Cuba gives salary increases to residents

Money comes after Raul Castro's restrictions
4/27/2008 HAVANA, Cuba The pay increases - which will affect almost one in five Cubans - were the first since 2005 and the first since Raul Castro replaced his ailing brother Fidel as president. Since taking office, Raul Castro has done away with some of Cuba's most-despised restrictions on daily life, bolstering his popularity and sparking rumors that more changes are coming.

Beginning in May, more than 2.1 million retirees will receive pension increases worth just under US$2 (euro1.28) a month. Minimum pensions will rise to US$9.50 (euro6) a month, while elderly Cubans who already collect larger retirement checks will see their benefits increase to US$19 (euro12.20), according to a notice published in the Communist youth newspaper Juventud Rebelde.

The notice said more than 9,000 court employees will get raises worth US$10 (euro6.40) a month, with judges and prosecutors receiving monthly increases roughly double that. The sector's median monthly salary will increase to US$26.60 (euro17).

While such increases are tiny by international standards, they will go a long way in a country where the government controls more than 90 percent of the economy and most people live rent-free. The communist system also provides free education and health care and a ration program for basic food needs.

Still, most Cubans find it virtually impossible to live on government salaries, and retirees are an especially vulnerable.

The government statement Sunday said it was raising salaries, "starting with those that were the lowest in the fair effort to reduce social inequalities and ensure that every citizen can live on his work and pension."

Raul Castro has said publicly that state salaries are not enough to live on and his government has suggested it will do away with wage limits and rework the official salary system, creating incentives to work by allowing government employees to earn as much as they can.

That has fueled speculation of widespread government wage increases. Sunday's statement said more raises would come in time, but added that the government could not yet afford to pay all state employees more.

"Currently, it is not possible to apply salary increases to all labor sectors, given that the country does not have the necessary resources at the moment," it said. "The salary increases will apply by sector and priority, always following a rigorous evaluation of the economic and financial conditions."

The raises in pensions will cost the government more than US$38 million (euro24 million) annually, while increases in court salaries will cost about US$658,000 (euro422,000) per year.

Since succeeding his 81-year-old brother to become Cuba's first new president in nearly five decades, Raul Castro has dropped unpopular restrictions that have kept Cubans from staying at luxury hotels and renting cars. He has authorized Cubans to own cell phones and computers and buy DVD players and coveted kitchen appliances for the first time.

The changes have bolstered the new president's popularity but also sparked rampant rumors that more changes are coming, including an easing of restrictions on travel outside of Cuba and an effort to strengthen the peso, currently worth 21 per single U.S. dollar.

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