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Inconsistencies and a cashless society

Ever wondered how to make it into the top earnings quartile? In Cuba the answer is to work as a maid at a tourist resort hotel.
I recently spent a sun filled week holidaying in Cuba. The temperature was perfect swimming weather, in the high twenties degrees Celsius.

Cuba proved to be a fascinating, frustrating and fun place for a veritable multitude of reasons.

According to Forbes the average Cuban earns the equivalent of USD$25 per month. The Miami Herald provides a bit more detail, breaking earnings down into proportions of the population by income band.

Cuban Average Monthly Earnings 2015

Even factoring in the fact that everyone is eligible for free university tuition and free health care, it still doesn’t amount to a whole lot of money.

At the moment Cuba maintains not one but two currencies, one for tourists (the Convertible Peso) and another for locals (the Peso). The tourist currency is at parity with the US Dollar, and valued at 24x the local currency.

This creates some interesting relative valuation scenarios.

If you though taxi fares were expensive, you were correct!

A taxi ride from the Havana airport to the Varadero tourist precinct costs a fixed price equivalent of USD$120, the equivalent of nearly 5 months average Cuban wages.

Havana Airport to Varadero

A single night’s accommodation in a Cuban equivalent of a 4 star all-inclusive resort costs in the vicinity of USD$240, or nearly 10 months average wages.

A typical package holiday runs for 7 nights, so when you throw in the return taxi journey to/from the airport you would be spending over 6 years average Cuban wages!

How about some tourist clich├ęs… a fancy Montecristo cigar and a bottle of Havana Club rum? That will cost you what the guy serving you earns in a fortnight.

Montecristo cigar and a bottle of Havana Club rum

How to get rich by... cleaning toilets?

Next consider the lot in life of a maid working in that fancy resort. Officially she earns that USD$25 a monthly wage.

As a hotel guest, if you want your room stocked up with bottled water and toilet paper, then you’d better leave her a tip. After talking to some of the other hotel guests, the going rate was about USD$1 per day… except for the couple of tight assed Australians who didn’t tip and subsequently found themselves caught short when the perils of chancing the buffet breakfast tray of scrambled eggs paid them a visit!

Each shift the maid cleaned 18 rooms. If 75% of the rooms were occupied by tipping guests then she would comfortably earn more than 10x her official wages in tips, easily putting her into the top quartile of Cuban income earners.

The most useful features of a smart phone don't require data

Another thing I found interesting was mobile phone penetration. Cubans were first able to legally use mobile phones in 2008. Less than 10 years later they were everywhere. Most people were using vintage Nokia handsets, my guess is Cuba is one of the places that old handset you traded in may have ended up.

That said many of the tourist facing locals I encountered, such as the taxi drivers and maids, were using 2-3 year old iPhones and Samsung Galaxy handsets. When I asked about this several mentioned that Canadian tourist had given the handsets in lieu of a tip, explaining that apparently many Canadian calling plans include a replacement handset each year so tourists sometimes bring the old handsets with them to save some money when tipping a tour guide for example.

I was surprised to hear the attraction of these newer generation handsets was primarily (apart from snob value) the physical features built into the handsets such as the camera, music player and torch. Prohibitive data usage charges meant the ubiquitous mobile data driven services like email, internet and Facebook were too expensive to use.

Embraced the cashless society ideal? Good luck with that!

The thing I struggled most with in Cuba was the need to pay cash for absolutely everything. In Europe we’ve gotten so used to paying for things with a tap of our debit/credit cards or phones, to the extent that in some countries shops are no longer obligated to accept cash payments. For example in Sweden less than 2% of financial transactions are performed using cash.

So what?

In Cuba card payment facilities are both rare and unreliable, any visitors would be wise to learn from my mistakes and bring sufficient cash to cover all their expected outgoings with them… including paying for accommodation, tours, and everything else that advertises that (in theory) they accept card payments.

2 comments :

theFIREstarter.co.uk said...

Cool to hear about your time in Cuba, it sounds like an interesting place that I've always wanted to visit!

I can't work out how people can earn $25 average a month when (for example) a taxi costs $120? How much of that money goes to the driver?! The taxi company owner must be creaming it I presume, or is it all state run? :|

Slow Dad said...

Thanks TFS.

From what the cabbie said the cars are provided, the airport run fares are fixed, and in the scheme of things it was a good job to have. That said he worked a 12 hour shift, paid his own speeding fines, and was part the way through a two year build of a new house for his family... they didn't have access to mortgage financing like we enjoy, so had to pay for things the old fashioned way.

The most interesting thing however was there is a big hitch-hiking culture in Cuba, so when the taxi drivers didn't have a paying fare they would happily pick up people hitching. While I thought that was really nice, I struggled to get my head around it as now the taxi was occupied and unavailable for paying fares. The cabbie just shrugged and said he liked helping people out, which was a common theme amongst many of the folks we met during out visit.

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