Identifier
Created
Classification
Origin
05QUITO159
2005-01-21 21:45:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Quito
Cable title:  

LABOR CODE REFORM PROPOSALS AND PROSPECTS

Tags:  ELAB PGOV EC 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 QUITO 000159 

SIPDIS

SENSITIVE

SECSTATE PLEASE PASS TO US TRADE REPRESENTATIVE

E.O. 12958: N/A
TAGS: ELAB PGOV EC
SUBJECT: LABOR CODE REFORM PROPOSALS AND PROSPECTS

REF: QUITO 82

UNCLAS SECTION 01 OF 02 QUITO 000159

SIPDIS

SENSITIVE

SECSTATE PLEASE PASS TO US TRADE REPRESENTATIVE

E.O. 12958: N/A
TAGS: ELAB PGOV EC
SUBJECT: LABOR CODE REFORM PROPOSALS AND PROSPECTS

REF: QUITO 82


1. (U) Summary: Minister of Labor Raul Izurieta plans to
announce a labor code reform package in February, which he
expects to submit to Congress in April. The reforms would
permit the formation of industry-wide unions, as well as
include various pro-business competitiveness initiatives.
Izurieta is making efforts to bring business and union
leaders together and is proposing candidates to head the
MOL's tripartite National Labor Council. Izurieta also said
a new round of labor inspections would begin this month with
newly hired labor inspectors (bringing the total of child
labor inspectors to 24).


2. (SBU) In our view, the MOL initiative is encouraging, but
insufficient to answer USG concerns on freedom of association
and child labor. To supplement the GOE's current reform
package, we hope to use an independent consultant to help
guide the GOE toward ILO-consistent reforms and short-term
non-legislative remedies. To do so, we need to convince the
GOE to formally request this technical assistance of AID. We
are prepared to do this, unless Washington agencies object.
Izurieta has extended an invitation to the AUSTR for Labor to
visit Ecuador, which could offer another opportunity to press
for near-term progress. End Summary.

Minister to Announce Labor Reform Proposal
--------------


3. (SBU) Izurieta told LabOff on January 19 that he expects
to publicize a labor reform in February and give the public
two months to review it. Izurieta also extended an
invitation to AUSTR for Labor William Clatanoff to visit
Ecuador in February to observe the labor situation. Izurieta
plans on sending the proposal to Congress in April. He says
he cannot yet predict its chances of passing through Congress
as the new Labor Commission has just formed. Izurieta said
he is worried it will be hard to work with its new president
since he is a member of the far-left MPD party. Izurieta
denied the President had called a meeting to discuss labor
code reform where Izurieta, the Minister of Jose Chavez of
the CEOSL confederation, and others were present (reftel).
Izurieta said Dr. Marcos Ponce of the ILO is helping draft
the labor code reform proposal. He is an independent
consultant and will give Izurieta his work this week. The

Inter-American Development Bank is paying him $5000 for this
project.


4. (U) Izurieta has previously told LabOff and press of 12
points that he would like to reform. In the meeting with
LabOff, Izurieta said hourly work will be regulated with an
upcoming Presidential decree. Izurieta also stated the
following points would be included in the upcoming labor code
reform proposal: industry-wide unions, company retirement,
profit sharing, limiting length of strikes, job creation and
dismissal notices. Izurieta did not list the full 12 points.


5. (U) LabOff asked Izurieta if reinstatement or anti-union
discrimination in hiring would be included in the reform
proposal. He said that the labor code guarantees not only
freedom of association, but also freedom in hiring, and for
that reason the government cannot force a private company to
hire someone. Izurieta said reinstatement does exist in the
public sector.

Industry-Wide Unions To Be Included in Reform
--------------


6. (U) Izurieta told LabOff that the labor code reform would
explicitly permit industry-wide unions in Ecuador. He said
that currently these are neither explicitly permitted nor
prohibited in Ecuadorian law. Regarding the flower
industry-wide union whose application had been denied three
times, he said the reason they were denied previously was
that the three companies that had employed the workers all
had closed. He said after the labor reform, there should be
no impediment to the formation of industry-wide unions,
however, workers have to be employed by an active company.

Izurieta Meets with Business and Unions
--------------


7. (U) Izurieta said that on January 18, he brought Roberto
Pena, president of the Chamber of Industries, and union
leader Mesias Tatamuez, together for a three-hour meeting.
Izurieta said his goal is to lower the tensions and improve
business-labor relations. He said he is planning another
meeting with the two leaders. Izurieta also said on January
18 he met with union leaders to discuss difficulties in
registering unions. He said his staff is meetings with
unions to analyze the situation.

Subcontracting Decree May Be Changed
--------------


8. (U) Izurieta said he is planning a meeting with unions to
discuss the probable modification of the subcontracting
decree. Izurieta said Jaime Arciniegas, leader of the
largest union confederation, has told him he would support
the decree if the percentage of workers that can be
subcontracted were taken out. Business leader Alberto Dassum
has told Izurieta he thinks the percentage should be
unlimited. Izurieta said the Constitutional Tribunal will
have the final say on the percentage issue, since business
has appealed it.


9. (U) Izurieta had previously told LabOff that the Ministry
had extended the deadline for companies to register with the
MOL in order for them to have time to change their by-laws.
Registration with the MOL is a requirement of last October's
Presidential subcontracting decree. Izurieta explained to
LabOff that subcontracting companies had to change their
by-laws because the decree says subcontracting companies can
only perform subcontracting and other related activities,
such as training. This clause is intended to prevent phantom
companies.

New Round of MOL Inspections
--------------


10. (U) Izurieta said a round of inspections for compliance
with the labor code, health and safety, subcontracting
companies, and child labor will begin next week. He said
there are now 24 child labor inspectors, with one in each
province except for Pichincha and Guayas, which each have
two. He said there are many new inspectors and there will be
a training workshop for them next week.

Comment: The Way Forward
--------------


11. (SBU) We are most encouraged by the MOL's willingness to
work with the ILO on a labor code reform package to permit
industrial unions (a reversal for this Government) and
encourage better business-labor relations. However, in our
view, the MOL's reforms do not sufficiently address USG labor
rights concerns. We therefore recommend that we use a
contractor to help the GOE develop a more balanced labor
reform proposal, preferably involving short-term remedies
that do not require legislation. In addition, without
labor/management consensus, the MOL's reforms or any labor
code reforms are unlikely to flourish in the current
fractious Congress.


12. (SBU) We and visiting USG labor officials have
encouraged the ILO reps in Ecuador to work with the MOL,
business, and unions on labor code reform, with limited
success. We therefore believe it is necessary for outside,
but ILO-consistent, assistance. We also suggest that USTR
consider accepting the Minister's invitation to visit Ecuador
in the upcoming months. Ideally, a USTR visit would coincide
with a visit from the new consultant.
Chacon