The Cuban government will dismiss more than 500,000 workers — a whopping 10 percent of its payroll — but will reportedly allow a major expansion of private economic activity in what would amount to the most significant overhaul undertaken by Raul Castro.

The half-million state employees will be cut by April 1, according to an announcement Monday from Cuba Workers' Central, the government-controlled confederation of labor unions.

The communist government also plans to allow a significant increase in private economic activity in hopes of creating 450,000 non-state jobs by the end of 2011, the Reuters news agency reported from Havana.

The two changes would amount to the most substantial initiatives undertaken by Castro to pull the economy — 95 percent controlled by the communist government — out of its worst crisis in two decades.

Overall, they indicate a government decision to turn small state enterprises such as repair shops into cooperatives run by their employees, and expand the number of self-employed such as plumbers and wedding photographers.

Dissident economist Oscar Espinosa Chepe said Castro's reforms so far have been so small and shallow that he doubts the goal of creating 450,000 private-sector jobs next year will be met.

"We need much stronger, deeper measures, like allowing the establishment of small- and medium-sized enterprises," Espinosa said by telephone from Havana.

But there's so much pent-up demand for almost everything in Cuba that the shift from state to private sector employment is likely to succeed, said Julia Sweig, a Cuba expert with the U.S.-based Council on Foreign Relations.

"There will be an adjustment period, for sure," Sweig said at a news conference Monday. "But the private sector is going to absorb them very, very rapidly."

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