Cuba plans to double minimum wage

President Castro says the rises will benefit low-wage workers
President Fidel Castro of Cuba has announced plans to more than double the country's minimum wage.

Labourers earning about 100 Cuban pesos ($4.10; £2.13) a month will see their wages rise to 225 pesos from 1 May.

The move will benefit 1.6 million workers, including farmhands, plumbers and undertakers, who survive on the lowest wages in communist Cuba.

President Castro's confidence in the economy has been buoyed by closer trade relations with Venezuela and China.

Oil deposits have also recently been discovered off Cuba's coast.

Welfare gains

Many Cubans supplement their low wages by working on the black market.

Cuba's economy has been struggling since the collapse in 1991 of its former backer, the Soviet Union.

However, Cuba's government has recently introduced a number of measures in an attempt to improve the livelihood of its citizens.

"I think we are coming along rather well," President Castro said in a televised address on Thursday, his eighth speech in 11 days.

At the end of March, the 78-year-old president announced a rise in payments for Cubans claiming welfare, including single mothers, widows and disabled people.

The increase in welfare payments, which will benefit 1.5 million Cubans, will also take place from 1 May.

President Castro said the minimum wage increases would cost the Cuban government about 1.1bn pesos.

The average Cuban government worker earns about 300 pesos a month, although most citizens pay no rent, while education and health care provision are also free.
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This is good. Too bad the U.S. cant follow suit and raise their minimum wage. Even if it was only 50 cents, it would help a lot of people out with the recent rise in gas prices.

good for them.

That Fidel, what a nice guy!

A raise in minimum wage can raise inflation. What Cuba really needs is more stores like Wal-Mart which helps keep inflation low.

Labourers earning about 100 Cuban pesos ($4.10; £2.13) a month will see their wages rise to 225 pesos from 1 May.

That would be >$8.20 an hour!

It's the final sign that America is shit. I make more than $2 above min wage - and still make under $8.20 an hour!! FUCKIT, IM MOVING TO CUBA!

It would be unethical for an American company to operate in Cuba b/c of the embargo, wouldn't it? And we all know that Wal-Mart is a bastion of ethics. So, forget it.

First thing I thought of when I saw this thread.

I'll be eager to see what the cost of living increase will be in Cuba a few months from now.

Have fun, and I hope you don't end up in a labor camp!! But if you do, send me a postcard.

Um, that's $8.20 A MONTH.

I don't think businesses in Cuba can easily raise their prices, but I'm not really sure about this. But it's true that in capitalist societies, companies affected by a minimum wage increase will generally pass along the higher costs to consumers through price increases.

Ouch! Jenni, I'm a fan. I hate to see you take a hit like that.

I don't know either but the article does refer to the black market. So I'm sure black market prices will surely rise.

Since when do underground economies adhere to government regulations?

hmmm, let's see if it has any effect on the people travelling 80 miles on rafts made out of driftwood holey innertubes and a prayer.

I'm going to go with.....nope.

and if the first poster is right, that's 8.20 a month not 8.20 an hour.

education and rent is free. 8.20 a month, still dosen't buy a lot of tacos.

but hey, now they can afford one moderately priced cigar so that's good.

If the United States would trade with them they'd be doing a lot better. They just need to promote Cuban business and put giant import tarriffs on American goods and not allow American companies to invest in property.

There is absolutely no good reason I cannot purchase Cuban Cigars/Rum etc whatever here in the states, or travel to Havana and drink mojitos on the beach.

ahhh, yes. price and wage controls to the rescue.

it's all so simple if we restrict our focus to just the benefits or just the costs of such action...

a business will not employ anyone who does not return to the company at least what the business is paying for their services. why won't viacom or merrill lynch pay me $100,000/yr? because i'll probably bring in about $6.22 worth of business. employees, and the wages they are paid, are costs to a company. if a laborer is being paid $5.00/hr, he or she must be bringing in $5.00/hr or more. if he is bringing in less, the firm effectively loses money for every hour that he is employed. translation = laborer loses his or her job.

introducing a price floor into the labor market necessarily results in unemployment. let's say, for arguement's sake, that the minimum wage increases from $5.00/hr to $6.00/hr. all those employees who were bringing in between $5.00/hr and $5.99/hr will lose their jobs. if you're mcdonalds, and have 10 employees pre-hike, which will you get rid of post-hike? yep. the worst workers.

it's fairly evident and intuitive that the less skilled are much more likely to bring in less money per hour than their more skilled peers. as such, it is always the less skilled who lose their jobs as a result of the minimum wage increase. does it seem particularly fair to you that the increased purchasing power of the few (better-off) remaining employees comes at the expense of those who can least afford to lose their jobs? the unskilled are, for all intents and purposes, subsidizing the skilled.

further, as the minimum wage represents an increased cost to the business, their operating costs increase. translation = increased prices. and don't forget: the minimum wage is demand-side stimulation, which means that even if we held the firm's price constant, prices would still rise as a result of increased demand. now put the two together. you have a compounding effect whereby prices rise exponentially more than they would had the market been left alone. these higher prices are born by everybody, including those who have lost their jobs as a result of the minimum wage's imposition.

i'll pass on increasing the minimum wage. it disproportionately harms those who can least afford to be harmed.

's okee, B, I lived.

So would slightly increasing the minimum wage be better, or should it not even be touched?

well...

i would like to see it abolished, though that will never happen. inflation, however, has a way of obviating the minimum wage. if we leave it be for a while, inflation will surely drive up wages to the point where the minimum wage is below the market clearing wage and ineffectual.

so if it were up to me, i would say "so long" to the minimum wage.