US embassy cable - 04QUITO3132

UNCLAS SECTION 01 OF 04 QUITO 003132 
 
SIPDIS 
 
DOL/ILAB FOR TANYA RASA, SECSTATE PLEASE PASS TO USTR 
REPRESENTATIVE 
 
E.O. 12958: N/A 
TAGS: ELAB, PGOV, EC, Labor 
SUBJECT: INFORMATION FOR MEANINGFUL LABOR RIGHTS REPORT 
 
REF: SECSTATE 241222 
 
1.  Summary:  This cable provides information on labor 
conditions in Ecuador as requested for the Meaningful Labor 
Rights Report, and is keyed to questions included in RefTel. 
End Summary. 
 
Administration of Labor Law 
--------------------------- 
 
2.  The Ministry of Labor and Human Resources (MOL) is made 
up of various administrative divisions, including the Office 
of the Vice Minister, the Undersecretary for the Sierra and 
Amazon, the Undersecretary for the Coast and Galapagos, the 
Labor Inspectorate, International Relations, Planning, 
Communication, Internal Auditing and Legal Advising.  The MOL 
received a proposal from the International Labor Organization 
(ILO) for a restructuring of the MOL which they plan to 
implement in December. 
 
3.  There are 45 labor inspectors nationwide, 11 of whom work 
in Quito.  Article 553 of the labor code defines their 
jurisdiction.  From January through October 2004, the MOL 
conducted 304 inspections.  In accordance with the labor 
inspection law, individual claims can result in fines from 
$5-50.  The Ministry of Labor's inspectorate issues 
approximately 30-40 fines a day. 
 
4.  Labor complaints not resolved by MOL administrative 
action are heard in trials before the labor judges within the 
Superior Court.  (It is not necessary to first make a labor 
complaint to the MOL.  However, approximately 95% of cases 
are first heard in the MOL.)  There are about 4,000 labor 
court cases a year.  Since June 2004, a new oral procedure 
was adopted for labor cases.  Now, trials that previously 
took 3-5 years can be resolved in 30-60 days.  From July 
2004, when oral procedures began, to November 2004, the five 
labor judges heard 1348 cases.  Labor court judges told 
LabOff they had reached sentences on approximately 450 of 
these cases.  Labor court judges also told LabOff they did 
not have statistics on the reasons the court cases were 
filed.  The decisions of the court can be appealed to the 
Supreme Court within 10 days after the last hearing.  Most 
cases are filed by workers for violation of contracts or of 
the law and unjustified firings.  Employers and workers 
generally obey the decisions of the labor courts.  In Quito 
and Guayaquil, there are approximately 30,000 pending cases 
that date from before the law was passed and need to be tried 
under the written system. 
 
Freedom of Association 
---------------------- 
 
5.  The Constitution and labor code provide most workers with 
the right to form trade unions.  According to the AFL-CIO 
Solidarity Center, about 390,000 workers in Ecuador are 
unionized (approximately 8.5% of the Ecuadorian economically 
active population).  Of these, approximately 120,000 are 
members of one of the five union "centrals" or labor 
confederations, while 270,000 are independent.  Those outside 
of the union confederations include drivers, public servants, 
health workers, teachers and oil workers.  The MOL has 
approved 878 unions since 1985.  No unions are registered in 
the Export Processing Zones (EPZs). 
 
6.  Under the law, unions may freely join federations or 
confederations.  The two largest single labor unions, the 
National Union of Educators and the Union of Social Security 
Workers, are allied with the Democratic Political Movement, a 
far-left party.  There are five large labor confederations; 
no confederation was allied with a political party.  There 
are approximately 70 labor federations established in 
Ecuador.  Important federations include health, electrical 
workers, public servants, oil workers and municipal workers. 
 
7.  The labor code explicitly prohibits employers from 
interfering in the establishment or functioning of worker 
organizations.  The code also explicitly prohibits employers 
from dismissing workers while they are forming a union or 
negotiating a collective contract; however, the penalties for 
violations are relatively minor and not always enforced in 
practice.  Members of the police, the military, and most 
public sector employees are not free to form trade unions. 
Some public sector employees, however, are covered by the 
labor code and able to form unions and bargain collectively. 
While public sector employees not covered by the labor code 
cannot form unions, they are free to form associations 
 
8.  The 1991 labor code reforms set the number of workers 
required for an establishment to be unionized at 30.  In 
2002, the ILO criticized the 30-worker minimum as too high 
and called for the government to take the necessary measures 
to amend the code.  In its 2002 Annual Survey of Violations 
of Trade Union Rights, the International Confederation of 
Free Trade Unions reported that 60 percent of the enterprises 
in the country employed fewer than 30 workers, effectively 
excluding 1 million workers from organizing a union. 
 
