Cablegate: Mol Understands Need for Labor Code Reform

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 003262

SIPDIS

SENSITIVE

SECSTATE PLEASE PASS TO US TRADE REPRESENTATIVE

E.O. 12958: N/A
TAGS: ELAB PGOV ETRD EC
SUBJECT: MOL UNDERSTANDS NEED FOR LABOR CODE REFORM

1. (SBU) Summary: While Minister of Labor Izurieta
understands the need for labor code reform, he is not focused
on freedom of association issues. The Embassy has made it
clear to Izurieta that the U.S. Congress is less likely to
pass a Free Trade Agreement (FTA) including Ecuador unless
the labor code is reformed to address freedom of association
weaknesses. Izurieta said the GoE is working with Congress
and the International Labor Organization (ILO) on labor code
reform. We have offered technical assistance to help focus
these reforms on freedom of association issues, and move
labor code reform forward. End Summary.

Embassy Reiterates Congressional Concerns on Labor
--------------------------------------------- -----

2. (SBU) PolChief and LabOff met with Minister of Labor Raul
Izurieta on December 16 to reiterate USG concern that
significant labor reform is necessary to bring the GoE into
compliance with its ILO commitments. Without this type of
reform, the U.S. Congress would be unlikely to approve an FTA
with Ecuador. To provide concrete examples of areas needing
reform, we shared with Izurieta copies of ILO recommendations
for reform, as well as the Human Rights Watch and US/LEAP
petitions for the Andean Trade Preferences Act (both of which
LabOff had previously provided to Izurieta) that outline
weaknesses in Ecuadorian labor law. We also provided
Izurieta with another copy of the March 5 letter from 34
members of the U.S. Congress to Minister of Trade Ivonne
Baki, highlighting the concluding phrases which refer to the
need for significant labor reform in Ecuador in order for the
U.S. Congress to approve an FTA. PolChief noted the current
pro-government Congressional majority and asked whether the
GoE was considering using this majority for labor code reform.

MOL Working on Labor Code Reform...
-----------------------------------

3. (SBU) Izurieta said that he fully understood the need for
labor reform and currently has a consultant working on a
reform proposal by December 30. Izurieta said he intends to
present these reform proposals to the National Labor Council
for discussion, to be followed by submission to Congress.
Izurieta described his 12-point labor reform priority list
which included replacing profit sharing with other benefits
such as travel benefits, housing loans and educational
scholarships for workers' families, replacing private
retirement schemes with public ones, and having employers
contribute at higher rates to Social Security. Izurieta said
getting rid of private retirement schemes will help workers,
because currently many workers are fired before being vested
in retirement benefits after 25 years with a company.
Izurieta's list did not include any freedom of association
issues and he stated he did not believe there were any laws
impeding the formation of unions. Izurieta said most workers
choose of their own volition not to join a union because this
could put their employment at risk.

...Yet Key Issues Not Addressed
-------------------------------

4. (SBU) We explained that while important, Izurieta's
reform priorities were not likely to be recognized as
"significant" in the context of U.S. Congressional debate of
an FTA including Ecuador. More likely to be considered
significant would be steps addressing the ILO's call for
reduction of the 30-person minimum to form a union, the right
to reinstatement for workers illegally fired for union
activity, authorization of industrial unions, and protections
against anti-union discrimination in hiring. Izurieta said
he would review the documents we provided to see how these
concerns could be addressed.

5. (SBU) On "industrial" or sector-wide unions, Izurieta
said these already existed without the sanction of the law.
He cited the example of the national drivers union as a de
facto industrial union. The AFL-CIO Solidarity Center in
Ecuador confirmed to us that this sector-wide union does
exist, as well as province-wide unions in the banana industry
(with a goal to form a nationwide union). However, when
flower workers tried to form a sector-wide union, they were
denied by the current Minister. (Izurieta said the labor
code neither permits nor prohibits sector-wide unions.)

Other Upcoming Issues
---------------------

6. (SBU) According to Izurieta, Andres Paez, President of
the Labor Committee in Congress, will attend an upcoming
National Labor Council meeting to discuss Paez' proposed
subcontracting law. However, Izurieta is concerned that Paez
will not retain the Labor Committee Chair after the January 5
reshuffle of Congressional leadership positions. Izurieta
also said he is in close contact with the ILO on employment
issues. Izurieta stated that the upcoming restructuring of
the Ministry of Labor will focus on promoting employment and
improving worker training programs. We suggested greater
collaboration with the ILO on freedom of association issues.

Comment
-------

7. (SBU) Unions already view Izurieta as biased in favor of
business and Izurieta's reform proposals will reinforce this
view. To help refocus the Minister's energies on more
significant reforms, we are exploring the possibility of
offering technical assistance on labor code reform through
USAID. We will also explore the possibility of having a
Chilean expert on labor reform visit Ecuador to share that
country's experiences. Meanwhile, we have encouraged private
and direct dialogue between key labor and business leaders,
to explore the possibilities of a shared labor/business
reform agenda. The current Congressional majority is
fragile, and the government is not in a position to impose
any labor agenda without labor or business support.
KENNEY

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