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.
"The Cuban government is coming to terms with reality; they have to cede ground to private enterprise," says Ted Henken, a professor at Baruch College at The City University of New York, who has studied private enterprise in Cuba.
The government began to tolerate a degree of private enterprise in the 1990s, after the collapse of the Soviet Union left Cuba without its main benefactor. Today, nearly 1 million Cubans work in the private sector – and several thousand (the exact number is unknown) engage in the black market economy. A doctor, for example, who earns just a little more than the average monthly national salary of $20, might rent out a room on the side to earn extra money.