Cuba to cut one million public sector jobs Published duration 14 September 2010

image caption Cuba's government employs about 85% of the country's 5.1 million workers

Cuba has announced radical plans to lay off huge numbers of state employees, to help revive the communist country's struggling economy.

The Cuban labour federation said more than a million workers would lose their jobs - half of them by March next year.

Those laid off will be encouraged to become self-employed or join new private enterprises, on which some of the current restrictions will be eased.

Analysts say it is the biggest private sector shift since the 1959 revolution.

Cuba's communist government currently controls almost all aspects of the country's economy and employs about 85% of the official workforce, which is put at 5.1 million people.

As many as one-in-five of all workers could lose their jobs.

"Our state cannot and should not continue maintaining companies, productive entities, services and budgeted sectors with bloated payrolls and losses that hurt the economy," the labour federation said in a statement.

"Job options will be increased and broadened with new forms of non-state employment, among them leasing land, co-operatives, and self-employment, absorbing hundreds of thousands of workers in the coming years," the statement added.

Free enterprise?

To create jobs for the redundant workers, strict rules limiting private enterprise will be relaxed and many more licenses will be issued for people to become self-employed.

Private businesses will be allowed to employ staff for the first time.

The self-employed will have access to social security and will be able to open bank accounts and even borrow money to expand their businesses.

They will also have to pay tax on their profits and for each person they employ, something which could dramatically boost the government's income.

And they will be able to negotiate contracts to provide services to government departments.

A minority of Cuban workers already work for themselves, for example as hairdressers and taxi-drivers, or running small family restaurants.

There is also a thriving black economy, with many people working independently without proper permission from the state.

The BBC's Fernando Ravsberg in Havana says salaries in Cuba's state sector are so low that many employees could be better off working for themselves.

But he says not everyone has the skills and initiative necessary to be self-employed.

He adds that the government plan does not foresee any kind of advice being offered to people seeking to set up their own businesses.

Economic crisis

image caption President Raul Castro has said the state's role in the economy must shrink

President Raul Castro outlined some of the changes in a speech in August, saying the state's role in the economy had to be reduced.

"We have to end forever the notion that Cuba is the only country in the world where you can live without working," he said.

Cuba's state-run economy has been gripped by a severe crisis in the past two years that has forced it to cut imports.

It has suffered from a fall in the price for its main export, nickel, as well as a decline in tourism.

Growth has also been hampered by the 48-year US trade embargo.