The report on Wednesday said "the socialist principle of distribution will be achieved wherein everyone earns in accordance with his contribution, in other words, pay in accordance with quality and quantity".

"Generally," the paper quoted Mateu as saying, "there has been a tendency for people to earn the same, and that egalitarianism is not helpful.

"That is something that we have to fix ... because if it is harmful to pay workers less than they deserve, it also is harmful to pay them what they have not earned," he added.

Fresh policies

Mateu said in the article that many government companies had already eliminated limits on salaries for workers, but the rest must do so by August. 
 
He said paying workers more for better work would help reduce the country's poverty and and corruption levels.

The US said that Castro, above, needs to release
political prisoners before relations improve [EPA]
 
The new wage policy, which was adopted in February, is the latest unveiled by the government of Raul Castro, the Cuban president, following changes in how decisions are made regarding land redistribution and decentralised farming.

Castro, who officially took office on February 24, has been de facto ruler since late July 2006 when his older brother Fidel, 81, was sidelined with serious health problems.

Since February, Castro, 77, has allowed Cubans to buy computers, own mobile telephones, rent cars and spend nights in hotels previously only accessible to foreigners.

Castro has also implemented reforms that give farmers better pay and more flexibility to buy farming equipment, a move designed to lessen the impact of the world food crisis.

He has commuted 30 death sentences, released some political prisoners, and signed human rights accords.

Remaining reforms

But policies that remain under scrutiny include opening the country to private enterprise, freedom to travel abroad, and an end to the dual-currency system, although this is due for reform.

Cuba operates with the convertible peso, worth just under $1, and the national peso, worth far less.

Castro's reforms have been welcomed by many Latin Americans, but the US has dismissed them as cosmetic.

George Bush, the US president, told EU leaders at an EU-US summit in Slovenia on Tuesday that the Communist island needed to free its political prisoners before relations could go forward.

"If the Castro administration really is different, the first way to show their difference to the world is to free the political prisoners," he said.