Why being a taxi driver in Cuba can get you a lot of money there.

Introduction

When you think of a high paying job, you might think about a doctor, surgeon, engineer, scientist, or basically any other job that requires a high amount of skill. That is, if the economy is perfectly balanced between private and public sector control, such as in many countries in the world today. But in Cuba, a taxi driver earns more than a doctor. Why the heck?

It all has to do with how greatly politics affect the economy. Cuba’s economy is generally referred to as an “upside-down economy.”, where the highest paid jobs require the least skill, and the lowest paid jobs require the highest amount of skill. But more specifically, those high paying jobs which takes lower skill are privatized in Cuba’s unbelievably small private sector, and prices can be regulated by the business owners. Meanwhile workers such as doctors, engineers and other jobs in the public sector get paid less because the government pays them that much.

A bit of history

Back then in 1959 when Cuban Communist Party founder Fidel Castro took power over the entire country, Cuba was surviving thanks to subsidies from the Soviet Union due to a strong bond between Castro and the USSR. Just like the general concept of Communism, every Cuban citizen gets equal assets and payment no matter their job, productivity, and so on. It was all going fine until on Christmas day in 1991, when the Soviet Union collapsed due to some factors such as nationalist movements, Perestroika and Glasnost, and so on.

Ever since the collapse, Cuba’s economy has been dwindling. Because the USSR collapsed, no one gave Cuba support and subsidies, and considering that Cuba is a country very dependent on imports, resources in the country have been reducing, and growth is only a term the government could dream of. Cuban citizens use a rations card to collect supplies from the government for their well being. Ration cards in 2015 showed significantly less values than ration cards in 1992, and some rations have completely been cut off. Currently, they depend on subsidies from China and neighboring countries such as Venezuela.

Cuban Incomes

In Cuba, a taxi driver earns approximately $60 dollars, compared to the average wage of $40. Cuban government workers get paid way less than privatized workers due to average incomes forced to be cut because the economy is getting worse and worse every year. The average salary in Cuba is just $25 per month, which is really small compared to neighboring countries such as in Jamaica, the Cayman Islands, and countries in South America.

But why do Cuban taxi drivers, or more specifically, people who aren’t working in the government sector earn higher than the average people in Cuba? One word: Privatization.

Cuba's "Black Market"

Cuba has this sort of “Black market”, where independent businessmen and women from the country set up their own businesses without any government regulations. No government regulations means that they could set up their own prices, which leads to higher incomes, which are usually higher than what the government pays them. Cubans usually have a secondary job above their first one, which earns them way more income for survival in the country. They barely work in their primary job because it earns them little income from the government, and due to little to no government regulations, the prices they set are usually high and overpriced for the sake of survival.

Cuba’s private, or “black” market is still niche, but it is slowly growing due to may people taking desperate actions to survive in the country for the sake of higher incomes. Until Cuba’s government does something about this situation, the unregulated private sector could cause income inequality, and the incentives for skilled workers and government workers to work will greatly reduce, which could be very detrimental to the country.