling to get by and felt frustrated” and that “neither education nor employment can guarantee a living wage.” This situation became even worse with the Trump Administration’s sanctions and reduced support from reeling Venezuela.

She left with a Cuban woman who hoped to arrive at the U.S. while the U.S. “wet foot/dry foot” policy that would allow them to enter the U.S. on foot was still in effect. They first flew from Cuba to Georgetown, Guyana; then they went by canoe to Brazil, then through Peru to Colombia. The next stage was on a fishing boat to the Darien Gap in Colombia and afterwards by hiking to Panama, by bus to Costa Rica (with a coyote), by walking through Nicaragua and Mexico to the border crossing at Laredo, Texas, where she with “dry feet” was admitted to the U.S. (The U.S. policy that allowed that entry was terminated on January 12, 2017)[3]

The Cuban woman that year (2016) was one of 56,406 Cubans who entered the U.S. via ports of entry. Previously in Fiscal 2014 and 2015 there were 24,278 and 43,159 such entrants.

An author in Diario de Cuba, Roberto Alverez Quinones, asserts that “from the Crisis de los Balseros (Rafter Crisis) in 1994 until 2015 some 660,000 Cubans emigrated, but experts consider believe that the figure actually ascends to one million people.” Now the total “Cuban diaspora currently totals over two million emigrants, meaning that 18% of Cuba’s total population has left it.” “Today, those who emigrate are young people who make up the economically active population (EAP), the driving force that makes the world go around.”

“No one knows [how many will emigrate in 2020.] What is known is that the exodus of Cubans will continue until more pressure is placed on the military gerontocracy that rules the country, it is driven from power, and the constrained power of the Cuban people is finally unleashed.”

On December 11, 2019, the Cuban Government announced that in April 2020 it would hold a conference in Havana about emigration. The stated purpose is to strengthen relations with the emigrants although the Government’s statement emphasized improving relations with Cubans born abroad and those “who do not have a position that is openly against the island’s government.”

Cuba’s Aging, Declining Population[4]

While the number of younger Cubans declines due to low birth rate and increasing emigration, the number of older Cubans increases due to increased life expectancy. The result, Cuba is experiencing an aging, declining population.

Poor Economic Conditions in Cuba [5]

Underlying all of the above circumstances is the poor economic conditions on the island.

Comparisons with other Latin American countries show the island’s poor economic conditions. “The minimum wage in Cuba today is a quarter of that in Haiti” while the Cuban average salary is only one-half of that in Haiti. Similar comparisons exist for Chili, Ecuador, Peru, Colombia and even poor countries of Nicaragua and El Salvador.

Poverty in Cuba is aggravated by unemployment, despite the government’s erroneous statistics. According to statistics published by different official media, in June of 2018 there were 6.2 million Cubans of working age in Cuba, and 1.7 million of them were not working or studying. This means a technical unemployment rate of 27%. Today, with the worsening economic crisis, it might exceed 30%, and may even be at 33%.

Another contributing factor to Cuba’s poor economic conditions is the ramped-up sanctions by the Trump Administration.[6]

Sociologist’s Comments on the Situation

Elaine Acosta, a sociologist and specialist in population aging, international migration and welfare policies, recently commented on the Cuban government’s new National Survey on Population Aging.[7]

She said it “reaffirms the speed and magnitude with which the process of population aging . . . [is occurring] in Cuban society . . .[putting] the Island at the forefront of aging processes throughout Latin America and the Caribbean. The only population group that . . . [is growing] is 60 years and older, especially 75 years and older.”

The projected continuation of this trend will make “the care crisis” deeper and more complex. On the one hand, the demand for Geriatrics, Gerontology services will inevitably continue to increase [along with] Security, Social Assistance and Care. In turn, [this will have] a great impact on the economy . . ., taking into account the decrease in the population potential with capacity for employment and the demand for education at all levels.”

These consequences will have a greater effect on older women due to “the feminization of aging on the Island. Women are not only the majority among the elderly (46.6% of men and 53.4% of women), but also have a greater life expectancy than men.” More generally these consequences will disadvantage “historically disadvantaged groups: women, elderly people, blacks, people with disabilities or street situations, as well as communities in larger territories.”

