HAVANA: With government plans afoot to reshape Cuba`s work force by cutting the bloat out of some payrolls, President Raul Castro said Sunday he would allow more small private businesses.

The economy is 95 percent in state hands at the moment. Castro`s move is aimed at limiting the socioeconomic fallout from planned work force shifts that could target one million excess jobs.

The Council of Ministers "agreed to expand the range of self-employment jobs, and their use as another alternative for workers who lose their jobs," Castro said as he gave a closing address at a biannual session of the National Assembly.

After the crash of the former Soviet bloc, Cuba`s cash-strapped government in the 1990s approved a wide range of self-employment. Positions such as beauticians, dog groomers, small restaurant owners and even cigarette lighter refillers were legalized as long as workers got licenses and paid taxes.

But social resentment spread when some workers, particularly in small private restaurants, achieved dramatic levels of success.

The government began increasing taxation and regulation, and decreasing license-granting, until the self-employed sector was largely rendered paralyzed, like most of the economy.

By 2009, there were just 148,000 people out of a work force of five million who were legally self-employed.

Cuba has no regular access to international funding; it depends heavily on the cut-rate oil it gets from Venezuela in order to keep its fragile economy afloat. Tourism earnings and remittances from emigres also are key pillars of the Cuban economy.

Inefficiency is rampant and wages are woefully low.

Cubans` hopes had been running high that change was coming to allow some economic opening in the Americas` only one-party communist regime.

But the Castro government flatly ruled out the possibility of a sweeping turn toward capitalism.

"One cannot speak of reforms," said Economy Minister Marino Murillo.

"We are studying an updating of the Cuban economic model in which socialist economic priorities will be at the forefront, and not the market," he stressed, in a message sure to disappoint many on the island desperately weary after years of hardship and almost no economic or political change.

If there was any welcome news for Cubans, many of whom were fearful that job shifts discussed in state media recently could leave them unemployed for the first time, Castro insisted no massive firings without reassignment of workers would take place.

"No one will be simply left out in the cold" on the employment front, Castro said.

Raul Castro, 79, said he would launch new wage and salary practices early next year. He did not give details.

Three months ago he gave a green light for a test-run privatization of barber and beauty shops.

Under the limited program, the state now rents out shops to workers who used to live mainly on tips and work at home on off hours. Now stylists are able to set their own prices, and are working at improving service. Stylists pay for a license, their rent, social security plus electric and water bills.

Legislative committees have been looking at whether privatization can be expanded in food businesses, long plagued by insufficient supply, high prices, and major problems in the distribution chain, from rampant theft to spoilage.

Castro took the reins from his ailing brother Fidel Castro four years ago, saying he wanted to boost production. But the Cuban government has not made bold policy shifts able to achieve the gains it wants.

So far the government has handed fallow land to Cubans willing to farm it, and has ended the equal scale for salaries for all workers across industries.

But workers still make an average of around 20 dollars a month.

BDST: 0949 HRS, August 02, 2010