ECUADOR LABOR UPDATE

UNCLAS SECTION 01 OF 03 QUITO 000082

SIPDIS

SECSTATE PLEASE PASS TO US TRADE REPRESENTATIVE

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

REF: 04 QUITO 3153


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

--President Calls Meeting to Discuss Labor Reform (para. 2)
--Minimum Wage Negotiations (4)
--Subcontracting Decree Deadline Extended (5)
--Government Lay Offs (6)
--Minister Claims Success (7)
--Child Labor Update (8)
--Children in the Trash Sector (9)
--Flower Workers Seek Industry Union (12)

President Calls Meeting to Discuss Labor Reform
-------------- --


2. According to union leader Jose Chavez of CEOSL, Ecuador's
largest labor confederation, President Gutierrez called a
meeting on January 5 to discuss labor reform issues.
According to Chavez, who was present at the meeting, Minister
of Labor Raul Izurieta said he is in contact with a labor
reform expert from the International Labor Organization (ILO)
who is working on a labor reform proposal. It was not clear
whether this reform proposal would include freedom of
association issues. Izurieta also announced that he would be
holding workshops to further labor reform. The first
meeting, scheduled for late January, would include a
negotiation expert from the ILO, who would coach business and
union leaders on negotiation skills. At the second meeting,
business and union leaders would negotiate a labor reform
package, using the ILO labor reform expert's proposal as a
starting point.


3. Izurieta has publicly declared that in 2005 he intends to
propose reforms to Congress addressing company retirement,
length of strikes, and profit sharing. Izurieta also said to
the press that a Presidential decree regulating hourly work
will be signed in early January. The decree will dictate
that employers pay Social Security for these workers. The
Minister has told us he is developing a 12-point plan for
reform that he has not made public.

Minimum Wage Negotiations
--------------


4. Union and business leaders began meeting on December 30
to discuss raising the minimum wage. By law, the minimum
wage must be raised a minimum of $8 this year, from $135.62
to $143.62 to account for various adjustments related to
salary unification. The minimum wage may also be adjusted to
compensate for inflation, which would suggest an added
increase of $2.87. Union leaders, however, want the minimum
wage to be raised to equal the cost of the poverty-rate
family basket of goods which is $272.54. If union and
business leaders do not reach a compromise on the minimum
wage issue, the Minister of Labor will make the final
decision.

Subcontracting Decree Deadline Extended
--------------


5. The Ministry of Labor has announced that the deadline for
subcontracting companies to register with the Ministry has
been extended from December 31, 2004 to July 31. Izurieta
told LabOff on January 5 that while the deadline to register
had been extended, companies must comply with the decree even
if they are not registered. Minister Izurieta said the
deadline was extended because companies needed to change
their statutes before they could register. The AFL-CIO
Solidarity Center believes this is because the majority of
subcontracting companies were phantom companies. According
to the press, the Ministry will be sending out 150 labor
inspectors to begin inspections of the 3,000 subcontracting
companies beginning this month.

Government Lay Offs
--------------


6. According to press, to begin implementation of the Civil
Service and Administrative Career Law, 5,000 government
workers will be laid off in early 2005. These workers will
be offered leave packages of up to $20,000 (financed by the
Inter-American Development Bank). Minister Izurieta has told
press that those who are currently overpaid will be the first
to be laid off.

Minister Claims Success
--------------


7. Minister of Labor Raul Izurieta claimed to the press that
his accomplishments in 2004 included the regularization of
foreign workers by giving them work certificates and training
150,000 workers. His goal for 2005 would be to train 220,000
more.

Child Labor Update
--------------


8. According to Izurieta, the Ministry of Labor had
requested a study from the National Statistics and Census
Institute (INEC) to determine the number of child workers in
the country. INEC recently concluded its study and
determined there were 302,000 child workers in the country,
77% percent of whom worked for their families. The MOL also
held two workshops (in Guayaquil and Cuenca) to train the
monitors of child labor inspectors, and will hold another
workshop in Quito this month. The monitors are primarily
union and NGO representatives, who visit inspection sites
with the inspectors to ensure transparency.

Children in Trash Sector
--------------


9. A study by the International Labor Organization (ILO)
conducted in Ecuador's 20 largest cities found that Quito has
the highest rate of children working in the trash rummaging
sector. Currently 362 children between ages 5-17 work in the
trash sector in Quito. In 2002, a similar study found 500
children working in 12 of the 20 largest cities. In 2004,
440 minors were found working in the trash sector in Santo
Domingo de los Colorados, Duran, Manta, and Quito. The ILO
categorizes this work as a worst form of child labor; these
children are at risk of coming into contact with toxic gases
generated by decomposition, as well as cuts on sharp objects,
and contact with hospital waste. Children in the trash
sector are four times as likely to suffer accidents as
children who do not work. According to the ILO study,
children in the trash recycling sector on average contribute
17% of their families' income and are three years behind in
their schooling.


10. In August, the Action and Development Foundation (DYA)
and the Municipality of La Bota, a northern suburb of Quito,
launched a school reinsertion program for these child
laborers. The Quito Municipality has also created a
committee to address the health and educational needs of
these children. Finally, the National Child and Family
Institute (INNFA) is providing scholarships to 16 of the 48
children in La Bota's trash sector.


11. Press reported that on December 28, four children
between the ages of 11 and 13 working in the city of
Riobamba's trash sector were buried and suffocated by the
waste deposited by a garbage collector during the night.
According to press, 8,193 children and adolescents in the
city of Riobamba and surrounding area work and do not attend
school.

Flower Workers Seek Industry Union
--------------


12. Olga Tutillo and Vincente Colla, former flower workers
met with LabOff on December 29 to describe labor rights
abuses in the flower sector. Tutillo has been invited by the
International Labor Rights Fund to visit the U.S. on speaking
tour on work conditions in Ecuador's flower industry. After
seven months of not being paid, they reported, the workers of
Rosas del Ecuador, who belonged to a company union (part of
the CEOSL confederation),went on a legal strike on October
6, 2003. The company, which had been suffering financial
difficulties, closed the same day. The workers have filed a
complaint with the Ministry of Labor to receive back pay for
those seven months and are still awaiting a decision.
Tutillo said that of approximately 380 flower companies in
the Cayambe (north of Quito) area, only two companies
currently had unions: Jardines de Cayambe and Florequisa.
Other companies fire workers as soon as they attempt to form
a union. She believes flower companies share a database of
blacklisted union workers.


13. To counter these abuses of worker rights, Tutillo said
the striking flower workers will again request approval from
the MOL to form an industry union, even though they have
already been denied three times. Rodrigo Calderon, Director
General of the Ministry of Labor told LabOff that the reason
the MOL denied these workers' earlier petitions was because
the applicants were no longer employed. To form an
industrial union, workers must be working for a company that
the union could be registered with. Tutillo said flower
workers were planning a trip to Colombia to meet with their
counterparts who successfully formed a nationwide industry
union two years ago.
KENNEY