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The Cuban regime published this Wednesday in the Official Gazette the Decree 127/2025 "On budgeted institutions," a regulation that promises to reorganize and make more efficient a state sector that accounts for more than 50% of the active workforce in the country, yet operates amid an unprecedented economic crisis and with salaries that are insufficient to meet even basic needs.
The decree affects approximately 2,443 budgeted units across the national territory and will take effect 30 days after its publication, with a one-year timeframe for full implementation.
Berta Iris Rojas Gatorno, Director of Financial Policies at the Ministry of Finance and Prices, described the measure as "high impact" during a joint press conference with representatives from the ministries of Labor and Social Security, and Economy and Planning.
"We are discussing a reach of around 2,443 units budgeted in the country, representing more than 50% of the active workforce in this sector," the official specified.
One of the most significant changes is that, for the first time, the decree establishes a legal definition for the budgeted sector and grants legal personality to its financial management.
"Before this decree, there was no legal definition for this budgeted sector," emphasized Rojas Gatorno.
The new framework also reorganizes who decides on the creation, merging, or elimination of budgeted units: this authority shifts from the Ministry of Economy and Planning to the Council of Ministers, based on a proposal from the Ministry of Finance and Prices.
"This budgeted activity comes from the Ministry of Economy and goes to the Ministry of Finance and Prices," explained the official.
Units referred to as "special treatment" will be able to determine their own salary system based on their performance, generate profits, and create reserves at the end of the financial year to allocate to institutional development, social responsibility, or housing. Those that are fully self-financed may request their conversion into a Socialist State Enterprise.
"We are achieving stability, equality between the budgeted sector and the state-owned business sector," affirmed Rojas Gatorno.
However, he clarified that this treatment does not apply to health or education, precisely the sectors with the largest number of workers and the worst salaries.
Guillermo Sarmiento Cabaras, director of the Labor Organization at the Ministry of Labor and Social Security, added that positions not directly related to the specific activities of each entity cannot exceed 30% of the total workforce. "When designing the structure and the workforce of a budgeted unit, it must be done rationally," he noted.
The decree comes at a time when the gap between state wages and the actual cost of living in Cuba is vast.
In 2025, the average salary in the budgeted sector was about 5,900 Cuban pesos per month, compared to an estimated cost of living between 25,000 and 50,000 pesos to cover basic needs. The most affected sectors are culture and sports, with 5,063 pesos as the average salary, and commerce, with 4,656 pesos.
Teachers earn the equivalent of about ten dollars a month, and doctors barely make 16 dollars a month.
That gap has driven a mass exodus of state workers to the private sector or directly to emigration, a phenomenon that the decree seeks to curb without addressing the structural causes of the problem.
The macroeconomic context makes it even harder to believe in the success of the measure. The Cuban GDP fell by 5% in 2025, accumulating a contraction of over 15% since 2020.
The government fulfilled only 51% of its plans that year. Independent projections from The Economist Intelligence Unit estimate an additional decline of 7.2% in GDP in 2026, far from the 1% growth projected by the regime itself.
The Decree 138 of October 20, 2025, which had already decentralized the salary system of the state enterprise sector, and the Agreement 10199/2025, approved in August of that year, which authorized the redistribution of savings from the salary fund as additional payments, are the direct precedents of Decree 127.
The difference is that none of those previous regulations managed to reverse the deterioration. The per capita GDP of Cuba is currently 1,082 dollars, the lowest in Latin America, where the regional average is 10,212 dollars.
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