Raúl Castro has proposed term limits for Cuba's rulers, including himself, in an unprecedented effort to rejuvenate the island's political leadership.

The 79-year-old Cuban president told the Communist party congress that senior positions should be rotated at least every 10 years to shake off the inertia and "self-delusion" that has crippled the economy.

"We have reached the conclusion that it is advisable to recommend limiting the time of service in high political and state positions to a maximum of two five-year terms," he said.

The four-day congress, which ends on Tuesday, is expected to endorse most – if not all – of 311 proposals to liberalise Cuba's stagnant, centrally planned, economy with cuts and privatisations.

Castro sprung a surprise in a speech on Saturday, which opened the congress, by denouncing a tendency towards geriatric leadership. Veterans of the 1959 revolution dominate senior posts. The first vice president, Juan Machado Ventura, is 80 and the second vice president, Ramiro Valdés, is 77. Raúl's brother and predecessor, Fidel, 84, still retains influence.

The congress, the first in 14 years, was likely to be the last for the Castros and their generation, said the president, adding that efforts to promote young people to top jobs had failed. "Life proved we did not always make the best choice … it's really embarrassing that we have not solved this problem in more than half a century."

His call for systematic rejuvenation will be debated not at the congress but at a party conference in January. Raúl succeeded Fidel in 2008, suggesting he could stay in charge at least until 2018, when he would be 86. The congress is expected to confirm the president as the party's first secretary but it remains unclear whether the second secretary – and possible successor – will be from a younger generation.

The congress, which has gathered 1,000 delegates, coincided with a parade of military hardware and hundreds of thousands of marchers to commemorate the 50th anniversary of the Bay of Pigs, when the revolution defeated a CIA-backed invasion of exiles. The stirring speeches about the continued fight against imperialism reinforced official rhetoric that liberalising the economy was about saving socialism, not abolishing it. Even so, some western diplomats in Havana say there is a Thatcherite agenda of cutting rights and welfare, and of emphasising personal responsibility and hard work.

Across Havana and the countryside slogans on old government billboards have acquired some irony: "Revolution means the historic moment." "Revolution is to change everything that can be changed." The state, which dominates the economy, accounts for about 80% of jobs, which pay on average about $20 a month. Agriculture and industry are anaemic. Castro criticised a sclerotic bureaucracy which stifled initiative and buried problems. "No country or person can spend more than they have. Two plus two is four. Never five, much less six or seven as we have sometimes pretended."

Of late, about 171,000 licences have been acquired for small businesses. The government hopes a partially unshackled private sector will soak up about a million state-sector workers soon to be jobless. Many formerly black-market hustlers have become legitimate traders with licences pinned to their chests. "Before I used to have a zipped bag under my shoulder and say 'pssst, want some flowers?'" said Rodolfo Mera, with a cartload of blooms. "Now the cops don't bother me."

Castro said the universal monthly food ration, already whittled down, would be restricted to the neediest. It had become "an unsupportable burden for the economy and a de-stimulus of work," he said. He promised that Cuba would avoid "shock therapy" and not allow a concentration of property in private hands. It was unclear whether this meant a continued ban on selling cars and houses.

"Little by little this place is opening up. It's getting a bit easier to get by," said Angel Morales, a 23-year-old who drives his father's Lada taxi.