Effects on real incomes
The dual exchange rate system is the main reason for Cuba’s ‘upside down’ pattern of income distribution. Precise measurement of relative real incomes is difficult, however, due to state controlled prices for basic goods.
In the state sector, wages are paid in CUP. The average monthly state salary is CUP460. The top CUP salary is around CUP2,000. At the Cadeca rate, the average monthly state salary can be exchanged for just CUC19.2 (US$19.2), and the top salary for a modest US$83.3. However, for a Cuban household there is not a linear relationship between CUP and CUC values, because of the relatively high purchasing power of that part of CUP income that is spent on subsidised goods (including basic foods, medicines, school supplies etc) and services (including pre-school child care, transport, and housing costs). Therefore, the US dollar purchasing power value of the first CUP400 of monthly household income (a very rough estimate of the amount spent on subsidised goods and services) is generally even more than US$400, but the value of the next CUP400 is closer to US$19.
Most Cuban state employees also receive some part of their monthly income in the form of a CUC bonus, or gifts in kind. These usually range in monthly value from around CUC5 to CUC30.
In the non-state (formal and informal) economy, incomes range enormously. These can be denominated in CUP or CUC: it is becoming custom to use the two currencies interchangeably for private sector trading and wage-setting, using the Cadeca rate. At the lower end, it appears that some employers are offering incomes around the level of state salaries – just CUC1 a day – enough for subsistence thanks to state subsidies for basic goods and services. At the upper end, there are reports of incomes of over CUC4,000 per month: 100 times the average state salary in nominal terms, and more than 10 times the average salary in real terms.
