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Cablegate: Disorganized Labor: Lots of Talk, Little Collective Action

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DE RUEHQT #0009/01 0141757
ZNR UUUUU ZZH
O R 141757Z JAN 10
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0636
INFO RUEHBO/AMEMBASSY BOGOTA
RUEHBR/AMEMBASSY BRASILIA
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEHCV/AMEMBASSY CARACAS
RUEHGL/AMCONSUL GUAYAQUIL
RUEHLP/AMEMBASSY LA PAZ
RUEHPE/AMEMBASSY LIMA
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UNCLAS QUITO 000009

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV ELAB PHUM EC
SUBJECT: DISORGANIZED LABOR: LOTS OF TALK, LITTLE COLLECTIVE ACTION

REF: 09 QUITO 951

1. (SBU) SUMMARY. Union leaders are calling for strikes beginning
...


id: 243678
date: 1/14/2010 17:57
refid: 10QUITO9
origin: Embassy Quito
classification: UNCLASSIFIED//FOR OFFICIAL USE ONLY
destination: 09QUITO951
header:
VZCZCXYZ0000
OO RUEHWEB

DE RUEHQT #0009/01 0141757
ZNR UUUUU ZZH
O R 141757Z JAN 10
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0636
INFO RUEHBO/AMEMBASSY BOGOTA
RUEHBR/AMEMBASSY BRASILIA
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEHCV/AMEMBASSY CARACAS
RUEHGL/AMCONSUL GUAYAQUIL
RUEHLP/AMEMBASSY LA PAZ
RUEHPE/AMEMBASSY LIMA
RUEHQT/AMEMBASSY QUITO


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UNCLAS QUITO 000009

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV ELAB PHUM EC
SUBJECT: DISORGANIZED LABOR: LOTS OF TALK, LITTLE COLLECTIVE ACTION

REF: 09 QUITO 951

1. (SBU) SUMMARY. Union leaders are calling for strikes beginning
on January 15, ostensibly to protest the "insufficient" rise in the
minimum wage, which will go from 218 dollars to 240 dollars in
2010. However, worker protests are unlikely to amount to much,
since organized labor in Ecuador is small, shrinking, disorganized
and disrespected. While some of their problems can be laid at the
feet of government policies, many of the labor federations' wounds
appear to be self-inflicted. To the extent that there is positive
news on the labor front, the union leadership appears to recognize
that their ongoing internal divisions are hampering efforts to
consolidate their position as the National Assembly gears up to
discuss a new labor code. Some organized labor leaders have begun
to discuss ways to raise awareness of workers' rights and
revitalize the movement, but they are unlikely to have any
short-term success. End Summary.

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Show me the money

------------------

2. (SBU) On December 31, the Ministry of Labor announced that the
basic minimum wage would rise from 218 dollars per month to 240
dollars (not counting required bonuses that roughly amount to an
additional two months' salary). The decision was made by the
Ministry according to applicable law, after the National Council on
Salaries - a tripartite technical agency with representatives from
labor, business and the government - failed to reach an accord by a
December 22 deadline. The 22-dollar monthly raise was slightly
higher than last year's 18-dollar increment. However, it did not
meet the expectations of labor leaders, who had called for a
"dignified salary" of 320 dollar per month, using a term President
Correa employed in his August inaugural address and a dollar figure
Minister of Labor Richard Espinosa announced later that month as
the wage families needed to cover a basic basket of consumer goods.
The 320 dollars sum is far greater than the government or business
leaders were willing to support, but one that Correa repeated in
his November 21 radio address. (Note: Government ministers began
walking back Correa's proposal immediately after the radio address,
noting that the President really meant to say that the minimum
salary should eventually reach 320 dollars, not that 320 was the
goal for the 2010 basic wage.)

