Cuban President Raul Castro has been moving slowly but steadily over the last couple of years to relax his government's grip on the country's ailing economy, yet it is the news that half a million state workers will get pink slips in the coming months and will be expected to find jobs in the private sector that has created a front-page buzz in the United States. Change is underway in the Cuban economy. It is time for Congress to end the archaic and ineffectual U.S. trade embargo and get out of the way of U.S. investment in Cuba before American firms lose out to those from Europe, Brazil and elsewhere.
Cuba's centralized economy has never been self-sustaining, especially in the face of the embargo that was imposed nearly 50 years ago. The education, healthcare and near-full employment hailed as achievements of the Cuban revolution were subsidized first by the Soviet Union and later by President Hugo Chavez of Venezuela. Now, in the midst of the global downturn, even Chavez can't support Cuba's bloated state payroll and inefficient enterprises.
The government employs more than 5 million people, or about 95% of the Cuban workforce. For the last year, Castro has been saying that is a million too many, signaling the layoffs. This spring, the government divested itself of state-run barber shops and beauty salons, converting employees into entrepreneurs who could, in turn, hire up to three workers. It also allowed farmers and small restaurants run out of homes to set their own prices and sell directly to customers, paying a 15% tax on revenues.