Cuba needed a new law on pensions for the best of reasons. Cuba’s life expectancy had increased. Cubans live on average as long as Europeans or North Americans. Such heightened life expectancy summarizes many of Cuba’s achievements of the past half-century. Fewer infants die at birth in Havana than in Washington, DC. Over the decades Cubans acquired better access to nutrition, curative and preventive health care free of charge, schooling to obtain the information needed to lead healthier lives, options for physical exercise in state-supported athletics and sports, and all under conditions of sufficient equality to permit a broad universal advance. It was the best of times in many ways.
Such success, however, has also had adverse consequences—what in the United States would be called a massive problem of unfunded pension liabilities. The old law permitted retirement for women at age 55 and for men at age 60. The new law increases those ages to 60 and 65, respectively. The impact of longer life expectancy on retirement plans is common in Europe and Japan. However, Cuba is different because, unlike Europe or Japan, it is a rapidly aging but poor country. Plus, unlike China, which is about to age rapidly as well, Cuba lacks a reliable economic growth path of its own that would not depend on external subsidies, which in recent years have come from Hugo Chávez’s Venezuela.
During the same session of the National Assembly, government officials announced with pride that the minimum pension, which is what many retired Cubans receive, had risen to the equivalent of $8.33 per month. True, access to health care is free, but the elderly still have to purchase medicines, which are often missing or in short supply in pharmacies and may only be purchased with “convertible pesos”—Cuban currency, equivalent to dollars or euros—used to purchase goods or services at international prices that are quoted also in euro or dollar equivalents. The elderly must also buy food, yet the rationing card covers only about half of a month’s supply of food, so convertible pesos are needed as well. The insufficiency of Cuba’s economic growth helps to explain the hardship that many Cubans must bear every day.
Cuba’s social security law should have been changed years ago. Long ago, Cuba’s excellent demographers had identified this demographic transition. Cuba’s population actually fell in 2006 and again in 2007 (while slightly rising in 2008) but the forecasts about the rapid aging predate these years. Why, then, was there no change sooner? Fidel Castro had the power to enact such a change but proved allergic to this and other reforms. It fell to Raúl Castro to have the guts to enact this change during his first year as president and to do so on the same year when the world economy collapsed, hitting Cuba hard as it has other countries—the worst of times.
The approach followed to enact the social security reform is noteworthy. The July 2008 National Assembly session enacted a preliminary bill that the population would discuss. At the December 2008 National Assembly session, the Labor Minister reported that 99.1 percent of the 3,057,568 participants in assemblies convened to discuss the bill had approved it. This was no doubt aided by the government’s full use of its ownership and operation of all the mass media to defend the policy changes in the absence of counterarguments. Nor should there be doubt that the substantive policy change was necessary. But surely the minister should have blushed. Did he really believe that a policy change of this magnitude, bitterly divisive in most democratic countries, would have obtained such an unbelievably high rate of approval? It was laudable to promote a public national debate about the change but regrettable that the government succumbed, once again, to a half-century legacy of authoritarianism hidden behind a pretended unanimity.
During the past half century, Cuba has had varied and complex experiences. The National Assembly’s December 2008 plenary session, on the eve of the fiftieth anniversary of the current political regime, brought together much of the good and the bad of these decades, as well as the silly and the imprudent. Yet it is evident that Cuba’s new president is prepared to take on some statesmanlike, albeit unpopular, decisions for the sake of sounder governance. What other courageous steps might he be willing to undertake in 2009?
Jorge I. Dominguez is the Antonio Madero Professor of Mexican and Latin American Politics and Economics, Vice-Provost for International Affairs, and Special Adviser to the FAS Dean for International Studies.