For years, the state employer system has been the subject of criticism from human rights organizations and labor law specialists.
MIAMI, United States. – The Cuban Government announced that foreign companies based on the Island will be able to decide whether to hire their workers directly or continue to do so through traditional state employers, a partial modification of the labor scheme that has governed foreign investment for decades.
The announcement was made this Tuesday by the Deputy Prime Minister and Minister of Foreign Trade and Foreign Investment, Óscar Pérez-Oliva, during the VIII Investment Forum of the Havana International Fair (FIHAV 2025), according to the Cuban News Agency (ACN).
Pérez-Oliva described the measure as an “important element of flexibility” for investors, explaining that, after the personnel selection process that today remains in the hands of the state employing entity, it will be the foreign company that will decide whether the contract is made directly or the current method is maintained, in which the formal link passes through the employer.
According to the ACN, “the employing entity may participate in the selection of personnel,” while “the final hiring decision will be made by the investor,” either directly or through that state company.
The authorities presented the change as part of a broader package of decisions to “make more flexible and streamline” foreign investment in Cuba, which would include a new financial scheme to operate in national currency and foreign currencies, shorter deadlines for approving businesses and additional operational facilities.
Pérez-Oliva assured that the objective of the specific labor reform is to provide foreign capital companies with “more flexibility”, reduce high personnel turnover and “protect qualified human resources”, a recurring problem in a context of strong labor emigration.
However, the Government did not specify from what date the new hiring scheme will come into force. The EFE agency points out that Pérez-Oliva limited himself to stating that the changes will be implemented through “several decrees”, while the official press talks about a new norm that will replace the Decree 325 —regulations of the Foreign Investment Law 118— and the updating of other Ministry resolutions.
The ACN adds that “in the coming days the regulations that support them will be announced”, without detailing specific deadlines or the final legal content.
Until now, the general rule for businesses with foreign capital in Cuba has been indirect contracting. The Foreign Investment Law 118 and its complementary regulations establish that the investor pays in foreign currency to a state employer company, which in turn signs the employment contract with the Cuban and pays him his salary in Cuban pesos (CUP), even when the salary negotiation with the foreign company is agreed in a hard currency.
In 2020, the Central Bank of Cuba insisted in which “employees will receive 100% of their salary in Cuban pesos,” even in businesses with foreign capital, based on salary levels agreed upon between the company and the employer.
The new announcement does not explicitly modify that principle. According to the ACN, the “significant novelty” focuses on the “hiring and remuneration of the workforce,” but what is introduced is the possibility that, after the intervention of the state employer in the selection, the subsequent contract can be direct between the investor and the worker, and that “bonuses in foreign currency” are paid out of profits, through bank payments, as long as the company generates external income.
Neither the ACN nor the state newspaper Workers They clarify whether the basic salary will no longer be set and paid in CUP, nor if companies will continue to pay the employer in foreign currency so that it can convert that money into national currency, as is the case today.
For years, the state employer system has been the subject of criticism from human rights organizations and labor law specialists, who consider it a mechanism of political and economic control over workers in the sector with foreign capital.
Human Rights Watch has pointed out that, under current legislation, foreign companies can only hire Cuban personnel through agencies controlled by the State, which leaves the selection of employees in the hands of the authorities and conditions their freedom of association.
Meanwhile, the Inter-American Commission on Human Rights, in a 2023 reportdescribed these entities as mandatory intermediaries in strategic sectors—including construction and technical services—with strong decision-making capacity over working conditions.
The announced reform is presented, therefore, as a partial change in a model that has allowed the State to appropriate a significant part of the real salary paid by investors. Academic research on the Law 118 point out that, in practice, the foreigner delivers the salary in foreign currency to the employer and the latter pays the worker in CUP, while retaining a margin that can be considerable, especially when artificial exchange rates are applied in areas such as Mariel.
Despite the potential significance for hundreds of thousands of workers linked to foreign investment, the authorities have not provided details on key aspects: how candidates will be chosen in practice, whether the “participation” of employers in the selection will continue to be decisive, what real margin companies will have to set salaries, and whether the reform will alter the restrictions that weigh on independent union organization in the sector.