All of these consequences will “require important political, economic and cultural changes at different levels (normative, political and programmatic) of social policy. It is a process that, given its complexity and size, will require competition and integration of new social actors (NGOs, churches, the market, etc.), as well as the elderly themselves and their families. ”

In summary, she said, “the problems presented raise the need for a reform of the Cuban social welfare regime in such a way that it can meet the economic, social and health needs of the advanced aging of the population, the population bleeding caused by migration as well as the new demands and social problems that result from these processes and their inadequate management and intervention. ”

=======================================

[1] Amor, New Policies Are Needed to Resolve Cuba’s Birth Rate Crisis, Diario de Cuba (Dec. 16, 2019); The numbers are no longer coming to the Government: child mortality rises, births plummet, Diario de Cuba (Jan. 3, 2020); Cuba’s Aging, Declining Population Continues, dwkcommentaries.com (Dec. 13, 2019) .

[2] Id; Krogstad, Surge in Cuban immigration to U.S. continued through 2016, Pew Research Center (Jan. 13, 2017); Poole, Two Women, 11 Countries; A Long Strange Trip From Havana to the U.S., N.Y. Times (Dec. 18, 2019); Alvarez Quińones, How Many Cubans Will Emigrate in 2020? Diario de Cuba (Jan. 14, 2020); Why do young Cuban professionals emigrate to Mexico? (video), Diario de Cuba (Jan. 28, 2020).

[3] U.S. Ends Special Immigration Benefits for Cubans, dwkcommentaries.com (Jan. 13, 2017).

4] Cuba’s Success and Problems with an Aging, Declining Population, dwkcommentaries.com (Mar. 10, 2019); 70% of Cuban elders live deprivation and deprivation, recognizes and official survey, Diario de Cuba (Dec. 11, 2020); Cuba’s Aging, Declining Population, dwkcommentaries. com ( Jan. 13, 2020).

[5] Alvarez Quińones, Poverty Decreasing Around the World, But Rising in Cuba Diario de Cuba (Nov. 29, 2019).

[6] See, e.g., these posts to dwkcommentaries.com: Young Cuban Discusses the Many Problems of His Country (July 5, 2019); Cuba’s Suffering from Continued U.S. Hostility (Aug. 17, 2019); Decline of U.S. Visitors to Cuba (Aug. 22, 2019); Dwindling Hope in Cuba (Dec. 18, 2019); President Trump Proclaims His “Success” on Cuba (Jan. 13, 2020).

[7] The current panorama in Cuba ‘is discouraging to project a dignified old age,’ Diario de Cuba (Jan. 27, 2020).

Cuba’s Suffering from Continued U.S. Hostility

After the Obama Administration had taken steps to improve U.S. relations with Cuba, the Trump Administration has gone in the opposite direction, as discussed in many earlier posts.[1]

U.S. Actions and Policies Against Cuba

These negative actions and policies include the following: continuation of U.S. embargo of Cuba; elimination of one of the “general licenses” for U.S. nationals to travel to Cuba; cancelation of right of U.S. cruise ships to make stops on the island; reducing amount of money U.S. nationals legally may remit to relatives and friends in Cuba; allowing litigation in U.S. federal courts over alleged trafficking in U.S.-owned property on the island under the Halms-Burton Act; additions to the U.S. “Cuba Restricted List” of entities and sub entities with which U.S. nationals may not transact business; U.S. negative reports on Cuban human rights, religious freedom and human trafficking; unilateral U.S. report about increasing Cuban Internet access; U.S. consideration of re-designating Cuba as a State Sponsor of Terrorism and of re-instituting U.S. parole for Cuban medical professionals; additional U.S. sanctions against Cuba for its alleged support of Venezuela.[2]

While there are recent bilateral bills in Congress to end the embargo and enhance U.S. nationals’ rights to travel to Cuba, they have not received, and are unlikely to receive, any consideration in the current Senate and perhaps the House of Representatives.[3]

Negative Impact on Cuba of U.S. Actions and Policies[4]

The negative impact, especially of the recent U.S. limiting the ability of Americans to travel to the island, has especially harmed Cuba’s emerging private sector. For example, a website and app used to make reservations, rate restaurants, and pay for meals at most restaurants throughout Cuba (AlaMesa) had to reduce its staff from 20 to 12 in response to a 30 to 40% decline in reservations.

But “Cuba’s economic woes go beyond U.S. policy. The island, with one of the world’s last communist governments, has been caught in a perfect storm. Its economy has been stagnant for years, averaging only about 1 percent annual growth. Its centrally-planned economy imports over two-thirds of its food. Its ally, Venezuela, has been in political and economic turmoil, causing an overall decline in oil shipments from the South American country. The island’s medical exchange program, a major source of revenue, also took a blow. Last November, Cuba recalled 8,517 medical professionals from Brazil in response to President Jair Bolsonaro’s tough stance against Cuba.”

