Daisy, a hairdresser in an eastern Guantanamo province, told the Reuters news agency that under the old system the government took in 4,920 pesos per month per hairdresser.

Now she will pay the government 738 pesos per month and keep any earnings above that.

"We have to pay water, electricity and for supplies but it seems like a good idea," Daisy said.

She said that while the plan did not turn the shops into co-operatives, employees would have to join forces to decorate and maintain the establishments.

Barbers and manicurists will pay less per month. For example, in Guantanamo barbers will give the government 604 pesos and manicurists will pay 280 pesos.

Those employees who do not wish to rent are being offered other jobs or retirement.

State control

The measure marks the first time state-run, retail-level establishments have been handed over to employees since they were nationalised in 1968, however the government has not announced the new policy, nor has the state-run media reported it.

"If carried out fully, it would convert small state enterprises into leasing arrangements and urban co-operatives"

Phil Peters,
Cuba expert at the US-based Lexington Institute

Cuba and North Korea are the world's only remaining Soviet-style command economies in which the state controls more than 90 per cent of economic activity.

Other communist countries such as China and Vietnam have long since liberalised retail trade, services and small business.

The retail sector has come under heavy criticism for poor service and rampant theft, and officials have repeatedly urged patience as they experiment with ways to bring improvement, without launching into full-scale capitalism.

Phil Peters, a Cuba expert at the Virginia-based Lexington Institute, said the new measure was a small step with potentially big consequences if the model is applied to the broader retail sector.

"If carried out fully, it would convert small state enterprises into leasing arrangements and urban co-operatives," he said.

In 1993, the government legalised self-employment in a number of retail activities but then gradually reduced the number of licenses available.

The number of self-employed peaked at more than 210,000 in 1996, according to the government, but had declined to around 100,000 by 2009.

Countless individuals engage in illegal self-employment in Cuba.