Hundreds of thousands of Cubans are attending a May Day parade in Havana honouring the world's workers.
President Raul Castro, who succeeded his ailing brother Fidel in February, is attending the celebrations. He did not address the crowds.
Raul Castro, 76, has introduced a series of reforms since becoming the leader of the Communist state.
But he has also made it clear that there will be no political reforms to the one-party system.
Creating 'softer system'
Raul Castro arrived in Havana's Revolution Square wearing his trademark general's uniform, but he did not make a speech.
Cubans attend a May Day parade in Havana
Instead, there was a brief speech by the leader of the trade union movement and then the march got under way, the BBC's Michael Voss in Havana says.
Cuban authorities say that 500,000 people are taking part in the parade.
This is the second year in a row that Fidel Castro, now 81, has not been present.
He stepped down after failing to fully recover from a series of emergency operations.
There are portraits of Marx, Engels and Lenin in Revolution Square, but many here believe that Raul Castro may be moving away from communist orthodoxy, at least as far as the economy is concerned, our correspondent says.
Raul Castro has already started to encourage private enterprise in agriculture.
He also appears to be trying to create a softer, less restricted system and in recent weeks he has lifted bans on owning mobile phones and allowed Cubans to stay in the same hotels as foreigners.
Havana has survived more than 40 years of US sanctions intended to topple Fidel Castro.
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