MOL PROMISES SUBCONTRACTING DECREE THIS WEEK

UNCLAS QUITO 002534

SIPDIS

SECSTATE FOR US TRADE REPRESENTATIVE
USTR FOR BUD CLATANOFF, USDOL FOR JORGE PEREZ-LOPEZ, DRL/IL
FOR GREG MAGGIO, EB FOR AMY HOLMAN

E.O. 12958: N/A
TAGS: ELAB PGOV EC
SUBJECT: MOL PROMISES SUBCONTRACTING DECREE THIS WEEK

REF: QUITO 2480


1. (SBU) Summary. At breakfast with the Ambassador
September 15, Minister of Labor Raul Izurieta said the
President would sign the oft delayed labor decree on
subcontracting by September 17. On September 14, union
leaders told PolOff they were worried the decree would not
sufficiently limit subcontracting abuses. End Summary.

Minister Says Decree A Done Deal
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2. (SBU) The Ambassador thanked Izurieta for his hospitality
during the recent labor delegation visit (reftel). The
Ambassador asked if there was any progress on the
long-delayed subcontracting decree. Izurieta said he would
need until September 21 to consult with unions again and make
additional changes. The Ambassador emphasized the need for
closure on this ATPDEA commitment by the GoE and suggested
the President consider signing the decree before planned
travel to Washington the week of September 20. Izurieta
agreed, and promised to recommend the President would sign
the decree by September 17.


3. (U) Izurieta also described his good relations with the
Labor Commission in Congress and its President, Andres Paez.
Izurieta said he is also working with the unions and business
to reach an agreement on hourly wages. Izurieta provided the
Ambassador a copy of the latest version of the subcontracting
decree, which adds a clause requiring companies to have a
maximum 75% of its employees hired through subcontractors.
The change reflects union concerns.

Unions Push For Subcontracting Limits
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5. (SBU) On September 14, PolCouns and PolOff attended a
reception organized by Patricio Contreras of the Solidarity
Center (AFL-CIO) with Izurieta and a broad selection of
approximately 50 union leaders. Jaime Arciniegas, President
of the CEOSL union, told PolOff that he and other union
leaders had met with the President and Izurieta on September
8 to discuss the subcontracting decree. In the meeting,
union leaders asked for the decree to limit the number of
subcontractors to no more than 15% of employees. Arciniegas
said the unions would be willing to support a decree if it
limited the number of subcontractors to a maximum of 50%.
Union leaders were very concerned about the clause in the
decree stating subcontractors can be used "indefinitely,"
which they feared could further weaken unions.

Comment
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6. (SBU) The last-minute concession to labor unions in the
current version of the decree could provoke a legal challenge
by business groups or even further delay. Izurieta clearly
understands the need for labor reform in Ecuador and is
working with key stakeholders, including members of Congress,
to this effect. However, if the long-overdue subcontracting
decree is any indication, the process for achieving more
comprehensive labor reform will be tortuous.
KENNEY