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Tourism: Cuba’s newest agent of socioeconomic divide

In the shadow of Havana’s decaying Capitolio, dozens of taxi drivers rest upon their cabs, searching the crowds for their next fares. Jineteros hustle rum and cigars on the sidewalks, each promising the cheapest prices in town. Prostitutes spill onto the streets as the sun goes down, and “Guantanamera” blasts from every corner to the delight of Havana’s international guests.

Since the fall of the Soviet Union, the tourism industry has been a vital component of the Cuban economy. The island opened its doors to international investors in the 1990s, namely to European and Canadian partners, in attempt to fill part of the gap created by the loss of Soviet aid.

“We benefited from two things,” said Cuban economist Jorge Mario Sanchez. “First, country size; on the Caribbean perspective we are a big place. Second, the forbidden fruit flavor, the fact of being isolated from tourism created a lot of speculation.”

International investments coupled with growing opportunities in the private sector have created a perfect climate for tourism to succeed in Cuba.

According to Dr. Richard Feinberg, a professor at the University of California San Diego, the industry has grown significantly in recent years. “By 2010, Cuba was hosting 2.5 million visitors yielding $2.2 billion in gross receipts,” he reported.

Plans for significant expansion are in place, with Spanish investors leading the charge in hotel and resort developments. Atop of the 48,000 rooms that currently exist for tourists in five- and four-star hotels, Cuban economist Juan Triana estimates that 20,000 more rooms must be built to meet the island’s growing demands.

“These are the most important projects to push the growth of the country in the next five years,” he said.

El Capitolilo de Havana
El Capitolio de Havana

In Cuban society, international tourism has become a premiere source of individual income. Professionals from all economic sectors are leaving their careers for tourism, trusting that access to unregulated money in the form of tips will provide greater opportunity for upward social mobility.

According to the Cuban Office of National Statistics, the average Cuban salary equates to $20.36 per month, putting the nation’s per capita income well below that of Mexico, Chile and the Dominican Republic. As the national economy continues its process of decentralization, with the threat that over 500,000 state positions will be cut in coming months, Cubans are gradually moving away from their dependence on the state and looking to other sources of income.

Internally, this labor migration to tourism has created interesting new social developments for Cuba. For 53 years, the country has prided itself on its free educational services for all citizens. Thousands of doctors, lawyers and engineers hold prestigious academic titles yet have little wealth to show for them. Consequentially, the incentive to finish school has diminished considerably among the younger generations, who see greater value in working for tips than social recognition.

“It’s a concern for the government, for the whole people [of] Cuba,” said Triana. “Today it’s too difficult to launch programs and create jobs; in fact, we are overqualified in terms of workforce.”

“People prefer… less-qualified but jobs but better pay,” added Sanchez.

While the fixed salary of service professionals is on par with the Cuban average, extra income in the form of tips is the main motivation for working in the tourism industry.

“Every time you take a cab or give a tip to anyone, you are putting dollars into circulation,” said Sanchez. In a struggling economy where the same money is constantly recirculated, those with access to new capital have a significant economic advantage.

As the majority of the population struggles putting food on the table, unregulated income has given birth to a social class system in Cuba. Savings, investments and the pursuit of material wealth are now possible, even encouraged by the government as it tries to reduce its role in the economy.

Private enterprise, which Sanchez says will compose 45 percent of the Cuban economy in five years, comes with a large startup cost. In Cuba, only the recipients of remittances, current business-owners and some in the tourism sector are now able to afford the investment.

Considering these factors, the island can expect to see the economic gaps widen among the Cuban population in coming years.

“It’s going to be a more polarized, more diversified, more contradictory society,” said Sanchez. “Today [the income gap] has been multiplied by 1,000, either because you rent a room or because you have a private business, or because you work in tourism.

Those with access to foreign money no longer exclusively depend on the economic security provided by the state; they can afford to dabble in capitalism. For the rest of the public, the rapid decline of the state’s economic role will leave many lost and unprepared for work in the private sector.

