Higher Salaries Equal Higher Production / Fernando Dámaso

Fernando Damaso, Havana, 26 October 2018 — According to some economists, the minimum wage in Cuba today, in order to keep up with the high cost of living, should exceed 1,200 CUP* per month (the equivalent of 50 CUC*, or roughly $50 US), well above its current level. This amount does not take into account one’s desires, repairs or improving one’s housing, for which it would be insufficient. We are talking about a subsistence minimum wage, where the citizen would have about 40 CUP per day (the equivalent of 1.55 CUC).

With regard to salaries, for years, government authorities have adopted the absurd principle that, in order to increase it, they must first increase production. This principle, internationally dismissed as wrong, is intended to remain irrevocable, when it is more than proven that an increase in wages is what leads to the increase of production, and the increase of in production, in turn, develops the market and increases consumption (with the wages earned by citizens), forcing a greater increase in production.

The link between wages-production-markets-consumption is the one that can help to cut the “Gordian knot” of our economy although, for now, it is clear that no one dares to do so, because political interests predominate over economic interests.

This economic anomaly, together with many other absurdities, imposed on Cuban society, has discouraged citizens’ initiative and the development of more efficient and modern forms of production. Meanwhile, the authorities, rather than solving the great problems they have created, concern themselves with prosecuting and punishing everything that demonstrates the economic inefficiency of socialism: the lack of productivity, the low quality of the goods produces, theft, corruption, embezzlement, losses and constant failures that characterizes it. It is the story of the “tree that is born crooked and its trunk never straightens.”

Meanwhile, our pro-government economists continue to invent formulas, ignoring the many successful experiences applied by different countries around the world.

*Translator’s note: Cuba has two official currencies, the Cuban Peso (CUP) and the Cuban Convertible Peso (CUC), with the latter being worth 25 times more than the former.  Most wages are paid in CUP but many products are only sold in CUC. The rationing system, it is generally agreed, only provides enough food — at extremely low prices but of limited types — for about 10 days per month.