Cuba has announced plans to slash one million state jobs and encourage the growth of its emerging small business sector in a gamble it hopes can keep its communist system and floundering economy afloat.
Workers laid off from government jobs will no longer be sent home with partial pay, but will instead have to find other means to make a living, the Cuban Worker's Central, or CTC by its Spanish acronym, warned on Monday.
It said more than 500,000 public sector jobs will be eliminated, in a first major cut, by March 2011.
"Our state neither can nor should continue maintaining companies... with inflated payrolls, and losses that are a drag on the economy, are counterproductive, generate bad habits and deform workers' performance," the CTC said.
President Raul Castro said in 2009 the government wanted to relocate more than a million state employees, sending shockwaves through a society which has grown accustomed to stable levels of employment over the last 50 years.
Cuba has a workforce of 4.9 million people in a country with 11.2 million population. The state controls 95 percent of the economy.
For years, the government has given laid off workers up to 60 percent of their salary while they were waiting to be placed in a new job.
But the CTC said "it will no longer be possible to indefinitely protect or subsidize workers' incomes."
The government is to hand out 250,000 permits in some 120 different types of small business and is encouraging mechanics, cobblers, hairdressers, gardeners and translators among others to apply, say documents circulating in workplaces.
Workers typically will pay a license fee, and sometimes rent. The government is hoping the emerging private sector can absorb workers but many analysts have their doubts.
Still, Yvonne Molina, 27, who recently received a permit to open a small seamstress business in her garage in downtown Havana, was hopful.
Molina said she hopes to earn significantly more than the meager wages of around 20 dollars a month the government pays.
"Every month I pay 300 pesos (about 12 dollars) for my license, and I earned 250 pesos (around 10 dollars) in one week. I've always fixed clothes," she told AFP. "I used to do it illegally. Now I can make dresses, sell them and earn a living with no fear that I will be fined."
Cuba's economy went into freefall after the collapse of former communist allies in the east bloc after 1989.
It emerged battered but afloat once it locked in Venezuela's President Hugo Chavez as a key political ally. Caracas supplies Havana with cut-rate oil and props up its economy -- as do hundreds of millions of dollars in remittances from about 1.5 million Cubans who voted with their feet and live abroad.
Hopes for change ran high after Raul Castro took over the country's helm in 2006 as his brother, revolutionary icon and longtime president Fidel, faced a life-threatening illness.
But even economic change -- much less political -- has been minor and rare under Raul Castro, 79. Fidel, now 84, remains Communist Party chief.
Half of Cuba's land is currently not producing, and the country imports 80 percent of its food. Though slightly larger than Portugal, Cuba has great trouble simply moving food from the country into cities.
Fidel Castro last week caused a stir when it was reported he told a US journalist: "The Cuban model doesn't even work for us any more."
The former president later confirmed he made the remark, but said it was not meant to have been taken literally and that he meant "exactly the opposite."
Peru's President Alan Garcia, asked about the flap in Lima, said "is the Cuban model of state ownership of everything applicable to society now? I'd say it is not."