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Cablegate: Ecuador: June Labor Update

This record is a partial extract of the original cable. The full text of the original cable is not available.




E.O. 12958: N/A


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

--ILO Meets with New MOL (para. 2)
--Vice Minister Outlines Labor Code Reform Plan (4)
--Child Labor Inspectors Rehired (6)
--FENACLE Reports Incidents on Banana Plantations (7)
--MOE Proposes Investing Social Security Funds (8)
--Judicial Workers Union Strong (10)
--Bureaucracy Grew Under Gutierrez (11)

ILO Meets with New MOL

2. In a June 3 meeting with International Labor Organization
(ILO) regional director Ricardo Hernandez Pulido, Hernandez
told LabOff the ILO had spoken with new Minister of Labor
Galo Chiriboga and offered to sponsor three Ecuadorian labor
consultants (one to represent government, one unions, and one
business) to analyze the labor code and formulate a reform.
The ILO would also offer their own technical assistants to
compliment this work. The ILO had previously offered to
sponsor a foreign consultant, however, the ILO received a
clear message from the new more-nationalistic GOE, that the
consultants would need to be Ecuadorian. The ILO has also
given the new Minister of Labor copies of the five technical
notes they produced on Ecuador's compliance with ILO
standards on: hourly work, subcontracting, company
retirement, child labor, and freedom of association and
collective bargaining.

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3. Hernandez said Chiriboga told him he did not think this
government had enough time for a full labor code reform and
did not intend to attempt this. Hernandez said Chiriboga's
priorities, as perceived by him, were creating employment and
strengthening the tripartite National Labor Council, while
the Vice Minister of Labor's focus seems to be gender issues
and child labor.

Vice Minister Outlines Labor Code Reform Plan

4. In a June 6 meeting, Vice Minister of Labor Betty Amores
said the MOL was already working closely with the ILO.
Amores said that both unions and business wanted a new labor
code and this was the appropriate time to work on the
project. Amores did say that she doubted this administration
would be able to complete labor code reform as it had a
limited time in office.

5. Amores said she would oversee a process to create text
for the new labor code, which would be similar to the process
used to create Ecuador's child code (which Amores worked on).
First, the MOL would select a group of jurists that would be
approved by the tripartite National Labor Council. The group
would have a maximum of four jurists and would include a
specialist in international labor rights. The jurists would
then map out what would fall under the code. Then, an
outline would be created, followed by the formulation of the
actual text. After each step, the product would be presented
to the National Labor Council for its approval. Amores said
the process would begin in July and would take approximately
nine months. She stated that they would work closely with
the ILO and Congress' Labor Commission throughout the process.

Child Labor Inspectors Rehired

6. Jenny Cepeda, of the MOL's child labor division, sent
LabOff an e-mail on June 10 stating that 12 child labor
inspectors had been rehired. The e-mail named these
inspectors, and said that the MOL was in the process of
selecting the remaining 10. LabOff spoke with Cepeda on June
14 who said that, as of that date, the MOL had hired a total
15 child labor inspectors. All of the child labor
inspectors' contracts had been suspended in accordance with a
presidential decree passed by Palacio in his first days as
President stating that all contractual public servants hired
since 2003 had to be dismissed. Amores said her
administration would work to strengthen child labor
inspections and would seek a greater budget for these
activities from the Ministry of Finance.

--------------------------------------------- --
FENACLE Reports Incidents on Banana Plantations
--------------------------------------------- --

7. FENACLE, a union based in Guayas province belonging to
the CEOSL union confederation, reported that police attacked
striking banana workers with tear gas on two haciendas in
Guayas province: San Jose hacienda in Balao on May 4, and
Primavera hacienda in Vernaza-Salitre on May 10. FENACLE
said that police detained union leaders at these haciendas
and accused them of being agitators. The union leaders were
detained for a few hours, then released.
MOE Proposes Investing Social Security Funds

8. On May 16, the Minister of Economy Rafael Correa proposed
using social security funds for petroleum and other projects.
Currently the Ecuadorian Social Security Institute (IESS)
has approximately $690 million deposited in the Central Bank;
these funds would be used in petroleum, road, and
hydroelectric projects. Correa said he would use resources
at the IESS deposited in the Central Bank that do not yield
interest and that also have not been used in the development
of new social security projects. Although the measure has
been rejected by retirees, Correa claims these investments
would greatly benefit the IESS and would allow it to improve
its services, including pensions.

9. Correa said the investments would be "activities that are
100% guaranteed and of high profitability." He did not
elaborate on his 100% guarantee of the investment or his
"high profitability" claim. Nor did Correa explain how this
new investment would turn around state oil company
Petroecuador, which enjoys a well-deserved reputation for
inefficiency and whose own production has steadily declined
over the last decade.

Judicial Workers Union Strong

10. According to an article in Quito's El Comercio
newspaper, FENAJE, the judicial workers union, has a great
deal of influence and owns property. FENAJE has managed $2.4
million since 2001 and is made up of 3,774 workers (of the
3,959 total judicial workers in the country). The union
showed its power to paralyze the country's judicial process
during its recent strike against the Supreme Court put in
place by Gutierrez in December 2004. The strike ended in
April with Gutierrez' ouster. FENAJE owns two hotels and a
tourist complex in Ecuador.

Bureaucracy Grew Under Gutierrez

11. According to press, government service was the sector
with the most job growth between 2002 and 2004. Before
Gutierrez assumed the presidency, 2,538 persons were employed
under personal government contracts. By the end of 2004,
7,034 additional persons were hired under this mechanism,
representing a 277% increase. According to Miguel Garcia,
president of the federation of public workers, political
parties and administrations look to employ government workers
through these personal contracts because no open contest is
necessary. During Gutierrez' term, the police and military
also saw a large increase in number of persons hired.

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