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Cuban leader Raul Castro is pushing to reform his country's state-run economy. He plans to lay off half a million government workers in the coming months. To help offset those cuts, communist authorities have issued more than 75,000 new self-employment licenses.

But as Nick Miroff reports from Havana, its not clear if they can create jobs fast enough.

NICK MIROFF: DVD pirates were the first to emerge from the shadows of Cuba's underground economy. They've set up homemade display racks all over the city, blasting bootlegged CDs at pedestrians like street vendors in any other Latin American capital.

(Soundbite of music)

MIROFF: They've got reggaeton music, Harry Potter movies, and nature shows lifted off the Discovery Channel, and now they're licensed by the Cuban state, which cares far more these days about job creation than copyrights.

Elsewhere, Cubans are delivering pizzas or setting up snack bars and restaurants in their homes, even hiring employees. It might not be a recipe for economic growth, but at least it's creating some optimism during an otherwise worrisome time for Cuban workers.

Ms. DAYAMI SANCHEZ: (Foreign language spoken)

MIROFF: Twenty-six-year-old Dayami Sanchez sat at a small stand outside her Havana apartment building, knitting a cap. I'm my own boss. I set my own hours, and I manage my own money, she said. The stuffed animals, hot pads and other knickknacks on her table were all handmade, but it had taken her a week to crochet a pair of $5 gloves.

(Soundbite of whistle)

Mr. RENE RAMOS: (Foreign language spoken)

MIROFF: A few blocks away, 70-year-old Rene Ramos was walking up and down the street blowing a whistle to draw attention to his homemade peanut bars. Without a whiff of irony, Ramos described himself as a symbol of the Cuban Revolution, saying he had been a lieutenant colonel in the Cuban military and served overseas in Angola.

Mr. RAMOS: (Foreign language spoken)

MIROFF: I think it's magnificent that everyone now has the opportunity to work legally, Ramos said, explaining that he's spent the past 10 years dodging the police to avoid fines. I don't mind paying a few dollars a month in taxes, he said.

According to the government, 68 percent of the new business licenses have gone to those who were previously unemployed, a sign that many Cubans are simply legalizing jobs they used to do on the black market. But the problem is that once the layoffs start, Cuba's economy must absorb 500,000 workers - 10 percent of the island's labor force - in just a matter of months, including many Cubans who may not have the wherewithal to start a business or make it on their own.

Ricardo Torres is a Cuban economist.

Mr. RICARDO TORRES (Economist): It's not the state anymore. It's you, the main actor of your own destiny or fate, right? It takes time to get used to that scenario, right? So, probably, many people will apply for new licenses, but not everybody will succeed.

MIROFF: There are plenty of obstacles: Taxes can be high, and the government will only license 178 specific trades, including palm tree pruner, button maker and fruit peeler.

The government says it will complete the job cuts by March, but there have been no reports of mass layoffs yet. It's possible the process will drag out longer, allowing the authorities to better manage social and political tensions and offer other jobs to the unemployed in less desirable industries like construction and agriculture.

For NPR News, I'm Nick Miroff in Havana.

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