The Cuban government has enacted Decree 138/2025, which redefines the salary structure in state enterprises under a model of conditional decentralization.
Published in the Official Gazette on December 20, the document regulates how state sector business organizations will be able to establish, in a more autonomous manner, their salary systems, directly linking the income of workers with productivity and economic efficiency.
The new regulation repeals Decree 87 of 2023, as its validation period has expired, and introduces broader mechanisms for wage flexibility.
The text is accompanied by Resolution 332/2025 from the Ministry of Finance and Prices, which regulates the financial relationships between state-owned enterprises and the government, including the distribution of profits, the creation of voluntary reserves, and the payment of dividends.
Autonomy to organize salaries... with limits
One of the most significant points of Decree 138 is that state-owned enterprises, their subsidiaries, and higher management organizations will be able to define their own salary system. This includes:
-The salary scale.
-The salary for complexity.
-Performance-based payments.
-Additional payments.
The forms of compensation.
"The organization of the salary system favors wages based on the complexity of the work and performance payments, allowing for the measurement of individual contributions by workers," states Article 3.
Additionally, the salary design must be discussed in the Management Council, receive approval from the union, and be ratified in the Collective Labor Agreement.
By law, the salary cannot be lower than the national minimum wage or the basic salary from the previous year for the same position.
Principles: Equality, proportionality, and dynamism
The decree is based on five fundamental principles:
-Equality: equal pay for jobs of the same complexity.
-Differentiation: based on responsibility, conditions, and suitability.
-Proportionality: based on time and the amount of work.
-Dynamism: the salary depends on business performance.
-Minimum protection: a non-regressive base salary is guaranteed.
"The salary is determined in accordance with the company's results," as stated in Article 7, section d).
Additional payments and incentives
Entities may apply additional payments linked to job conditions, seniority, extra knowledge, and performance.
These payments should not exceed 50% of the salary scale and require verified financial backing.
The regulation also reaffirms payment based on results and piecework, which must represent at least 30% of the salary fund (with some exceptions), as an incentive to boost individual productivity.
Benefits for workers: conditional incentive
Decree 138 and its complementary resolution authorize the distribution of profits among workers, with strict requirements: no outstanding tax debts, not having been classified as "deficient" in audits, and compliance with state contributions.
"The head of the economic entity is authorized to make advance payment... for the distribution of profits to the workers," states Article 45 of Resolution 332.
These payments are not considered salary and do not contribute to social security. They are paid in CUP and are subject to personal taxes.
Voluntary reserves and special funds
Companies may create voluntary reserves from retained earnings, intended for:
-Research and development.
- Purchase or repair of housing for employees.
-Collective stimuli.
-Internal compensation fund.
-Social responsibility, among others.
These reserves require approval and are subject to financial plans and accounting validations. They can only be executed if the state contribution for performance is met and other obligations are not affected.
The State does not withdraw from control: Critiques and shadows of the Decree
Although Decree 138/2025 employs the language of decentralization and autonomy, its structure reveals a strong dependence of state enterprises on the central financial and political apparatus.
Instead of real autonomy, a conditioned and phased form of flexibility is established, subordinated to multiple levels of validation and fiscal criteria.
In particular:
-Companies can only pay more if they contribute more to the State. Otherwise, they are forced to cut their salary fund to a historical minimum.
Negative audits block profit payments, even if the errors are not related to the employee.
-The salary of the company’s chief may exceed the established limits, according to the discretionary decision of higher authorities, which undermines the principle of proportionality.
The model of additional payments and voluntary contributions depends on external approvals and does not guarantee stability for workers, particularly in low-profit sectors or those affected by the national economic context.
"The salary fund is contingent upon the fulfillment of the contribution from the return on state investment or the payment of dividends," acknowledges the decree in several articles.
In practice, this means that labor productivity continues to be measured from the standpoint of state profitability, rather than from the direct improvement in workers' conditions.
Those who work in unprofitable companies—whether due to structural issues or external decisions—will find their opportunities for increasing income constrained, regardless of their effort or commitment.
A reform with ideological and fiscal limits
Decree 138/2025 undoubtedly represents a significant shift in the official narrative regarding salary management. It acknowledges the value of individual performance, salary differentiation, and the need to motivate employees through incentives.
However, it does so without relinquishing political or fiscal control over the state company, leaving little room for a genuine structural transformation.
In essence, the Cuban state shifts the responsibility of increasing productivity onto the companies, but it does not provide them with the necessary tools to operate with full autonomy. This form of decentralization is inherently shackled.
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