Advertisment

Cuba's Poverty Crisis: The Struggle with State Salaries and Pensions

author-image
Olalekan Adigun
New Update
Cuba's Poverty Crisis: The Struggle with State Salaries and Pensions

The plight of poverty in Cuba is intimately tied to the state's low wages and insufficient pensions, according to economist Pedro Monreal. In his analysis, the average Cuban wage does not cover the cost of the Reference Basket of Goods and Services (CBSR), rendering pensions so low that they are deemed 'pensions of misery'. Despite a wage and monetary reform in early 2021, which raised the minimum wage and eliminated the convertible peso (CUC), salaries have devalued due to inflation and rising prices, particularly in food. Monreal emphasizes that those relying on a state salary are severely impoverished. He points to a necessary debate over the concept of a fair, minimum, and decent wage in Cuba while criticizing governmental management, with a decaying infrastructure and efficient repression as other sectors such as energy, transport, housing, agriculture, education, and public health deteriorate. The political and administrative system appears exhausted with no expectation of improvement. Cuba seems to be taking steps towards becoming a failed state, maintained only by state control and the lack of viable alternatives.

Advertisment

State Salary and Poverty

Monreal's critical analysis of the Cuban economy highlights the severe discrepancy between wages, pensions, and the actual cost of living. The average Cuban worker's wages barely exceed the basic consumption cost by 3%. In January 2021, Cuban authorities announced a wide-ranging wage and monetary reform, removing the convertible peso (CUC) from circulation and triggering a price reform. This reform quintupled the minimum wage to 2,100 Cuban pesos. However, most prices have since multiplied several times. The value of the minimum wage in Cuba has fallen below eight dollars due to an increase in the dollar's value in the informal market. Inflation and the cost of living have further weakened the Cuban's pocket, faced with a shortage of all kinds of products, especially food, medicines, and basic goods.

Pensions of Misery

Advertisment

Cuban pensions are described as 'pensions of misery', not even reaching 20% of the CBSR's value. The average wage in Cuba is increasingly close to the so-called poverty line. Meanwhile, the government speaks of growth that undervalues current inflation. The purchasing power of Cuban households has reached its most critical point since the implementation of the Tarea Ordenamiento package of measures. The real average monthly wage in Cuba could have reduced by 39% by the end of 2022.

Government's Response

The Cuban President, Miguel Díaz-Canel, has embarked on an official tour of the Middle East, visiting the United Arab Emirates, Qatar, and Iran amidst the worst economic crisis of its history without an apparent solution. The tour began on November 27, and it is presumed that he is accompanied by his wife, Lis Cuesta, and possibly his son. These trips have sparked controversy due to the prolonged absence from the country amidst a national crisis, with a shortage of basic resources and high inflation. In the current situation in Cuba, characterized by a notable scarcity of food, small and medium-sized enterprises (Mipymes) are selling chicken boxes at a price of 12,000 Cuban pesos, almost five times the country's minimum wage. Cuban citizens face these exorbitant prices daily, with wages starting at a minimum of 2,100 CUP.

Advertisment
Advertisment