Business

Study: Cubans don’t make much, but it’s more than state salaries indicate

Cuban consumers peruse the goods at a store in Cienfuegos. A new survey shows that Cubans’ income is higher than average state salaries would indicate.
Cuban consumers peruse the goods at a store in Cienfuegos. A new survey shows that Cubans’ income is higher than average state salaries would indicate. mwhitefield@MiamiHerald.com

When relations between Cuba and the United States were in the deep freeze, few American companies viewed the island as a potential consumer market.

With rock-bottom salaries and the embargo firmly in place, there was little to pique their interest. But now with the Obama administration’s opening toward Cuba, international consulting companies have begun to take the pulse of Cuban consumers.

The latest consumer survey comes from Rose Marketing, which was founded in Boston and was the first independent advertising and public relations firm to enter the then Soviet Union in 1989. It is now headquartered in Moscow and has consulted for many multinational firms. Last year Rose become one of the first marketing agencies offering its services in Cuba.

The Rose survey indicates that Cubans earn considerably more than the official average monthly salary, which was 687 pesos, or about $25, in 2015, according to Cuba’s National Office of Statistics. Wages in Cuba averaged just 494.4 pesos ($18.66) monthly from 2008 to 2015.

The survey, which was conducted among 1,067 Cubans in Havana, Santiago de Cuba, Holguín, Camagüey, Pinar del Río, and Cienfuegos in May and June, found that about 27 percent of Cubans earn under $50 per month; 34 percent earn the equivalent of $50 to $100 per month; and 20 percent earn $101 to $200. Twelve percent reported earning $201 to $500 a month; and almost 4 percent said their monthly earnings topped $500, including 1.5 percent who said they earned more than $1,000.

The remainder of respondents declined to state their income, and Rose said the survey had a margin of error of plus or minus 3 percentage points.

“Of course these income figures are relatively low in contrast to other nations and the average Cuban still struggles to make ends meet,” Rose noted. But the firm said the income figures should also be taken in the context that “Cubans receive free healthcare and education, as well as minimally subsidized living expenses.”

Another recent consumer study by the Boston Consulting Group found that about half the Cuban population lives with a median household income of $300 to $400 a year. However, it also found that about half of Cuban consumers — mainly those in urban areas — had a household income of $1,000 to $2,000.

Many Cubans have jobs on the side, and in recent years about a half million have joined the ranks of Cuba’s cuentapropistas, or self-employed. Although there are still many government restrictions on self-employed workers, the earnings potential for some is considerably more than state salaries. About 50,000 employees of Cuba’s joint ventures with foreign companies also have higher earnings potential as do those employed in the tourism sector who get tips.

Last week Marino Murillo, Cuba’s economy minister, said that Cuba would have to cut its fuel consumption by almost a third from now to the end of the year due to the dwindling economic prospects of its patron, Venezuela.

But at the time the survey was done this spring, Cubans were optimistic. Seventy percent of those surveyed said they expected their incomes to increase in the next six to twelve months — a prospect that is now more dubious since the Cuban economy grew just 1 percent in the first half of the year. Murillo said Cuba will have to reduce both imports and state investments in coming months.

That could also dash Cubans’ hopes for new consumer purchases. The Rose survey found that 16 percent said they planned to buy home appliances in the next six to 12 months, 15 percent wanted to buy perfume, and 13 percent planned purchases of fashion clothes. Twelve percent said they planned to buy airline tickets; 12 percent, shoes; 7 percent, automobiles; 6 percent, laptops; and 5 percent, smartphones.

Although advertising is infrequently seen on the island, 80 percent of survey respondents claimed it would influence the brands they select. Many Cubans carefully peruse the ads and fliers from newspapers brought from abroad by friends and relatives, and advertising has begun to appear on some Cuban apps and on the Paquete Semanal (Weekly Package), a collection of movies, television and other pirated content from abroad that is distributed on portable hard drives.

Another important source of supplemental income for Cubans is the remittance payments they receive from abroad. Miami-based Havana Consulting Group estimated that remittances sent to the island reached a record $3.35 billion last year. Between 2008 and 2015, the firm said remittances to Cuba grew by $1.9 billion and were the principal source of Cuban family income.

Havana Consulting said an increase in flights to Cuba in recent years has contributed to the growth of remittances since each Cuban that travels to the island carries an estimated $3,200 to $3,500 in cash. Increased migration of Cubans, loosening of U.S. restrictions on remittances and the rise of a fledgling private sector in Cuba that is often financed by money from abroad are other factors the firm cites in explaining the spurt in remittances.

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