This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 QUITO 001392 
 
SIPDIS 
 
DEPT FOR WHA/AND, WHA/PPC, EB, AND DRL/IL. USDOL FOR JORGE 
PEREZ-LOPEZ. GENEVA FOR JOHN CHAMBERLIN. PLEASE PASS USTR 
FOR A/USTR CLATANOFF, V. LOPEZ AND B. HARMON. 
 
E.O. 12958: N/A 
TAGS: ELAB PGOV EC
SUBJECT: ECUADOR: JUNE LABOR UPDATE 
 
REF: QUITO 1005 
 
¶1.  Summary:  Following are recent labor-related developments 
of interest: 
 
--ILO Meets with New MOL (para. 2) 
--Vice Minister Outlines Labor Code Reform Plan  (4) 
--Child Labor Inspectors Rehired (6) 
--FENACLE Reports Incidents on Banana Plantations (7) 
--MOE Proposes Investing Social Security Funds (8) 
--Judicial Workers Union Strong (10) 
--Bureaucracy Grew Under Gutierrez (11) 
 
---------------------- 
ILO Meets with New MOL 
---------------------- 
 
¶2.  In a June 3 meeting with International Labor Organization 
(ILO) regional director Ricardo Hernandez Pulido, Hernandez 
told LabOff the ILO had spoken with new Minister of Labor 
Galo Chiriboga and offered to sponsor three Ecuadorian labor 
consultants (one to represent government, one unions, and one 
business) to analyze the labor code and formulate a reform. 
The ILO would also offer their own technical assistants to 
compliment this work.  The ILO had previously offered to 
sponsor a foreign consultant, however, the ILO received a 
clear message from the new more-nationalistic GOE, that the 
consultants would need to be Ecuadorian.  The ILO has also 
given the new Minister of Labor copies of the five technical 
notes they produced on Ecuador's compliance with ILO 
standards on: hourly work, subcontracting, company 
retirement, child labor, and freedom of association and 
collective bargaining. 
 
¶3.  Hernandez said Chiriboga told him he did not think this 
government had enough time for a full labor code reform and 
did not intend to attempt this.  Hernandez said Chiriboga's 
priorities, as perceived by him, were creating employment and 
strengthening the tripartite National Labor Council, while 
the Vice Minister of Labor's focus seems to be gender issues 
and child labor. 
 
--------------------------------------------- 
Vice Minister Outlines Labor Code Reform Plan 
--------------------------------------------- 
 
¶4.  In a June 6 meeting, Vice Minister of Labor Betty Amores 
said the MOL was already working closely with the ILO. 
Amores said that both unions and business wanted a new labor 
code and this was the appropriate time to work on the 
project.  Amores did say that she doubted this administration 
would be able to complete labor code reform as it had a 
limited time in office. 
 
¶5.  Amores said she would oversee a process to create text 
for the new labor code, which would be similar to the process 
used to create Ecuador's child code (which Amores worked on). 
 First, the MOL would select a group of jurists that would be 
approved by the tripartite National Labor Council.  The group 
would have a maximum of four jurists and would include a 
specialist in international labor rights.  The jurists would 
then map out what would fall under the code.  Then, an 
outline would be created, followed by the formulation of the 
actual text.  After each step, the product would be presented 
to the National Labor Council for its approval.  Amores said 
the process would begin in July and would take approximately 
nine months.  She stated that they would work closely with 
the ILO and Congress' Labor Commission throughout the process. 
 
------------------------------ 
Child Labor Inspectors Rehired 
------------------------------ 
 
¶6.  Jenny Cepeda, of the MOL's child labor division, sent 
LabOff an e-mail on June 10 stating that 12 child labor 
inspectors had been rehired.  The e-mail named these 
inspectors, and said that the MOL was in the process of 
selecting the remaining 10.  LabOff spoke with Cepeda on June 
14 who said that, as of that date, the MOL had hired a total 
15 child labor inspectors.  All of the child labor 
inspectors' contracts had been suspended in accordance with a 
presidential decree passed by Palacio in his first days as 
President stating that all contractual public servants hired 
since 2003 had to be dismissed.  Amores said her 
administration would work to strengthen child labor 
inspections and would seek a greater budget for these 
activities from the Ministry of Finance. 
 
--------------------------------------------- -- 
FENACLE Reports Incidents on Banana Plantations 
--------------------------------------------- -- 
 
¶7.  FENACLE, a union based in Guayas province belonging to 
the CEOSL union confederation, reported that police attacked 
striking banana workers with tear gas on two haciendas in 
Guayas province: San Jose hacienda in Balao on May 4, and 
Primavera hacienda in Vernaza-Salitre on May 10.  FENACLE 
said that police detained union leaders at these haciendas 
and accused them of being agitators.  The union leaders were 
detained for a few hours, then released. 
-------------------------------------------- 
MOE Proposes Investing Social Security Funds 
-------------------------------------------- 
 
¶8.  On May 16, the Minister of Economy Rafael Correa proposed 
using social security funds for petroleum and other projects. 
 Currently the Ecuadorian Social Security Institute (IESS) 
has approximately $690 million deposited in the Central Bank; 
these funds would be used in petroleum, road, and 
hydroelectric projects.  Correa said he would use resources 
at the IESS deposited in the Central Bank that do not yield 
interest and that also have not been used in the development 
of new social security projects.  Although the measure has 
been rejected by retirees, Correa claims these investments 
would greatly benefit the IESS and would allow it to improve 
its services, including pensions. 
 
¶9.  Correa said the investments would be "activities that are 
100% guaranteed and of high profitability."  He did not 
elaborate on his 100% guarantee of the investment or his 
"high profitability" claim.  Nor did Correa explain how this 
new investment would turn around state oil company 
Petroecuador, which enjoys a well-deserved reputation for 
inefficiency and whose own production has steadily declined 
over the last decade. 
 
----------------------------- 
Judicial Workers Union Strong 
----------------------------- 
 
¶10.  According to an article in Quito's El Comercio 
newspaper, FENAJE, the judicial workers union, has a great 
deal of influence and owns property.  FENAJE has managed $2.4 
million since 2001 and is made up of 3,774 workers (of the 
3,959 total judicial workers in the country).  The union 
showed its power to paralyze the country's judicial process 
during its recent strike against the Supreme Court put in 
place by Gutierrez in December 2004.  The strike ended in 
April with Gutierrez' ouster.  FENAJE owns two hotels and a 
tourist complex in Ecuador. 
 
-------------------------------- 
Bureaucracy Grew Under Gutierrez 
-------------------------------- 
 
¶11.  According to press, government service was the sector 
with the most job growth between 2002 and 2004.  Before 
Gutierrez assumed the presidency, 2,538 persons were employed 
under personal government contracts.  By the end of 2004, 
7,034 additional persons were hired under this mechanism, 
representing a 277% increase.  According to Miguel Garcia, 
president of the federation of public workers, political 
parties and administrations look to employ government workers 
through these personal contracts because no open contest is 
necessary.  During Gutierrez' term, the police and military 
also saw a large increase in number of persons hired. 
Kenney