HAVANA (AFP) – Cuba will increase its minimum wage fivefold as part of reforms due to come into effect on January 1 as it unifies its two official currencies, the official gazette said on Friday.
The large-scale reform of salaries and pensions had been promised for years before President Miguel Diaz-Canel announced it late on Thursday.
It will see the minimum wage increase from CUP400 to CUP2,100 (USD17 to USD87.) The reform will also see the convertible peso, which is pinned to the dollar and was introduced in 1994 to replace the US currency, phased out over the next six months.
It will leave only the regular peso that is worth 24 times less.
The idea is to make the Cuban economy more efficient and easier to understand for foreign investors.
It comes at a time when the country is reeling from toughened sanctions imposed by the administration of United States (US) President Donald Trump and from the drop in tourism and remittances due to the coronavirus pandemic.
Inflation is expected to soar so “it’s necessary to establish a minimum salary in the country that guarantees the satisfaction of basic necessities for the worker and his family, as well as the scale of salaries applicable to all workers”, said the Labour Ministry in a resolution published in the official gazette.
As well as the new minimum wage, there will be 32 pay scales based on the type of work, up to a maximum of CUP9,510.
Currently the average wage is just CUP879, according to the national statistics office. The new measures, that were first announced in 2013 before being repeatedly delayed, come at a delicate time for the Cuban economy, which is expected to shrink by eight per cent this year.