By Marc Frank

HAVANA (Reuters) - The pace of economic reform ispicking up in Communist Cuba with the announcement last weekthat 500,000 state jobs will be shifted to the private sector.

It was the most important policy move since President RaulCastro took over day-to-day governing from his ailing brotherFidel Castro in July, 2006. He assumed the presidency in 2008.

Castro signaled from early on that one of the world's lastSoviet-style economies was due for an overhaul under his watch,but he has ruled out any switch to Western-style capitalism.

By October, 2006, the official media had started publishingcriticism, taking aim at everything from the state monopoly onbuying and selling food, to retail fraud and poor services.

In a closed-door session of parliament in December, 2006Castro bluntly declared "we are tired of excuses," and demandedan end to "bureaucratic red tape".

What follows is a chronology of Raul Castro's mostimportant reform-oriented measures and statements:


July - In his first major speech, Castro calls "absurd" thestate milk collection and distribution system and says farmerswill deliver directly to local consumers where possible.

"To have more, we have to begin by producing more, with asense of rationality and efficiency. To reach these goals, thenecessary structural and conceptual changes will have to beintroduced," he said.

August - Castro signs a law ordering all state companies toadopt a system of "perfecting" management. This was developedby the military when Castro was defense minister to improveperformance using capitalist-style management techniques.


February - In his formal inaugural address as Cubanpresident, Castro says: "We must make efforts to find the waysand means to remove any deterrent to productive forces. In manyrespects, local initiative can be effective and viable".

March - Computers, cell phones, DVD players and electricappliances go on sale for the public and bans on Cubans rentingcars and staying in tourism hotels are lifted.

A sweeping reform of agriculture begins. This includesdecentralization of decision-making, orders to statebureaucrats to stop favoring state farms over private farms,increases in state prices paid to farmers, leasing of fallowstate land and loosening of regulations on farmers sellingdirectly to consumers instead of to the state.

August - A significant labor reform ties wages toindividual productivity, not company performance, and caps onearnings are eliminated.

Government announces domestic freight transport and housingconstruction will be decentralized to the municipal level.

Despite economic devastation caused by hurricanes Gustavand Ike in August and September, and a liquidity crisistriggered by the global economic downturn, Castro says hisreform program will move forward.


March - Castro purges his brother's economic cabinet andplaces trusted military men in key economy and planning posts.The central bank head quits two months later and is replaced.

April - The new cabinet slashes the budget and imports, thefirst of a series of adjustments.

Plans are unveiled to develop suburban farming around mostcities and towns, using mainly private plots.

June - The Communist Party daily, Granma, begins publishingletters for and against small private business, elimination ofsome government subsidies and other reforms.

July - A statement issued after a meeting of the CommunistParty Central Committee says that the search is on for"innovative formulas that will release productive potential."

Castro is quoted as stating "ideas chart the course, thereality of figures is decisive," a ground-breaking statement ina nation where ideology and politics trump economics.

August - National Assembly establishes office of theComptroller General of the Republic. Castro says it will aim toimprove "economic discipline" and crack down on corruption.

He calls for "elimination of free services and impropersubsidies -- with the exception of those called for in theconstitution (healthcare, education and social security)."

Santiago mountain dwellers are allowed to sell fruits andproduce at roadside kiosks. Spreads to adjoining provinces.

September - Licenses are issued to food vendors in variouscities, making them legal. Studies begin on switching somesmall retail services and manufacture to cooperatives.

October - Granma announces state work place lunchrooms willclose in exchange for a daily stipend.

December - Economy Minister Marino Murillo tellsparliament: "We have begun experiments ... to ease the burdenon the state of some services it provides."


January - Municipal governments are ordered to draw upeconomic development plans that may include cooperatives andsmall business. A pilot project where taxi drivers lease cabsinstead of receiving a state wage begins in Havana.

April - Barbershops and beauty salons with up to fourchairs go over to a leasing system, the first time stateretail establishments are handed over to employees since theirnationalization in 1968. Rules for home construction andimprovements are liberalized.

May - Murillo announces plans to "create in the majority ofmunicipalities supply markets where farmers can acquiredirectly the necessary resources to produce, substituting thecurrent system of assigning resources centrally."

June - Sale of construction materials to the population isliberalized. The government authorizes farm cooperatives toestablish mini-industries to process produce.

August - New rules authorize Cubans with small garden plotsto sell produce directly to consumers at roadside kiosks.

The state increases from 50 to 99 years the time foreigncompanies can lease land as part of tourism and leisuredevelopment projects, such as golf courses and marinas.

Stores open where farmers can purchase supplies in localcurrency without regulation.

September - The government announces the lay-off of morethan 500,000 state workers and 250,000 new licenses for familybusinesses over six months. Some 200,000 of the state jobs willgo over to leasing, cooperatives and other arrangements.

Regulations governing self-employment are significantlyloosened and taxes tightened. The family businesses areauthorized for the first time to hire labor and rent space. (Editing by Jeff Franks, Pascal Fletcher and Kieran Murray)