HAVANA (Xinhua) – Havana was abuzz on Friday with newly announced government measures to spur the economy, including wage and pension hikes for public-sector workers and retirees.
The measures, unveiled late Thursday amid an otherwise bleak outlook due to heightened United States (US) sanctions and open hostility from a conservative White House, will benefit over 2.7 million Cubans.
State-run Cuban Television reported that starting in July the minimum wage will rise to 400 pesos (USD17), while the average salary will rise to 1,067 pesos (USD45 dollars).
“It is something all public-sector workers really welcome because they have been demanding it for many years,” Madelin Guzman, an elementary school teacher in Havana, told Xinhua.
“I believe the government and President (Miguel) Diaz-Canel have made an important decision. It will become a new work incentive for all state workers,” she added.
Public sector workers in Cuba include those in the sectors of healthcare, education, culture, sports, civil service, housing and defence.
Emilio Ortega, a college graduate, said the decision reflects the government’s determination to implement much-needed reforms in Cuba.
“Salaries will still be low and not as we all expected, but it’s an important first step that satisfies us,” Ortega said.
On the government’s introduction of a monthly tax for social security that workers need to pay, Ortega said, “It seems logical and acceptable that we all contribute to social security because Cuba is an ageing country. The younger workforce isn’t enough to replace those who retire, and the state will have to assume that economic burden in the future.”
According to Economy Minister Alejandro Gil, around 1.2 million retired state workers will benefit from the wage hike.
“It’s definitely good news, although our pensions are still very low considering the price of some goods and services in the country,” said Gladys Bustillos, a 77-year-old retiree.
The Cuban government has pledged to keep a close eye on prices to ensure higher salaries and pensions do not have an inflationary effect.
The full package of economic measures approved by the Council of Ministers is to be “detailed over the coming days,” the government said.
“These measures seek to encourage savings, bolster domestic production, diversify and increase exports and substitute imports, promote local development and enhance state companies,” Gil said.
Moving towards the unification of Cuba’s dual-currency system is another goal, the minister added.
For over 25 years Cubans have used two pesos: the Cuban peso (CUP) worth about four US cents and the Convertible peso (CUC), which remains parity with dollar.
The CUC was introduced after the collapse of the former Soviet Union in the late 1990s and is used to buy goods at some retail stores.