The U.S. allowance of litigation over alleged trafficking in Cuba property owned by Americans is seen as discouraging foreign investment today.

Recently “there have been shortages in basic goods such as eggs, cooking oil and chicken.”

Cuban Government’s Response to Rough Economic Conditions[5]

At the July 13 closing session of the National Assembly, President Diaz-Canel reported that a series of emergency measures announced that month aimed to stimulate domestic production and he hoped for slight growth this year. “Even in the eye of the hurricane of adversity that the enemy conceived to suffocate us, the Cuban economy can grow slightly, thanks to the fact that we have the potential to resist and continue advancing in our development.” He added that the economy grew 2.2% in 2018, compared with an earlier estimate of 1.2%, and that stronger base would make it harder to reach this year’s goal of 1.5% growth.

The President also said there will be price controls and policies aimed at stimulating local production to meet increased consumer demand without sparking inflation.

The next week of July 15, Cuba experienced power outages and fuel shortages that prompted citizen concern about the possible emergence of a “Special Period II” of harsh economic shortages. Cuba Energy Commissioner Raul Garcia sought to reassure citizens that the power outages were due to breakdowns in power plants, not oil shortages, and that those outages would be fixed by the end of the week.

These measures came at a time when falling Cuban imports have caused scattered shortages of food, hygiene and other products across the country. Diaz-Canel admitted the country was suffering from a liquidity crisis and bureaucracy and was short on fuel. He called on officials and the public to join together in the national emergency and each do their part to move the country forward. “Putting aside vanities and selfishness, practicing honesty, industriousness and decency, we will also be contributing to GDP,” he said.

On August 2, the Cuban government for the first time published details of its foreign exchange earnings from services such as telecommunications, hotels, health and education assistance, in an apparent concession to creditors. The biggest export earner in 2018 was health services at $6.4 billion, followed by “support services” at $1.3 billion while hotel and related services garnered $970 million, followed by telecommunications at $722 million and transportation and support services, which includes everything from airlines to docking fees, at around $600 million. Total exports were $18.6 billion in 2013 and $14.5 billion last year, down from $18.6 billion in 2013. Imports fell from $15.6 billion to $12.6 billion.

All of these developments have resulted in an increase in the country’s foreign debt from $11.9 billion in 2013 to $18.2 billion in 2016, an increase of almost 53% percent.

Cuba Introduces Price Controls[6]

In early July President Miguel Diaz-Canel announced that the government had adopted a series of emergency measures to fight economic stagnation and dwindling foreign currency earnings that began in 2015 as the economy of key ally Venezuela imploded, and that have been aggravated by a series of new U.S. sanctions. The measures included increased wages and pensions for more than 2 million state employees, amounting to more than 8 billion pesos annually, or close to 13 percent of this year’s budget. The President also said there will be price controls and policies aimed at stimulating local production to meet increased consumer demand without sparking inflation.

The other shoe dropped on July 30, when the President announced a ban on all retail and wholesale price increases except for products imported and distributed by the state where already-set profit margins cannot be increased. In recent weeks, regional authorities have slapped price controls on taxi fares, beverages and haircuts, among other items. The price controls differ from province to province.

These price controls are especially difficult for the private sector.

For example, on August 15, retail prices in Havana were set for some basic foods such as beans, pork, lemons, bananas, onions and cabbage. The retail price of pork, a staple of the Cuban diet, was set at 45 pesos a pound, although market sellers said it previously went for some 65 pesos a pound. And farmers still charge 28 pesos a pound for pork. Another example is lemons, which used to sell for 30 pesos a pound, now has a new maximum price of 10 to 15 pesos, which is the same price that farmers charge for the lemons.

On August 12, Cuba Minister of Finance and Prices, Meisi Bolaños, stated, “We are going to be rigorous with those who try, by means of devices, to evade and violate the new measures approved to avoid the increase in prices. . . . We cannot allow that measures like these that the country approves to boost the economy and generate greater capacity to buy in the population to be spoiled by a few unscrupulous that cause Cubans to lose confidence in state control.” The Minister also denied that the purpose of the measures is “to stop the development of non-state forms.”

Economists assert that such price controls are ineffective. Andrew Zimbalist, a Cuba expert at U.S.’s Smith College, said, “Such measures are usually okay for short periods of time, but if they stay in place they begin to create serious distortions in the economy.” A similar opinion was expressed by Pavel Vidal, a former Cuban central bank economist who teaches at Colombia’s Universidad Javeriana Cali. He said, “The more they control prices in formal markets, the more inflation and instability there will be in informal markets and the less incentive the productive sector has.”

