US embassy cable - 04QUITO2534

UNCLAS QUITO 002534 
 
SIPDIS 
 
SECSTATE FOR US TRADE REPRESENTATIVE 
USTR FOR BUD CLATANOFF, USDOL FOR JORGE PEREZ-LOPEZ, DRL/IL 
FOR GREG MAGGIO, EB FOR AMY HOLMAN 
 
E.O. 12958: N/A 
TAGS: ELAB, PGOV, EC, Labor 
SUBJECT: MOL PROMISES SUBCONTRACTING DECREE THIS WEEK 
 
REF: QUITO 2480 
 
1.  (SBU) Summary.  At breakfast with the Ambassador 
September 15, Minister of Labor Raul Izurieta said the 
President would sign the oft delayed labor decree on 
subcontracting by September 17.  On September 14, union 
leaders told PolOff they were worried the decree would not 
sufficiently limit subcontracting abuses.  End Summary. 
 
Minister Says Decree A Done Deal 
-------------------------------- 
 
2.  (SBU) The Ambassador thanked Izurieta for his hospitality 
during the recent labor delegation visit (reftel).  The 
Ambassador asked if there was any progress on the 
long-delayed subcontracting decree.  Izurieta said he would 
need until September 21 to consult with unions again and make 
additional changes.  The Ambassador emphasized the need for 
closure on this ATPDEA commitment by the GoE and suggested 
the President consider signing the decree before planned 
travel to Washington the week of September 20.  Izurieta 
agreed, and promised to recommend the President would sign 
the decree by September 17. 
 
3.  (U) Izurieta also described his good relations with the 
Labor Commission in Congress and its President, Andres Paez. 
Izurieta said he is also working with the unions and business 
to reach an agreement on hourly wages.  Izurieta provided the 
Ambassador a copy of the latest version of the subcontracting 
decree, which adds a clause requiring companies to have a 
maximum 75% of its employees hired through subcontractors. 
The change reflects union concerns. 
 
Unions Push For Subcontracting Limits 
------------------------------------- 
 
5.  (SBU) On September 14, PolCouns and PolOff attended a 
reception organized by Patricio Contreras of the Solidarity 
Center (AFL-CIO) with Izurieta and a broad selection of 
approximately 50 union leaders.  Jaime Arciniegas, President 
of the CEOSL union, told PolOff that he and other union 
leaders had met with the President and Izurieta on September 
8 to discuss the subcontracting decree.  In the meeting, 
union leaders asked for the decree to limit the number of 
subcontractors to no more than 15% of employees.  Arciniegas 
said the unions would be willing to support a decree if it 
limited the number of subcontractors to a maximum of 50%. 
Union leaders were very concerned about the clause in the 
decree stating subcontractors can be used "indefinitely," 
which they feared could further weaken unions. 
 
Comment 
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6.  (SBU) The last-minute concession to labor unions in the 
current version of the decree could provoke a legal challenge 
by business groups or even further delay.  Izurieta clearly 
understands the need for labor reform in Ecuador and is 
working with key stakeholders, including members of Congress, 
to this effect.  However, if the long-overdue subcontracting 
decree is any indication, the process for achieving more 
comprehensive labor reform will be tortuous. 
KENNEY