Desde Dentro de Cuba.

Distribuido por Cuba Free Press, Inc. -

Sept. 24, 1999.


HAVANA - Cuba's social security system which took into account all its workers once in general pledged retirees a modest but decorous income and was touted as one of the early accomplishments of the socialist revolution. But once the Soviet socialist bloc disappeared, Cuba's unsubsidized economy collapsed and, with it, Cuba's social security program.

The average monthly pension in 1995 was 94 pesos and 60 cents, according to the Latin American Economics Commission (SEPAL). According to information provided by Cuba's Ministry of Labor and Social Security for that year, 60 percent of retirees were receiving pensions under 100 pesos a month. Cuba can't produce or provides no recent data but since pensions have not been raised in awhile, those numbers have not changed.

Retirees finishing a lifetime of work end up frustrated at seeing benefits considerably less than what they had contributed to. They must add to the above disaster certain food and housing supplements - also curtailed greatly since the 1990's. Some items such as edible oils and articles for personal grooming must be bought only at certain special stores where prices place them out of a retiree's each. For example, a liter of cooking oil costs 40 pesos.

What's more, items such as clothing or shoes are stocked in minimal amounts, mainly for children. To these cut-backs of the rationed quotas, already at bare subsistence levels, must be added the higher prices, since the monies available to retirees have remained frozen for decades.

Another example: Potatoes. Once they cost eight cents a pound but now cost more than 40 cents a pound. Cigarettes, selling before at 20 cents a box are now two pesos. Products off the rationing books cost considerably more.

Before the 1989 crisis many citizens kept their savings in the banks at the urging of official campaigns. Today, with the Cuban peso devalued, those savings have turned to hot air. In 1990 the street-exchange rate was seven Cuban pesos for each U.S. dollar. That figure rose to 100 pesos per dollar in 1993 and now oscillates between 20 and 22 pesos per U.S. dollar, according to data from the Cuban National Bank.

The situation faced by the retirees is quite dramatic and shows very little hope of solution. In 1980, 10.6 percent of the population was over age 60. By 1998 that percentage had risen to 13.6. The Latin American Center for Demographic Studies estimates that by the year 2015, 18 percent of the Cuban population will be over age 60 and by the decade of 2040 to 2050, there will be only two citizens of ages 15 to 64, for every Cuban over 65 years of age.

This growth of the senior sector will create intolerable demands on the already strained social security system. Just this year Cuba expects 73,000 new retirees to join the 1,000,000-plus already in those ranks, which will demand thousands of millions of pesos.

The expenditures made by social security over the last 10 years and the percentage of the national budget spent on those benefits show disproportionate growth. In 1989, social security spending amounted to 7.8 percent of the budget; it is now closer to 13 percent, causing an enormous financial strain. But matters are even worse: The contributions to social security are not enough. As a matter of fact, over the last few years the deficits have grown so that earlier requirements for government subsidies of 38.2 percent of its budget rose to more than 41 percent in 1996. A lower rate was shown in 1997, the result of government actions. Speculation places the new figures at around 39 percent.

That's an intolerable amount, especially when one considers the limited growth of contributions from the workers. Cuban authorities in 1994 defined the contribution expected from all workers in Law No.73 of the tax codes, which is supposed to fund social security. It was approved and applied in August of 1994, despite the very low prevailing salaries.

Years ago, Cuban workers contributing to Social Security saw their salaries divided into "gross" and "net" categories. Later the "net" categories became the only ones used. That was an accounting trick which did not, of course, result in more money for the workers. Recently, a new policy called "managerial perfectionism" called for five to seven percent of salaries to be earmarked as contributions to the social security system.

Still another measure attempting to help obscure the problem was to delay the age of retirement, currently at 55 for women and 60 for men. Those age limits were adopted at the time of unlimited subsidies, with political propaganda in mind. They certainly did not take into account the limited economy of a third-world socialist nation.

All these measures, at best palliatives, are unlikely to change the very difficult circumstances senior-sector Cubans are going through. Theie problem also affects the growth of the Cuban economy. Money going into social security is not available for capital formation, investment, creation of new jobs...indeed for the growth of salaries and pensions.

The only feasible solution would be to increase net productivity. This can hardly happen under a socialist system of government. So it seems the social security crisis will deepen in spite of the efforts of the past generations which sacrificed everything at their time.

Now the seniors can reap only privation, frustration and humiliation.

Oscar Espinosa Chepe, Cuba Free Press.

P.O. Box 652035
Miami, FL 33265-2035
Phone: (305)270 8779 -- Fax: (305)595 1883

Copyright © 1999 - Cuba Free Press, Inc.