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Olga Hernandez Platt appears satisfied with the crowd at La Moraleja. The sun has almost set, and her paladar has nearly reached its 50-person capacity.

“We’re fortunately among those who have survived so far,” she says of the restaurant, which opened in February of last year.

Throughout Havana, many paladars, privately-owned restaurants, have emerged in recent months as Cuba continues its process of market liberalization. Though the establishments were legalized in the mid-1990s, they have reemerged in greater numbers under Raul Castro’s series of economic reforms.

“Some are already not making it,” she says, explaining the difficulties of the current economic situation.

For Cuba, private enterprise is a relatively new concept, one which requires capital and experience for success. In the case of La Moraleja, it has both.

For 15 years, Platt worked in Havana’s tourism sector. She learned the ropes of the industry while serving as a manager of a prominent cigar bar, making connections with chefs and waiters who now staff her restaurant.

Out of their home, her family ran a “casa particular,” similar to a bed-and-breakfast, which attracted many international guests. Today, they run the restaurant out of the same house, but have converted the backyard into a dining area.

Since the 1990s, she and her family saved the extra income from tips and rentals to invest in La Moraleja. All of the startup cost came internally; Platt received no help from abroad.

The restaurant has 10 full-time employees, and everyone receives a cut of the nightly take. According to Platt, the incentive-based pay ensures that each employee works to maximize the profitability of the restaurant, not just to take in a fixed salary.

While the business is entirely run by Platt and her family, the Cuban government still requires significant compensation in the form of taxes.

“We pay 5,000 pesos in national currency and 10 percent of our overall take,” she says. “And a tax to pay for each employees’ social security.”

The popularity of the restaurant continues to grow, with online review sites like Yelp filled with positive comments about La Moraleja. The paladar has also been featured in publications like Cigar Aficionado and the New York Times.

“It’s a lot of mouth-to-mouth… people visit and they comment to other people,” says Platt.

After 14 months, La Moraleja can attribute much of its success to tourism. The restaurant, founded on tips, now relies on tourists as its main source of income.

“The majority of our customers are international,” she says, adding that the Cubans who dine at her restaurant are typically Cuban-Americans.

As money continues to flow through the doors of La Moraleja, Platt and her family are living comfortably. Her fashionable attire, gold earrings and makeup indicate that the business is treating her kindly, and the packed restaurant is a sign of good things to come.

One thing is certain; owning a private business beats working for a fixed salary.

“I haven’t missed [that] for one day,” she laughs.

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In a matter of months, L.D. will be turning 30.

“It’s hard to admit it, but like they say, you can’t change reality,” he says.

L.D., who asked to be identified by his nickname, has worked as a guide at Havanatur for three years.

“It’s very rewarding,” he says. “As a tour guide, I have the opportunity [to] learn from a lot of people who come to this country. I’m getting a lot of background and information regarding culture and how people think.”

With daily shifts often lasting more than 12 hours, the work is physically demanding.

“I think it’s a job I have to do right now because I’m young… I have this will power and strength to walk a lot,” he says.

Prior to Havanatur, L.D. taught English and phonology at the University of Havana. He was approved to pursue his doctorate in English, but decided to put his academic career on hold.

“I was earning… like 525 Cuban pesos [22 CUCs – monthly], with no extra money, just like that. It was a fixed salary and I was working really hard. That’s why I decided to quit that job and come here.”

Streets of Havana (Karen Graciela Calderon)
Streets of Havana (Karen Graciela Calderon)

Thousands of Cubans are currently fleeing school and abandoning professional careers to work in the tourism sector, where tips promise greater economic stability than university degrees.

“You can barely live with a salary you get from the state,” says L.D. “That’s why most people want to work [in] this sector.”

While the base salary for a tour guide equates to roughly 20 CUCs per month, additional money in the form of tips is responsible for the bulk of the income.

