Cuban President Raul Castro plucked consumer items like soap and toothpaste off the list of state-subsidized rations, arguing a continued underwriting of the essential commodities could endanger the revolution.

The end of subsidies exposes Cubans to a free market of a sort, and at considerable cost. Rationed items usually sell at a small part of their market prices because they are backed by state subsidies.

With the subsidies off and the goods on sale at much higher prices in Cuba's nascent market economy, Cubans are set to receive a foretaste of capitalism mixed with an informal or underground economy.

Analysts said the end of subsidies could be untimely because, as part of the same effort to reduce state spending, the government is doing away with half a million jobs on its various payrolls and wants the trade unions to back the retrenchment.

Analysts said the job cuts would most likely be approved by the Communist Party apparatus but the final outcome of a political trade-off between Castro and the trade union movement was yet to emerge.

Tens of thousands of state workers due to be laid off in the coming months would be encouraged to seek self-employment.

Analysts said the process was likely to be harsher than in China after Deng Xiaoping launched "socialist capitalism," first through rhetoric and then some cautious reforms. Deng's move was a precursor to China's present system, variously described as "nationalist capitalism" or "socialist market economy."

Quite like China, though, analysts believe Cuban leaders are tilting toward the kind of pragmatic nationalism that Deng used to fire up the engine for a resurgent, market-oriented China.

Salvador Valdes, head of the Confederacion de Trabajadores de Cuba, Cuba's only legal workers' organization, said it was the union's responsibility to guarantee what he called labor "reorganization" went through smoothly.

Valdes, quoted in the Trabajadores weekly, said the "administrative process" of the layoffs called for CTC vigilance to make sure it was done in compliance with established rules.

The government estimates it will eliminate 146,000 state jobs this year and help 351,000 people on its payrolls to adapt to other forms of independent employment.

At least 100,000 will enter self-employment, official estimates showed. Some 143,800 Cubans were reported in self-employment in 2009.

The measures follow Castro's warning, "either we reform, or we go over the cliff and it's the end of the revolution," MercoPress reported.

Over a longer, five-year term the government hopes 1.8 million workers will be absorbed into the non-state sector. The Communist Party is set to meet in April to look at the projections.

Valdes told the weekly CTC must "avoid violations, paternalism, favoritism and any other negative tendencies."

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