--------------------------------------------

"No one to blame but ourselves" (and Correa)

--------------------------------------------

3. (SBU) January is traditionally a month for demonstrations, with
unions expressing their unhappiness with the annual salary bump, so
the call to march surprised no one. Effective mobilizations by the
labor federations are hampered by the size of the shrinking unions.
Organized labor represents less than 5% of the total and may be as
low as 1.2% of the workforce. According to a lawyer specializing
in labor issues in Guayaquil, 1979 was the zenith of union
membership with roughly 17 percent of the workforce formally
represented. Politically powerful in the 1980s, the unions first
began losing steam when then-President Rodrigo Borja (1988-1992)
raised the minimum number of workers required to form a union from
15 to 30, cutting membership in half. In addition, a law requiring
that employers pay two years' severance to terminated workers,
combined with exorbitant interest rates during the monetary crisis,
led huge numbers of union members to "get themselves fired" and
live off the severance package. (Banks were offering interest
rates of 50-100% on deposits, allowing some workers to live off the
interest on the deposited severance package, at least temporarily.)
Former President Lucio Gutierrez (2003-2005) gutted the public
sector unions with the passage of the Civil Service and
Administration Law, which stated that workers classified as
"professional" staff could not join unions. Correa's executive

decrees and the 2008 Constitution have further limited union
activity by pulling public sector technical and administrative
staff under the Civil Service Law umbrella, and listing entire new
categories of "strategic" public sector industries where no worker
is allowed to strike (see reftel), all of which may cut the number
of unionized workers in half again.

4. (SBU) Labor federation leaders explain that although Correa -
and past Presidents - hold the blame for policies that cut
membership, the unions have suffered from their own lack of vision.
The president of one of the largest federations told Poloff that
while large numbers of members were cut from the rolls legally,
unions and confederations were slow to seek new sources to fill
their dwindling ranks. The informal labor sector, for example,
accounts for 42.5 percent of the workforce, yet labor federations
have generally ignored the sector. While the law may prevent
"unions" from forming, there is no legal or regulatory prohibition
on forming labor associations among any group of workers under the
umbrella of the federations, who could then work together to
publicize workers' rights and press the government and National
Assembly to pass more labor-friendly legislation. According to
him, the federations should restructure to better represent all
workers, not just those who are allowed to join unions.

5. (SBU) In addition, younger workers have little interest in
joining traditional unions, which they see essentially as corrupt,
self-serving organizations that take dues but produce little. The
federation president explained that most union leaders are selected
by a few senior members, who then call in a few more members to
"elect" the new union or federation leader in a rump congress.
General elections among all federation or union members are either
rare or rigged, and leaders often seek to build networks of
"clients to reward, not activists who act." In addition, most
traditional labor federations were linked to now-discredited or
shrinking socialist and communist political parties.

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Who they are

------------

6. (U) Currently, there are three primary federations of unions who
together form the United Workers Front (FUT), all of which vastly
inflate the number of members in their own federation and report
very old membership data. It is this Front that has called for
strikes on January 15, and claims to represent the vast majority of
what remains of organized labor. Of the three federations, the
largest is the Free Trade Union Organization (CEOSL), which had
more than 200,000 members a decade ago, but now claims to represent
fewer than 80,000 workers. These workers are from the health care
sector, private industry, some municipal workers, agriculture, and
some independent unions. CEOSL is in merger talks with the
Ecuadorian Confederation of Class Organizations/Latin American
Workers (CEDOCLAT), which claims to represent an additional 20,000
laborers in the informal and public sectors. The other two
federations in the FUT are the Ecuadorian Confederation of Workers
(CTE), with 20,000 reported members primarily in the electricity
and health care sectors (although apparently the health care
workers are leaving in droves), and the Ecuadorian Confederation of
Class Organizations for Worker Unity (CEDOCUT), with fewer than
20,000 reported workers in regional governments and hospitals.

7. (U) In addition to the FUT federations, the General Union of
Workers of Ecuador (UGTE) represents about 20,000 regular union
members and, more importantly, the approximately 120,000 members of
the National Union of Educators (UNE). This teachers'
organization, despite its name, is actually an association, since
teachers are considered professionals and work in the strategic
education sector, both of which theoretically prevent them from
either forming a union or striking. Despite the legal
prohibitions, the teachers last held a strike from September 15 to

October 7, 2009, to protest the Education Law, and UNE president
Mery Zamora has called for another teacher strike beginning
sometime this month. (The largest student association will begin
their own series of demonstrations on January 8.)