According to L.D., a group of 10 will tip him approximately 100 CUCs a week, five times the average Cuban monthly salary. Surprisingly, that sum is lower than his normal intake. In one week, he has made 400 CUCs, the equivalent of 20 months of work for the typical Cuban.

Along with supporting his parents and picking up the tab when his friends go to clubs, L.D. is using the extra income to invest in his future.

“I’m saving some money because I want to go to other countries,” he says. Italy, Canada and New York City top his current list.

“I also have a friend… trying to start a company right here in Cuba [who] wants me to be a representative.”

According to Cuban economist Jorge Mario Sanchez, this pattern of behavior is common among youth who leave academics for the service sector.

“They are sacrificing current income for future spending,” he said.

J.D., along with others currently working in tourism, is likely to emerge on the positive side of of Cuba’s emerging market economy.

While a doctorate would have granted him greater social recognition, he is more than pleased with his occupational tradeoff.

“When you have this Ph.D., then they are going to give you like 80 or 100 Cuban pesos more [than the average],” he says, a sum equal to 25 total CUCs.

Though he acknowledges that he is fortunate to be in his current position, he affirms that the Cuban system is set up for everyone to succeed.

“If I could make it, there are thousands of people who can make it too. It’s just a matter of effort… they’re granted the same things.”

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When Rosi moved from Guantanamo to Havana at the age of 18, she came expecting more work and better pay.

“There’s no tourism in Guantanamo, and the soldiers aren’t allowed to mingle,” she says.

Formerly a student of gastronomy, Rosi, 22, decided sexual tourism offered a better economic future. So far this week, she hasn’t had a single customer.

“The situation is very bad,” she laughs.

Rosi is among the hundreds of sex workers who stroll the Malecón nightly in search of paychecks.

She says her prices depend on the amount of food she needs to bring home to her son.

“For one night? 60, 50… but it depends,” says Rosi, who initially offered herself for 30 CUCs. “There are some tourists that will pay 100 CUCs,” she added, though noted that it was rare.

The lack of basic necessities is the primary motivation behind prostitution in Cuba. Many prostitutes work state jobs but remain unsatisfied with the average salary of 20 CUCs a month. They then turn to prostitution for an extra source of income.

“A lot of professionals in Cuba, they go to prostitution to feed their families,” said Omar Lopez, the human rights director of the Cuban American National Foundation in Miami. “Whatever it takes to survive is viable.”

Prostitution is often a family affair. Some come to Havana’s iconic seawall with their mothers to avoid police interrogation, then separate once a customer asks to speak with them privately. Many spouses play an important role in the business as well.

“Here, generally the pimps are the husbands of the women,” says Rosi.

Rosi has always operated independently. Prostitution is her only means of income, and she uses it to provide for her 2-year-old son, sister and mother. They watch the child while she goes out to work.

“The hardest thing is food and clothes,” she says.

Though she knows the father of her child, she has never received the 30 monthly pesos required by the state for child-support.

“It’s very common in Cuba for the man to just leave,” she mentions. Rosi admits that she has no desire to look for a relationship, and has lost her sense of emotional attraction.

“I’ve never enjoyed it,” she says of her work.

The lack of clients and her economic situation force her to accept anyone offering to pay, regardless of their requests.

“If you want it, it will cost you,” she explains.

In Rosi’s realm of Cuba’s prostitution culture, there is limited opportunity for social advancement. Women, men and children come to the Malecón for basic transactional sex, but struggle to find clients.

An abundance of underage prostitutes suggests that the supply of workers continues to grow, but the demand for sex has not increased at the same rate.  The market is full of “unemployed” sexual workers, and the resultant competition has caused everyone to lower their prices.

These facts don’t stop Rosi from coming to the city’s edge once darkness falls.

Lured into prostitution by promises of easy money and economic security, she has given herself no exit strategy.

“The situation here is critical,” she says.

Without a role in the emerging private sector, Rosi is one of the many Cubans who will remain chained to the underground economy of sexual tourism.