(Reuters) - Cubans, speaking out in citizen meetings leading to a Communist Party congress in April, have given officials an earful about their economic worries and said the government must do a better job, people close to the process said this week.

They said concerns about low salaries, high prices and cutting state subsidies dominated discussions in the thousands of meetings held across the country from December through February.

The government said more than 7 million people, out of a population of 11.2 million, participated.

"People are very preoccupied over rising prices, over the lack of balance between wages and prices and over what will happen to the most vulnerable, for example if the food ration is cut," said a Communist Party member involved in compiling comments from the meetings.

A summary of the citizen input will be provided to the public before the party congress, where 1,000 delegates will vote on proposed economic reforms put forth by President Raul Castro, who is under pressure from creditors over late debt payments and the population over economic stagnation.

He wants to transform Cuba's social system from one based on collective work and consumption to one where markets, individual initiative and reward play larger roles and targeted welfare replaces cradle-to-grave subsidized goods and services.

According to the proposals the state would pull back from some secondary activities in favor of private initiative, stop directly administering state-run companies and cede more power to local governments.

Hundreds of thousands of state jobs would be cut in favor of an expanding "non-state" sector, while such things as subsidized utilities and the monthly food ration would be eliminated to improve government productivity and finances.

HOPE AND DREAD

Cubans appear to be looking to the congress with a mix of hope and dread.

Under changes already taking place, more than 113,000 people have taken out licenses for self-employment and 100,000 leased fallow state land in hopes of earning more money, but the state is also demanding more taxes and giving fewer handouts.

"Me and my family feel much more squeezed than last year," said pensioner Yolanda, who rents out a room to tourists in her Santiago de Cuba home.

Yolanda said she supported Castro's reforms, but thought lower taxes and more controls on rising prices were needed.

"I used to pay a monthly tax of $136 to rent my room and now I have to pay $200," she said.

The public meetings also reflected changing sentiment about the country's economic woes. Many people blamed the system, and not just the U.S. trade embargo against Cuba, long accused of being the main culprit, the sources said.

People repeatedly demanded the government improve its performance in exchange for tightening their belts.

"Many people asked why, after repeatedly complaining about the waste generated by its monopoly on food distribution, most produce was still under its control and food rotting in fields and on trucks," said a retired party official in Guantanamo, with knowledge of the discussion.

All in all, "the discussions generated an enormous amount of information about how the people look at and understand the main problems facing the country," said a party member in central Camaguey province. "And this puts enormous pressure on the government to respond adequately."

It will not be easy, said Vicente Gonzalez, president of the Santiago de Cuba Provincial Administrative Council, but "we have to carry out these changes because the alternative is a debacle."

"If we are not capable of creating a sustainable country where we produce what we need through hard work and sacrifice we will lose our main achievements," he said, referring to free healthcare and education provided to all Cubans.

(Editing by Jeff Franks and Mohammad Zargham)



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