Cuba plans to cut more than 500,000 state jobs over the next six months as part of a push to raise productivity.
Workers laid off from government jobs will no longer be sent home with partial pay, but will have to find other means to make a living.
The Cuban Worker's Central said: 'Our state neither can nor should continue maintaining companies ... with inflated payrolls.
'Losses that are a drag on the economy are counterproductive, generate bad habits and deform worker's performance.'
It said more than 500,000 public sector jobs will be eliminated by March 2011.
Cuba has a workforce of 4.9m people in a country with an 11.2m population. The state controls 95% of the economy.
For years, the government has given laid off workers up to 60% of their salary while they were waiting to be placed in a new job.
But the CTC said 'it will no longer be possible to indefinitely protect or subsidise workers' income'.