‘Self-effort’ cooperatives in Cuba

Since December 2012, the creation of non-agricultural cooperatives has been promoted in Cuba with the objective of decentralizing state management and achieving greater economic efficiency, a vital element of the country’s current social project.

In May, Grisel Tristá Arbesú, chief of the Area of Improvement of Entities of the Permanent Commission for the Implementation and Development of the Guidelines, told the press that 498 cooperatives had been authorized and that 246 of them were functioning.

The sectors covered by this type of association are commerce, gastronomy and services, construction, transportation, industry and alimentary production. Recently, the sectors of energy and accounting adopted cooperative management.

At the June 21 meeting of the Council of Ministers, the ministers evaluated the trajectory of the economy during the first semester. Some between-the-lines reading of the published accounts and unofficial information indicate a possible flexibilization in the process of approving the cooperatives now being formed.

According to the text published in Granma, the policy approved by the Council specifies that “the establishments that provide gastronomic [restaurant], personal and technical services, as a rule, will be managed in non-state forms.” That, the report said, was a statement by Marino Murillo Jorge, chief of the Permanent Commission for the Implementation and Development of the Guidelines.

But there is also another type of non-agricultural cooperatives, not derived from the existing state-run establishments. They are the so-called “non-induced cooperatives” or “self-effort cooperatives.”

According to the legislation that regulates this type of association, the authorities must answer an application for acceptance of a cooperative within six months. Nevertheless, three cooperative creators contacted by Progreso Semanal say that they’ve been waiting for longer than that for an official response.

Statements by government officials suggest that the State intends to retain control of the management of telecommunications. It is known that the Ministry of Information and Communication, as the governing agency, has not approved any non-induced or self-effort cooperative. And that’s not for lack of applications.

Nor does the Ministry of Culture consider cooperative management, because, according to Deputy Minister Fernando Rojas, the ministry’s entrepreneurial model — cultural institutions raising their own revenue — “has shown to be successful.” Applying the logic of the cooperative “would create an unnecessary competition to something that has worked well,” he said.

The topic lends itself to speculation because, among other reasons, little information is available. The accounts by the media of the Council of Ministers’ session have been woefully insufficient, and the figures quoted cannot be compared or confirmed in any way.

President Raúl Castro’s full comments on issues that are vital for the future of the nation were not published. According to economist Armando Nova, the National Office of Statistics and Information (ONEI) has not issued any data for the first semester of this year, the period on which the ministers’ analyses focused.

Some of the figures reported are not encouraging. GNP growth is a weak 0.6 percent and the expectations for this variable were revised to 1.4 percent, whereas in 2013 the minister of the Economy and Planning, Adel Yzquierdo Rodríguez, had projected a growth of 2.2 percent, based on constant prices. And these are only the published data.

The causes cited by the minister of the Economy include “failure to obtain the foreign revenue planned for, the existence of adverse climate conditions, and the domestic insufficiencies that continue to affect our economy,” as well as a hostile international context and the economic blockade maintained by the United States against Cuba.

As of May 2014, Cuba has licensed more than 467,000 self-employed entrepreneurs, among them individuals who have formed cooperatives as the most participative and plural model of economic management. All of them pay taxes.

In that regard, Economy and Finances minister Lina Pedraza said that during the first year of application of the latest Tax Law, tax revenue “represents 37 percent of the GDP and derives from the application of taxes, rates and fees,” according to the daily Granma. Of the 18 implemented collections (the projected total is 25), 12 come from taxes.

That figure was not possible before the economic opening, which indicates that the tax policy is already playing a relevant role in the volume of revenue. On March 27, 2012, Marino Murillo said at a press conference that, by 2015, 40 to 45 percent of the GDP would come from the non-state sector.

Both data indicate that — although in the opinion of many, the process of economic reform is moving at a pace slower than expected — there is a palpable repercussion in some of the sectors that benefit from the measures.

The cooperative is the only legal way for self-employed entrepreneurs (“cuentapropistas”) to obtain legal personality and, in practice, function like small businesses. And since Friday (June 20), cooperatives can get Internet service from ETECSA, Cuba’s only telecommunications company.

Also, the fact that cooperatives cannot follow the existing regulations and that a specific regulation was created for non-state management could be legally making some difference.

On the other hand, the cooperative form of economic management implies a greater participation by the members and independence to decide on their functions and the distribution of profits, in comparison with the so-called self-employment.

“It’s not like a restaurant owner who hires people and in most cases decides the conditions of the contract. In a cooperative, everyone benefits equally and issues are decided among everyone,” said one of the people interviewed, who is still waiting for confirmation to work as a cooperativist in the communications sector.

Rachel D. Rojas, Progreso Weekly
June 25, 2014

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