ECUADOR: JULY LABOR UPDATE

UNCLAS SECTION 01 OF 02 QUITO 001788

SIPDIS

DEPT FOR WHA/AND, WHA/PPC, EB, AND DRL/IL. USDOL FOR CARLOS
ROMERO. GENEVA FOR JOHN CHAMBERLIN. PLEASE PASS USTR FOR
A/USTR CLATANOFF, V. LOPEZ AND B. HARMON.

E.O. 12958: N/A
TAGS: ELAB PGOV EC
SUBJECT: ECUADOR: JULY LABOR UPDATE

REF: A. QUITO 1392

B. QUITO 1666

C. QUITO 1734


1. Summary: Following are recent labor-related developments
of interest:

-- MOL Discusses Labor Reform Plan (para. 2)
-- Four Agreements Reached on Labor (4)
-- MOL Working With Limited Budget (5)
-- Congress Working on Subcontracting Law (6)
-- Social Security Reserve Funds To Be Returned (7)
-- ICFTU Issues Report on Ecuador (9)
-- Petroecuador Workers Reinstated (10)
-- Flower Workers Fired For Unionizing (11)
-- Government Will Regularize Colombian Workers (12)

MOL Discusses Labor Reform Plan
--------------


2. In a July 14 meeting with LabOff and AIDOffs, Minister of
Labor Galo Chiriboga outlined his proposed method for the
formulation of a new labor code. Chiriboga, who originally
indicated a preference for administrative over legal reforms,
said that both business and labor have asked him to begin a
law code reform project. Chiriboga said there would be a
committee of five Ecuadorian labor law experts who would
elaborate the first draft of the text. Business and union
representatives would nominate some of the members of the
committee. Chiriboga agreed with us on the importance of ILO
involvement during the process; we will continue to pursue
the possibility of a foreign ILO expert to support the
process.


3. Chiriboga said that a "core" section of the new labor
code would apply generally. Other parts of the code might
apply differently, depending on circumstances such as the
type of business involved. As each section of the code is
elaborated, it will be submitted to the tripartite National
Labor Council for review. Chiriboga has also invited
Congress' Labor Commission to participate as a non-voting
member of the council. Chiriboga announced that labor code
reform would be a topic for discussion on July 27 within the
National Labor Council.

Four Agreements Reached on Labor
--------------


4. Minister of Labor Galo Chiriboga announced on July 1 that
union and business leaders had reached an agreement to work
on four labor-related legislation issues: hourly work,
subcontracting, company retirement, and labor code reform (as
part of a larger discussion on the FTA's effects on labor).
Chiriboga said he would seek consensus on these issues within
the National Labor Council.

MOL Working With Limited Budget
--------------


5. Chiriboga told LabOff that his Ministry only has a budget
of $300,000 for programs and that the MOL only gets 0.17% of
the government's overall budget. As of July 14, the Ministry
had eight labor inspectors and 14 child labor inspectors and
was looking to hire more. The MOL continues to be unable to
provide transportation for all its labor and child labor
inspectors. The MOL is also planning to hire a technical
secretary for the National Labor Council by a competitive

SIPDIS
process.

Congress Working on Subcontracting Law
--------------


6. Andres Paez, president of Congress' Labor Commission,
told LabOff on July 26 that Congress was elaborating a new
subcontracting bill, to supplant an existing decree issued by
the Gutierrez government. Paez had organized a meeting with
labor and business leaders in mid-July to discuss what should
be included in the proposal. The proposal will be submitted
to the National Labor Council for discussion, before it
returns to Congress for the second debate. Paez said
business and unions were discussing a compromise of allowing
up to a maximum 50% of a company's workers to be
subcontracted (rather than the 75% specified in the decree).
Press report only 40 of the approximately 4,000
subcontracting companies in Ecuador are registered as
required by the decree.

Social Security Reserve Funds To Be Returned
--------------


7. Congress voted on July 28 to accept the President's July
21 partial veto of the bill (Ref C) to return social security
reserve funds to workers. The partial veto merely extended
the time period for the refunds. The original bill passed in
Congress called for the return of all reserve funds to
affiliates within 90 days. The 74 votes in favor came from
the PSC, ID, PRIAN, Pachakutik, DP, PRE, and PSP parties; the
MPD and Socialists voted against the President's amendments
to the bill.


8. The reserve funds will be returned in three stages: 95%
of affiliates will be able to withdraw their funds within
five months; the remaining five percent would wait until as
late as 2008. Individuals who have been retired over six
months will receive their reserve funds immediately. The
IESS plans to divest $423 million of its funds, currently
invested in various government bonds, in order to pay out the
reserve funds.

ICFTU Issues Report on Ecuador
--------------


9. Labor union international ICFTU submitted a report on
Ecuador to coincide with the WTO's review of Ecuador's trade
policy in early June. The report, available on ICFTU's
website (http://www.icftu.org),highlights weaknesses in the
application and enforcement of core labor standards. It
found particular shortcomings in freedom of association,
discrimination, and child labor.

Petroecuador Workers Reinstated
--------------


10. Of the 33 workers dismissed in 2003 by Petroecuador, the
state oil company, 27 have recently returned to their posts.
The workers went on strike in 2003 and were subsequently
charged by Petroecuador with sabotage and terrorism and
fired. The Ecuadorian Supreme Court has found them innocent
of these charges. The workers will also receive $19,990 each
in compensation.

Flower Workers Fired For Unionizing
--------------


11. According to a flower worker representative, 31 workers
attempted to form a union at the Flores de la Montana flower
company on June 23. The MOL was informed of the formation of
the union on July 24. The workers were subsequently fired on
June 27; 16 of the workers fired are protesting outside the
farm, and have filed a complaint with the Ministry of Labor.

Government Will Regularize Colombian Workers
--------------


12. Minister of Labor Galo Chiriboga told press on July 5
that he would begin a campaign to regularize Colombian
workers in Ecuador to guarantee the same pay and work
conditions as their Ecuadorian counterparts. Chiriboga asked
Ecuadorians to understand that Colombians and Peruvians in
Ecuador suffered similar problems as Ecuadorians abroad. "If
Ecuador asks for its migrants to be regularized abroad, how
can we deny this to foreigners in Ecuador," he asked
rhetorically.
MEMMOTT