At least half a million Cubans stand to lose their government jobs by early next year, after the Cuban Labour Federation blamed "bloated payrolls" and losses for the economy.

The state, which employs 85 per cent of the country's workforce, said it will ease restrictions on private enterprise to help those laid off find new jobs.

The government said the move to restructure Cuba's economy -- under state control for 50 years -- is designed to raise productivity, and includes a rare acknowledgement that the previous model has failed.

Al Jazeera's Tom Ackerman reports. (Sept 14, 2010)