9.  Labor laws intended to protect workers' rights to freedom 
of association sometimes failed to deter employers from 
retaliating against workers for organizing.  Reinstatement is 
not a legal right of workers fired for union activity. 
 
10.  While employees of state-owned organizations enjoyed 
rights similar to those in the private sector, the law 
prevents the majority of public sector employees from 
exercising collective bargaining rights.  However, most 
public employees maintained membership in some labor 
organization. 
 
 
Right to Organize and Bargain Collectively 
------------------------------------------ 
 
11.  According to the MOL, there are currently 651 active 
collective contracts, which cover 134,762 workers (88,694 in 
the public sector and 45,053 in the private sector.) 
However, according to the AFL-CIO Solidarity Center, 
currently 28,260 workers in Ecuador are covered by collective 
bargaining agreements.  None of these are in the EPZs.  As of 
November 2004, there have been 49 collective bargaining 
agreements signed in 2004 (previous years:  2003: 114, 2002: 
124, 2001: 134).  According to the AFL-CIO Solidarity Center, 
there are three primary reasons why the number is so low for 
2004.  These are the closing of many businesses due to the 
poor economy, no new formation of unions due to the 30 person 
minimum, and the public sector not bargaining collectively 
due to the new law on standardizing salaries.  In accordance 
with the labor code, unionized as well as non-unionized 
workers are protected by collective contracts. 
 
12.  The labor code provides for resolution of labor 
conflicts through an arbitration and conciliation board that 
consists of one representative of the Ministry of Labor, two 
from the union, and two from management. 
 
13.  The labor code requires workers to be represented by 
only one labor union.  It prohibits discrimination against 
union members and requires that employers provide space for 
union activities upon the union's request.  If the Ministry 
of Labor rules that a dismissal of an employee is 
unjustified, it can require the employer to pay severance to 
the worker of 125 percent of a month's salary for each year 
worked, although the reforms set a cap on such payments. 
 
14.  During the past year, there have been five strikes, two 
in the public sector and three in the private sector. 
According to the MOL, this is due to increased dialogue and 
intervention on the part of the MOL.  There are few 
restrictions on the right of workers to strike, although a 
10-day cooling-off period is required before a strike can be 
declared.  The labor code limits solidarity strikes or 
boycotts to 3 days, provided that the MOL approves them.  In 
some industries, during a legal strike, workers may take 
possession of the factory or workplace (thus ending 
production at the site) and receive police protection during 
the takeover.  However, in other industries, such as 
agriculture, the law requires a 20-day waiting period from 
the day the strike is called.  During this time, workers and 
employers must agree on how many workers are needed to ensure 
a minimum level of service, and at least 20 percent of the 
work force must continue to work in order to provide 
essential services. 
 
15.  The labor code provides that "the employer may contract 
substitute personnel" only when striking workers refuse to 
send the number of workers to provide the minimum necessary 
services in service industries.  The employer must pay all 
salaries and benefits during a legal strike; the labor code 
protects strikers and their leaders from retaliation. 
 
16.  The law does not provide public workers with the right 
to strike and includes a provision that striking public 
sector workers are liable to between 2 and 5 years in prison; 
however, there were frequent unauthorized work stoppages by 
public sector workers.  In September, Congress passed a civil 
service reform law that creates a unified salary structure 
for some public workers (it excludes the police, military, 
teachers, and health care workers).  The law reiterates the 
prohibition against strikes by most civil service employees. 
 
17.  There is no special prosecutor assigned to handle 
extreme cases of anti-union discrimination or acts of 
interference, such as murders and beatings, however these are 
not common crimes in Ecuador.  The Ministry of Labor is the 
organization within the Ecuadorian government responsible for 
ensuring the respect of workers' rights. 
 
Prohibition of Forced or Compulsory Labor 
----------------------------------------- 
 
18.  The Government has proposed legislation to reform the 
penal code to criminalize prostitution of minors under 18 and 
trafficking in persons (TIP).  On August 18, the president 
signed a decree establishing a national commission to fight 
TIP and provide social services to victims.  The Executive 
branch submitted its package of legislative reforms in 
September, which remains under Congressional review.  The 
reforms are designed to bring the penal code into compliance 
with international conventions against trafficking in persons 
and alien smuggling. 
 
