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Communist Cuba turns to private enterprise

Cuba hopes that private enterprise will revive a struggling economy. The state will lay off 500,000 workers and encourage them to find jobs in the private sector.

By Staff Writer / September 24, 2010

Manuel Cardenas repairs shoes in a state-run workshop in Havana; his job may be at risk.

Franklin Reyes/AP

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Mexico City and Havana, Cuba

Since swallowing the news that 500,000 state workers will be laid off in Cuba in an effort to raise productivity and fix the ailing economy, construction worker Antonio Charadán says he is experiencing the rare feeling of "going it alone" in this communist-run nation.

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"My job might not be considered necessary," says Mr. Charadán, a father of two. "I do not know where I will be in a few months; I feel secure about nothing."

Adriana Robles feels the economic shift under way, too, but says it is precisely what Cuba needs to survive in today's global economy.

"Everywhere in the world, work is something that you have to fight for," says the secretary, who has worked in Havana for 25 years. "Here we are used to having everything easy."

Cuba's Sept. 13 announcement that it will cut workers from the government payroll and encourage them to join private cooperatives or start their own businesses has generated much concern across the island nation, but also hope that a more liberal economic policy is in sight. As Cuban residents adjust to their new work prospects, observers say this is the first step in creating a radically new Cuban economy.

"This is moving toward the creation of a small and medium business sector, even though they are not going to call it that," says Philip Peters, a Cuba expert at the Lexington Institute, a think tank in Virginia. "If they carry this thing through, Cuba will look very different a year from now."

The government, according to local media, has begun calling meetings across the nation to explain the layoffs and options ahead.

Raúl Castro, who has led the nation since his older brother, Fidel, fell ill in 2006, has long been seen as a pragmatist who is open to economic changes – and this move bolsters that reputation.

Under Raúl Castro's leadership, Cubans have been given the right to buy cellphones and own other electronics. Private taxi drivers have been granted state licenses and private farmers have been granted state land. But the changes announced this month are the most far-reaching to date.

The layoffs will affect 10 percent of the 5.1 million workforce. The plan is an attempt to scale back a bloated, inefficient state payroll and is expected to be completed by spring 2011 and affect all government ministries.

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