US embassy cable - 04QUITO3262

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, Labor 
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