19.  The government and NGOs are designing programs to assist 
trafficking victims.  The ILO with GoE cooperation plans to 
open a shelter for minors who are victims of commercial 
sexual exploitation in Machala by January 2005.  USAID and 
Geneva Global will provide $600,000 to fund 12 to 15 projects 
to address TIP issues in Ecuador.  Geneva Global held a 
conference on November 15 with 38 NGOs to solicit proposals 
for projects. 
 
Child Labor 
----------- 
 
20.  Child labor remains a major problem in Ecuador. 
However, the GoE, NGOs and other institutions are taking 
steps to combat worst forms of child labor in Ecuador.  More 
clearly needs to be done, particularly in the enforcement of 
child labor laws and the rehabilitation of child laborers. 
In July 2004, the Ministry of Labor created a Division for 
Child Labor comprised of three officers, augmenting the 
previous single position for Child Labor, which was also 
responsible for international affairs.  The Division meets at 
least monthly with the MOL and inter-agency National 
Committee for the Progressive Eradication of Child Labor. 
 
21.  In May 2004, the MOL hired eighteen new child labor 
inspectors, bringing the total nationwide to 19.  Currently 
there are 16 inspectors due to resignations; the MOL is in 
the process of hiring six more.  According to the ILO, the 
inspectors have found 500 child laborers in the field. 
Nation-wide the budget to prevent and combat child labor is 
$465,000.  Of this $300,000 went to the Ministry of Social 
Welfare and still has not been spent, $25,000 to the MOL, and 
$140,000 for inspectors' salaries. 
 
22.  The Institute for the Child and Family (INNFA) has a 
$3.5 million budget to work on child labor issues.  (INNFA's 
funds do not come from the national budget; most funds come 
from import taxes.)  Most of this money goes towards 
scholarships for poor children, while a smaller program is 
aimed towards moving children out of dangerous work.  INNFA 
provides support for child labor inspectors and helped create 
an inspection manual.  INNFA has worked to address the 
problem of child labor in the flower sector by providing 
information on child labor to all the major flower producers. 
 
 
23.  The ILO-IPEC began a child labor Time-Bound Program in 
October 2003 with action plans in the banana, flower, 
construction, trash and commercial sex exploitation of minors 
aiming to get children out of work and back in school.  USDOL 
awarded $3 million to Catholic Relief Services to target 
child laborers and children at risk of entering the flower 
and banana sectors. 
 
24.  The Child Worker Program funded by the Central Bank of 
Ecuador, has developed a workshop program called "Panita" 
which meets three times a week to promote civic values and to 
work with families and schools on the issue of child labor. 
The Child Worker Program is also planning a community 
ombudsman program to hire a community group to receive and 
act on reports of child labor.  The Central Bank provided 
$200,000 annually for the Child Worker Program. 
25.  The labor code needs to be harmonized with the Code for 
Children and Adolescents (passed in Congress in December 
2002), which sets higher standards.  The Child and 
Adolescents Code raised the fine for child labor violations 
to $200-1000; the labor code fine remains at 50 sucres 
(Ecuador's obsolete currency).  In the labor code, the 
minimum work age is 12 for work as domestics or artisans and 
14 for all others, while in the Child Code it is 15 for all. 
 
Minimum Wage 
------------ 
 
26.  The minimum wage is defined in Article 94 of the labor 
code and is annually updated by the Ministry of Labor.  (The 
MOL's National Technical Secretariat of Human Resources and 
Remuneration Development sets the minimum wage for public 
sector workers and the National Salary Council sets those for 
the private sector.)  The current minimum wage as of November 
2004 is $135.62 per month and $0.95 per hour.  This is the 
general minimum wage and the MOL also sets minimum wages by 
sectors.  There are reports of non-compliance with the 
minimum wage, particularly for foreign workers. 
 
Occupational Safety and Health 
------------------------------ 
 
27.  The MOL reported that it received 71 work accidents 
complaints, 9 of which were deaths, during 2003.  Workers can 
file complaints with the MOL's labor inspectorate or with the 
Social Security Institute.  Occupational safety and health 
regulations are better enforced for those workers covered by 
collective bargaining agreements.  The construction, flower 
and agro-industrial sectors reportedly suffer higher than 
average safety and health problems. 
KENNEY