Cuba unveils private sector expansion plan

Cuba detailed its plan for expanding the private sector on Friday, saying self-employment would be allowed in 178 activities and the government would consider financial credits for the country's new entrepreneurs.

The plan, outlined in a story in Communist Party newspaper Granma, will let Cubans sell food, give massages, train animals, repair cars and homes, sell wine and many other things currently prohibited, in a liberalisation of Cuba's state-controlled economy.

The key goal of the reform was to "defend, maintain and continue perfecting socialism" by increasing productivity, the story said.

Self employment, it said, gives a worker "another way of feeling useful with his personal effort."

Many of the details of the plan were leaked earlier, but Friday's story was the first official confirmation of what will happen.

It contained comments from Cuban officials, including economy minister Marino Murillo Jorge and Labour vice-minister Admi Valhuerdi Cepero.

Cuba has said it will lay off 500,000 workers from state payrolls and, starting in October, will issue 250,000 licences for self-employment to help create private sector jobs for them. Another 200,000 government jobs will shift over to employee-run cooperatives and leasing arrangements.

More than 85% of the Cuban labour force, or more than 5 million people, worked for the government at the close of 2009, according to official figures.

For the first time since small businesses were nationalised in 1968, the self-employed will be allowed to hire their own employees.

Granma said private restaurants, known as "paladares," will be able to expand to 20 seats, up from the current limit of 12. Many popular paladares were already ignoring the 12-seat limit.

It also said homeowners who have permission to live outside the country will be able to rent out their homes while they are away.

The newspaper said the government was analysing with Cuba's central bank the possibility of providing financial credits to help the self-employed get their businesses up and running.

Many are expected to get start-up money from relatives living abroad.

Previously leaked Communist Party documents have said the self-employed will pay taxes ranging from 10% to 40% on their gross income, depending on their business, plus another 25% for the national social security programme.

Granma said the taxes will increase government revenues and help achieve their "adequate redistribution."

Murillo said Cuba would have to beef up inventory in its stores, which are state-run, to meet demand for equipment and supplies for the new businesses.

He said eventually it would be good to have wholesale outlets, but that will not be possible "in the next few years."