8. (U) Finally, several industries have unions and federations that
are independent of the larger confederations, and represent only
their industry or sector. Independent unions represent workers in
the various stages of the petroleum industry; some municipalities;
each provincial government; some sugar industry companies; those
health care sectors not represented in one of the confederations;
and some agricultural sectors.

-------------------------

What they should be doing

-------------------------

9. (U) Labor leaders and NGO representatives note that the GOE is
discussing a revision or complete redraft of the 1938 Labor Code.
Although tentatively scheduled for a spring debate, it is unlikely
the National Assembly will able to finish the legislation currently
on its plate in time to take up the labor code before mid-year, if
then. Among the bills already on the Assembly's docket is a new
Public Service Law, which will replace the current Civil Service
and Administration Law affecting public sector workers. The clock
is certainly ticking on the old labor law, however, which should
provide a sense of urgency to the federations and the nascent
efforts to come to some kind of agreement on what organized labor
would like to see in that draft. Labor leaders from around the
country gave Poloff a laundry list of government evils and general
"problems with the situation today" at a recent reception, and all
agreed that they would need to work together to create a labor code
that protected workers' rights and unions. None, however, seemed
to have a specific plan on how to proceed, and none were
particularly enthusiastic about working across federation lines. A
group of younger leaders attempting to form an inter-federation
association (see reftel) may be the start of a unified base - or at
least a platform for discussion - but so far they are more
concerned with how to register their organization than with
crafting a message or strategy.

10. (SBU) In addition to working together on policy, the
confederation president mentioned earlier said that they all needed
to increase membership with unionized and non-unionized workers;
create a more democratic order within the unions and federations;
and consider the possibility of forming a political party that
would attract interest from both workers and businesses seeking
more stability in the economy, especially in times of economic
crisis. Federations must go out to seek affiliates with everyone
from domestic servants to street vendors, all of whom are
unrepresented and vulnerable to exploitation, or risk losing so
many members that they become entirely irrelevant.

---------------------------------

Why they won't be able to do it

---------------------------------

11. (SBU) Labor contacts are pessimistic about the chances of
organized labor's ability to organize themselves to confront the
challenges they face collectively. The labor lawyer noted that
Correa's real target is the public sector unions, which today
represent the largest segment of organized workers. Correa sees
them as a threat to his ability to control key sectors of society
and the economy (teachers, oil, utilities, transport) and uses
those jobs to reward loyalists and garner influence. On the other
hand, the President seems to have little interest in private sector

unions, which, after all, are mostly a threat to the powerful
families and established financial class that Correa is always
disparaging. Since Correa is "the boss" for the public sector, and
for the Ministry of Labor that is supposed to be protecting
workers' rights, there is no third party with political influence
that can defend those workers' interests effectively. The
federation president in turn said the unions and federations
themselves would not be able to overcome their differences because
no one would be willing to give up "their" seat on various
government councils, allowing the government to continue its
successful policy of dividing and conquering. In addition, he
said, the confederations and some unions still maintained ties,
some of them financial, to disparate political parties that were
unlikely to permit them to merge effectively. Our labor NGO
contacts say simply that the organized labor leaders cannot figure
out what they want, and have not adjusted to the new economic
reality and shrinking membership base. Without younger and more
dynamic leaders, who are not quite so interested in protecting
their rice bowls, there is unlikely to be any real unity.

--------

COMMENT

--------

12. (SBU) Without coordinated action, and significantly more
sympathy from the middle class, the January demonstrations are
likely to be more of the usual: an inconvenience for everyone, but
certainly no threat to government stability. Unions and their
allied associations have everything to gain by modernizing their
structures and memberships, but are more likely to continue losing
both members and political influence, at least in the short term.
Correa is not helped by the faltering economy or rising crime,
which create some discontent among those who might otherwise firmly
support his hard line against organized labor, but he probably
needs no allies to weaken the labor movement. The unions appear to
be capable of doing that themselves. Protesting groups - teachers,
unions, students and the indigenous - are already setting different
schedules for their actions. While the different schedules will
let each group highlight their individual gripes, they will miss
yet another opportunity to show a united front against the
government.
HODGES

=======================CABLE ENDS============================

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