Experts also have criticized Cuba’s verbose regulations of the private sector that were introduced at the end of 2018. They concluded that these “regulations approved by the Council of Ministers were written in reverse: excessive documents (29) and processes that represent obstacles in the application process for licenses, cracking down on violations, excessive inspections, the definition of twenty-two oversight agencies for the private sector (with specific departments to deal with them), the new requirement of a bank account with two months’ worth of taxes as credit in this account, needing to pay payroll taxes from the very first employee, etc.”

Conclusion

Obviously Cuba is in a very perilous situation that the U.S. has helped to create. All who support normalization of the two countries relations need to voice their opinions to their senators and representatives and to Trump Administration officials.

===============================

[1] See List of Posts to dwkcommentaries—Topical: CUBA.

[2] E.g., Sabatinni, Trump Doubles Down on Failed Cuba Policy, N.Y. Times (July 24, 2019); U.S. Updates Cuba Restricted List (July 26, 2019); U.S. State Dep’t, State Department Updates the Cuba Restricted List (July 26, 2019); U.S. State Dep’t, List of Restricted Entities and Subentities Associated With Cuba as of July 26, 2019 (July 26, 2019); New U.S. Government Hostility Towards Cuba’s Medical Mission Program, dwkcommentareis.com (Aug. 14, 2019); “U.S. (Trump) and Cuba, 2016-2017,” “U.S. (Trump) and Cuba (2018),” “U.S. (Trump) and Cuba, 2019,” “U.S. Parole Program for Cuban Medical Professionals, 2019,” “Cuba, Venezuela and U.S., 2019,” “Cuba Restricted List, 2019,” “ Helms-Burton Act Title III Authorization, 2019” and U.S. Embargo of Cuba, 2019” sections in List of Posts to dwkcommentaries—Topical: Cuba.

[3] See these posts to dwkcommentaries.com: New Bill To End U.S. Embargo of Cuba (Feb. 9, 2019); Senator Leahy’s Senate Floor Speech To End Embargo of Cuba (Feb. 18, 2019); Congressional Bipartisan Bills for Reversal of U.S. Policies Regarding Cuba (Aug. 13, 2019).

[4] Sesin, In Cuba, entrepreneurs see a steep decline with Trump policies, NBC News (July 6, 2019); Cuba Says Fuel Shortage, Blackouts Are Temporary, Being Fixed, Reuters (July 19, 2019); Frank, Cuba hopes for slight growth as Trump pummels Caribbean island, Reuters (July 13, 2019).

[5] Kuritzkes, The End of Cuba’s Entrepreneurship Boom, Foreign Policy (July 15, 2019); The decline in tourism from the United States to Cuba already feels strongly on island, France23 (July 18, 2019);Taylor, Cubans Talk About Impact of Trump Administration Travel Policy Changes, Travel Pulse (July 22, 2019); Myers, A Visit To Cuba Reveals Economic Pain of Trump’s Travel Ban, Travel Weekly (July 29, 2019); Eaton, Cuba Trying to Attract Tourists and Investors Even as U.S. Clamps Down, Tampa Bay Times (July 30, 2019); Reuters, Cuba Reveals Health, Hotel, Other Service Earnings, N.Y. Times (Aug. 2, 2019); Whitefield, Cuba Feels the Pinch of the Trump administration’s travel restrictions, L.A. Times (Aug. 11, 2019); Torres, Cuba’s foreign debt is on the rise despite big profits from medical services abroad, Miami Herald (Aug. 12, 2019);Myers, Taking the pulse of demand for Cuba travel, Travel Weekly (Aug. 13, 2019); The Cuban economy is increasingly indebted, official figures reveal, Diario de Cuba (Aug. 15, 2019).

[6] The Government of Havana sets maximum prices for sale of products, Cubadebate (July 28, 2019); Frank, Cuba, battling economic crisis, imposes sweeping price controls, Reuters (July 30, 2019); Vela, Cuba’s Price Control Is Short-Term Fix To Production Problems, Economist Says, ABC10 News (July 30, 2019); Fuentes Puebla & Romeo Matos, Price control, a necessary complement to the salary increase in the budgeted sector, Cubadebate (Aug. 1, 2019); The Cuban Government warns that it will be relentless in the face of ‘artifice’ to avoid its price cap, Diario de Cuba (Aug. 13, 2019); Reuters, Cuban Government Imposes Price Controls as It Seeks to Keep Lid on Inflation, N.Y. Times (Aug. 15, 2019); Fernandez, It’s a Long and Winding Road for Cuba’s Private Sector, Havana Times (Aug. 15, 2019).