Related videos:
The Cuban regime published this Wednesday in the Official Gazette the Decree 127/2025 a regulatory package that expands the salary powers of state entities and introduces new incentive mechanisms to curb the exodus of workers from the budget sector.
The regulation, approved by the Council of Ministers and accompanied by complementary resolutions from the ministries of Finance and Prices, Labor and Social Security, and Economy and Planning, comes into effect 30 days after its publication and impacts approximately 2,443 budgeted units that account for more than 50% of the active workforce in the state sector.
One of the most significant changes is that budgeted units with "special treatment" will be able to set their own salary system based on their performance, equating them with the state business sector.
These entities will also be able to generate profits, create reserves at the end of the fiscal year, and use them for institutional development, social responsibility, housing, or replenishment.
"We are achieving stability, an equality between the budgeted sector and the state-owned business sector," stated Berta Iris Rojas Gatorno, Director of Financial Policies at the Ministry of Finance and Prices.
The decree also expands the powers of agency heads to approve self-financed activities without requiring funding from the state budget.
"The budgeted units can carry out self-financed activities without requiring funding from the State budget, and this will not constitute a change in structure," explained the official.
In terms of labor structure, the decree establishes that positions not directly related to the specific activities of each entity should not exceed 30% of the total workforce, aiming to reduce oversized structures.
Guillermo Sarmiento Cabaras, director of the Labor Organization of the Ministry of Labor and Social Security, emphasized that "when designing the structure and staffing of a budgeted unit, it must be done with reasoning."
Exit from the sector due to low wages
These measures are part of a broader strategy to contain the exodus of state workers to the private sector, driven by the wage gap: in 2025, the average salary in the budgeted sector was about 5,900 pesos, compared to 7,331 pesos in the state business sector.
The immediate precedent of this decree is the Agreement 10199/2025, approved in August 2025, which had already authorized the redistribution of savings from the salary fund—generated by vacant positions, unpaid leave, or maternity benefits—as additional payments to workers, recognized as "salary for all legal effects" although not permanent in nature.
The special treatment enabled by the new decree does not apply to sectors with high social impact such as health and education, but rather to activities that can be self-financed, such as certain registrations and specialized services.
The decree also establishes, for the first time, a legal definition for the budgeted sector and grants legal personality to the financial management of entities.
Rojas Gatorno clarified that the goal is to "seek greater efficiency in human resources that contributes to fair labor recognition and increased compensation for this sector," in a context where the Cuban GDP has experienced a 15% decline since 2020, as a result of 67 years of a centralized economic model that has exhausted the productive capacity of the country.
Filed under: