US embassy cable - 05QUITO82

UNCLAS SECTION 01 OF 03 QUITO 000082 
 
SIPDIS 
 
SECSTATE PLEASE PASS TO US TRADE REPRESENTATIVE 
 
E.O. 12958: N/A 
TAGS: ELAB, PGOV, EC, Labor 
SUBJECT: ECUADOR LABOR UPDATE 
 
REF: 04 QUITO 3153 
 
1.  Summary:  Following are recent labor-related developments 
of interest: 
 
--President Calls Meeting to Discuss Labor Reform (para. 2) 
--Minimum Wage Negotiations (4) 
--Subcontracting Decree Deadline Extended (5) 
--Government Lay Offs (6) 
--Minister Claims Success (7) 
--Child Labor Update (8) 
--Children in the Trash Sector (9) 
--Flower Workers Seek Industry Union (12) 
 
President Calls Meeting to Discuss Labor Reform 
--------------------------------------------- -- 
 
2.  According to union leader Jose Chavez of CEOSL, Ecuador's 
largest labor confederation, President Gutierrez called a 
meeting on January 5 to discuss labor reform issues. 
According to Chavez, who was present at the meeting, Minister 
of Labor Raul Izurieta said he is in contact with a labor 
reform expert from the International Labor Organization (ILO) 
who is working on a labor reform proposal.  It was not clear 
whether this reform proposal would include freedom of 
association issues.  Izurieta also announced that he would be 
holding workshops to further labor reform.  The first 
meeting, scheduled for late January, would include a 
negotiation expert from the ILO, who would coach business and 
union leaders on negotiation skills.  At the second meeting, 
business and union leaders would negotiate a labor reform 
package, using the ILO labor reform expert's proposal as a 
starting point. 
 
3.  Izurieta has publicly declared that in 2005 he intends to 
propose reforms to Congress addressing company retirement, 
length of strikes, and profit sharing.  Izurieta also said to 
the press that a Presidential decree regulating hourly work 
will be signed in early January.  The decree will dictate 
that employers pay Social Security for these workers.  The 
Minister has told us he is developing a 12-point plan for 
reform that he has not made public. 
 
Minimum Wage Negotiations 
------------------------- 
 
4.  Union and business leaders began meeting on December 30 
to discuss raising the minimum wage.  By law, the minimum 
wage must be raised a minimum of $8 this year, from $135.62 
to $143.62 to account for various adjustments related to 
salary unification.  The minimum wage may also be adjusted to 
compensate for inflation, which would suggest an added 
increase of $2.87.  Union leaders, however, want the minimum 
wage to be raised to equal the cost of the poverty-rate 
family basket of goods which is $272.54.  If union and 
business leaders do not reach a compromise on the minimum 
wage issue, the Minister of Labor will make the final 
decision. 
 
Subcontracting Decree Deadline Extended 
--------------------------------------- 
 
5.  The Ministry of Labor has announced that the deadline for 
subcontracting companies to register with the Ministry has 
been extended from December 31, 2004 to July 31.  Izurieta 
told LabOff on January 5 that while the deadline to register 
had been extended, companies must comply with the decree even 
if they are not registered.  Minister Izurieta said the 
deadline was extended because companies needed to change 
their statutes before they could register.  The AFL-CIO 
Solidarity Center believes this is because the majority of 
subcontracting companies were phantom companies.  According 
to the press, the Ministry will be sending out 150 labor 
inspectors to begin inspections of the 3,000 subcontracting 
companies beginning this month. 
 
Government Lay Offs 
------------------- 
 
6.  According to press, to begin implementation of the Civil 
Service and Administrative Career Law, 5,000 government 
workers will be laid off in early 2005.  These workers will 
be offered leave packages of up to $20,000 (financed by the 
Inter-American Development Bank).  Minister Izurieta has told 
press that those who are currently overpaid will be the first 
to be laid off. 
 
Minister Claims Success 
----------------------- 
 
7.  Minister of Labor Raul Izurieta claimed to the press that 
his accomplishments in 2004 included the regularization of 
foreign workers by giving them work certificates and training 
150,000 workers.  His goal for 2005 would be to train 220,000 
more. 
 
Child Labor Update 
------------------ 
 
8.  According to Izurieta, the Ministry of Labor had 
requested a study from the National Statistics and Census 
Institute (INEC) to determine the number of child workers in 
the country.  INEC recently concluded its study and 
determined there were 302,000 child workers in the country, 
77% percent of whom worked for their families.  The MOL also 
held two workshops (in Guayaquil and Cuenca) to train the 
monitors of child labor inspectors, and will hold another 
workshop in Quito this month.  The monitors are primarily 
union and NGO representatives, who visit inspection sites 
with the inspectors to ensure transparency. 
 
Children in Trash Sector 
------------------------ 
 
9.  A study by the International Labor Organization (ILO) 
conducted in Ecuador's 20 largest cities found that Quito has 
the highest rate of children working in the trash rummaging 
sector.  Currently 362 children between ages 5-17 work in the 
trash sector in Quito.  In 2002, a similar study found 500 
children working in 12 of the 20 largest cities.  In 2004, 
440 minors were found working in the trash sector in Santo 
Domingo de los Colorados, Duran, Manta, and Quito.  The ILO 
categorizes this work as a worst form of child labor; these 
children are at risk of coming into contact with toxic gases 
generated by decomposition, as well as cuts on sharp objects, 
and contact with hospital waste.  Children in the trash 
sector are four times as likely to suffer accidents as 
children who do not work.  According to the ILO study, 
children in the trash recycling sector on average contribute 
17% of their families' income and are three years behind in 
their schooling. 
 
10.  In August, the Action and Development Foundation (DYA) 
and the Municipality of La Bota, a northern suburb of Quito, 
launched a school reinsertion program for these child 
laborers.  The Quito Municipality has also created a 
committee to address the health and educational needs of 
these children.  Finally, the National Child and Family 
Institute (INNFA) is providing scholarships to 16 of the 48 
children in La Bota's trash sector. 
 
11.  Press reported that on December 28, four children 
between the ages of 11 and 13 working in the city of 
Riobamba's trash sector were buried and suffocated by the 
waste deposited by a garbage collector during the night. 
According to press, 8,193 children and adolescents in the 
city of Riobamba and surrounding area work and do not attend 
school. 
 
Flower Workers Seek Industry Union 
---------------------------------- 
 
12.  Olga Tutillo and Vincente Colla, former flower workers 
met with LabOff on December 29 to describe labor rights 
abuses in the flower sector.  Tutillo has been invited by the 
International Labor Rights Fund to visit the U.S. on speaking 
tour on work conditions in Ecuador's flower industry.  After 
seven months of not being paid, they reported, the workers of 
Rosas del Ecuador, who belonged to a company union (part of 
the CEOSL confederation), went on a legal strike on October 
6, 2003.  The company, which had been suffering financial 
difficulties, closed the same day.  The workers have filed a 
complaint with the Ministry of Labor to receive back pay for 
those seven months and are still awaiting a decision. 
Tutillo said that of approximately 380 flower companies in 
the Cayambe (north of Quito) area, only two companies 
currently had unions: Jardines de Cayambe and Florequisa. 
Other companies fire workers as soon as they attempt to form 
a union.  She believes flower companies share a database of 
blacklisted union workers. 
 
13.  To counter these abuses of worker rights, Tutillo said 
the striking flower workers will again request approval from 
the MOL to form an industry union, even though they have 
already been denied three times.  Rodrigo Calderon, Director 
General of the Ministry of Labor told LabOff that the reason 
the MOL denied these workers' earlier petitions was because 
the applicants were no longer employed.  To form an 
industrial union, workers must be working for a company that 
the union could be registered with.  Tutillo said flower 
workers were planning a trip to Colombia to meet with their 
counterparts who successfully formed a nationwide industry 
union two years ago. 
KENNEY