Private Business Expands in Cuba, Hiring of Up to 100 Workers Allowed 0 12

Cuban lawmakers unanimously approved a large package of reforms supported by the Communist Party and the country's former leader Raul Castro. According to Reuters, the reforms involve the partial privatization of a significant portion of Cuba's socialist economy. This is yet another attempt by the country to survive under harsh American sanctions.

If the reforms are fully implemented, it will represent the most serious revision of the Cuban economic model since the 1959 revolution and a notable shift towards the market.

The new rules allow private real estate construction, permit the transformation of state enterprises into commercial companies with shares and stakes, and open the way for private banks into the financial sector, which was previously almost entirely controlled by the state.

In addition, the authorities will allow the sale of state property to Cuban and foreign companies, private individuals, as well as Cubans living abroad. For a country where the state has maintained control over land and industry for decades, this is a significant shift.

Before the vote, Cuban President Miguel Díaz-Canel urged lawmakers not to view the reforms as a renunciation of socialism. "The issue here is how to continue building socialism, which has been under the longest blockade in history by the largest world power for many decades," Díaz-Canel stated, referring to the American sanctions. "We are not renouncing socialism."

Prime Minister Manuel Marrero stated that the new measures effectively recognize the market as "a tool for the efficient allocation of resources" — for the Cuban communist system, this sounds almost like an ideological turnaround. He emphasized that this is not about abandoning socialism, but about "updating" the economic and social model to improve the quality of life for Cubans.

The package includes more than 175 measures. The Prime Minister presented it to lawmakers for nearly two hours, after which the National Assembly unanimously supported the reforms. When and how exactly these decisions will start to work in practice remains an open question.

Under Pressure from the U.S.

Many steps towards liberalizing the Cuban economy have been discussed for a long time — both within the country and beyond. However, the recent escalation of relations with the U.S. has brought this topic back to the forefront.

Cuba's state economy, with its bureaucracy and low efficiency, has been experiencing a prolonged crisis since the collapse of the Soviet Union, which supported Havana for decades.

Sanctions from the Donald Trump administration, including a months-long oil blockade, have further narrowed the space for maneuver: the economy took another hit, foreign businesses began to leave, and the tourism sector — one of the main sources of income — sharply declined.

Díaz-Canel specifically emphasized that the decision to open up the economy is not related to negotiations between Cuba and the U.S. Earlier this year, the two countries began to establish contacts, but negotiations appear to have already stalled. The U.S. State Department has not commented on the situation so far.

The reforms have also been supported by Raul Castro — the long-time leader of the Communist Party. In May, he was charged in the U.S. with murder.

At the same time, the measures largely revise the economic order that has existed since the 1959 revolution. In a letter first presented to the Politburo and then to lawmakers, Castro called the reforms "useful" and urged for their swift implementation.

Opening a Business

The reform package significantly reduces the role of state enterprises and expands the space for private business, which has long been constrained by strict state regulations.

Cuban companies will be allowed for the first time to hire more than 100 employees. Entrepreneurs will also be able to own multiple private enterprises — this is also a fundamental innovation for Cuba.

According to Marrero, the movement of private capital should become easier thanks to state-controlled private banks and a digital currency market with licensed operators.

Cuba has maintained one of the most generous systems of social guarantees in the region for decades: the state subsidized education, healthcare, and transportation. However, the economic crisis of recent years has severely impacted these areas.

Now, the authorities intend to restructure the tax system. Social programs will be financed not only by state structures but also by private companies — both Cuban and foreign.