ECUADOR LABOR UPDATE

UNCLAS QUITO 000427

SIPDIS

SIPDIS

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

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



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

-- MOL On Labor Code Reform (para. 2)
-- MOL Raises Minimum Wage (4)
-- MOL Publishes Report on Subcontracting (6)
-- New Law Requires Hiring of Disabled (7)
-- Dole Representatives Meet with Banana Union (8)
-- Andinatel Union Leaders Fired (10)

MOL On Labor Code Reform
--------------


2. Minister of Labor Galo Chiriboga and GOE chief free trade
agreement negotiator Manuel Chiriboga met with EconCouns and
PolChief on February 1 to discuss Chiriboga's recent visit to
the ILO regional office in Lima and prospects for labor code
reform. The Minister of Labor said that the ILO had selected
an expert to help the GOE draft a labor code reform. MOL
Chiriboga said he was confident Ecuador could achieve
consensual labor code reform within six months, despite the
lingering effects of the minimum wage controversy.


3. Subsecretary of Labor Ricardo Rivera told LabOff on
February 14 that the climate in the National Labor Council
was improving and that Walter Tapia, former head of
international affairs and child labor at the MOL, had been
named the technical secretary for the council on February 8.
Rivera also said that the name of the ILO expert who will
draft the new labor code would be announced shortly.

MOL Raises Minimum Wage
--------------


4. Minister of Labor Chiriboga announced on January 19 that
the minimum wage would be raised ten dollars, from $150 to
$160. The National Salary Council (CONADES),headed by
Subsecretary of Labor Ricardo Rivera, had earlier recommended
an increase of $30. Chiriboga rejected the recommendation
after complaints from the business community, and others,
including the president of the Central Bank, claimed a $30
raise would be disastrous for the Ecuadorian economy.


5. Following Chiriboga's decision, the United Workers Front
threatened to pursue a congressional impeachment of
Chiriboga. The business community also threatened to appeal
the $10 minimum wage raise, arguing it should not exceed
inflation. The AFL-CIO Solidarity Center facilitated an
informal meeting between Minister of Labor Galo Chiriboga and
Jaime Arciniega, head of the largest union confederation on
January 17. While the two had previously had very good
relations, relations have since deteriorated, due in large
part to the minimum wage issue. While no agreement was
reached, tensions were lowered, and the unions have not
followed through on their impeachment threat.

MOL Publishes Report on Subcontracting
--------------


6. In December, the Ministry of Labor published a report on
the use of subcontracting which found that only 920 of 4,625
subcontracting companies in the country were registered. (An
October 2004 presidential decree required all subcontracting
companies to register with the Ministry of Labor.) The
report revealed that some subcontracting companies had been
used to continually rotate workers to deny benefits under the
labor code for permanent hires. MOL labor inspectors visited
200 subcontracting companies (none of which were registered
with the MOL) on December 8 and 9, mostly in or near
Guayaquil. Of these, almost half were connected to the Noboa
Group, owned by banana magnate and presidential candidate
Alvaro Noboa. The MOL found that these companies employed
500 subcontracted workers each. (The MOL did not fine any of
the companies visited.)

New Law Requires Hiring of Disabled
--------------


7. In December, Congress and the President approved an
amendment to the labor code requiring the hiring of persons
with disabilities in all public and private enterprises with
more than 25 employees. During the first year of the law's
implementation, enterprises with more than 25 employees will
be required to hire one person with disabilities for every 25
employees. After five year's of the law's implementation,
these enterprises will be required to employ a minimum of 5%
disabled staff. The National Disabilities Council estimates
that there are 815,000 persons with disabilities in the
country able to work, of which 56 percent are not employed.

Dole Representatives Meet with Banana Union
--------------


8. Banana union FENACLE leader Guillermo Touma reported that
on January 16, FENACLE representatives met with Dole company
managers and lawyers to improve dialogue on labor issues and
to discuss the possibility of banana worker unionization on
Dole plantations. Dole expressed openness to future meetings
and dialogue and to the possibility of reaching some kind of
agreement. Touma said the banana union was satisfied with
these initial talks.


9. On January 23, 10 union leaders who worked at the Josefa
banana plantation, a Dole supplier, were not allowed to enter
the workplace and fired. The fired workers then went on
strike outside the plantation starting January 23, but were
dislodged by police on February 11.

Andinatel Union Leaders Fired
--------------


10. On February 2, the president of state owned telephone
company Andinatel Esteban Arellano, fired four of the
company's union leaders, paying them a total of $632,000 in
compensation. Andinatel accused the union leaders of
destabilizing the company though their attacks on Andinatel
management regarding its negotiations to purchase fiber
optics. One of the union leaders, Giovanny Cabrera, and the
previous president of Andinatel had signed a collective
bargaining contract in April 2005 giving workers a 36-month
period of job stability. Cabrera has threatened to initiate
a law suit in the labor court for violation of this contract.
JEWELL