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 001788 
 
SIPDIS 
 
DEPT FOR WHA/AND, WHA/PPC, EB, AND DRL/IL. USDOL FOR CARLOS 
ROMERO. 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: JULY LABOR UPDATE 
 
REF: A. QUITO 1392 
     ¶B. QUITO 1666 
     ¶C. QUITO 1734 
 
¶1.  Summary:  Following are recent labor-related developments 
of interest: 
 
-- MOL Discusses Labor Reform Plan (para. 2) 
-- Four Agreements Reached on Labor (4) 
-- MOL Working With Limited Budget (5) 
-- Congress Working on Subcontracting Law (6) 
-- Social Security Reserve Funds To Be Returned (7) 
-- ICFTU Issues Report on Ecuador (9) 
-- Petroecuador Workers Reinstated (10) 
-- Flower Workers Fired For Unionizing (11) 
-- Government Will Regularize Colombian Workers (12) 
 
MOL Discusses Labor Reform Plan 
------------------------------- 
 
¶2.  In a July 14 meeting with LabOff and AIDOffs, Minister of 
Labor Galo Chiriboga outlined his proposed method for the 
formulation of a new labor code.  Chiriboga, who originally 
indicated a preference for administrative over legal reforms, 
said that both business and labor have asked him to begin a 
law code reform project.  Chiriboga said there would be a 
committee of five Ecuadorian labor law experts who would 
elaborate the first draft of the text.  Business and union 
representatives would nominate some of the members of the 
committee.  Chiriboga agreed with us on the importance of ILO 
involvement during the process; we will continue to pursue 
the possibility of a foreign ILO expert to support the 
process. 
 
¶3.  Chiriboga said that a "core" section of the new labor 
code would apply generally.  Other parts of the code might 
apply differently, depending on circumstances such as the 
type of business involved.  As each section of the code is 
elaborated, it will be submitted to the tripartite National 
Labor Council for review.  Chiriboga has also invited 
Congress' Labor Commission to participate as a non-voting 
member of the council.  Chiriboga announced that labor code 
reform would be a topic for discussion on July 27 within the 
National Labor Council. 
 
Four Agreements Reached on Labor 
-------------------------------- 
 
¶4.  Minister of Labor Galo Chiriboga announced on July 1 that 
union and business leaders had reached an agreement to work 
on four labor-related legislation issues:  hourly work, 
subcontracting, company retirement, and labor code reform (as 
part of a larger discussion on the FTA's effects on labor). 
Chiriboga said he would seek consensus on these issues within 
the National Labor Council. 
 
MOL Working With Limited Budget 
------------------------------- 
 
¶5.  Chiriboga told LabOff that his Ministry only has a budget 
of $300,000 for programs and that the MOL only gets 0.17% of 
the government's overall budget.  As of July 14, the Ministry 
had eight labor inspectors and 14 child labor inspectors and 
was looking to hire more.  The MOL continues to be unable to 
provide transportation for all its labor and child labor 
inspectors.  The MOL is also planning to hire a technical 
secretary for the National Labor Council by a competitive 
 
SIPDIS 
process. 
 
Congress Working on Subcontracting Law 
-------------------------------------- 
 
¶6.  Andres Paez, president of Congress' Labor Commission, 
told LabOff on July 26 that Congress was elaborating a new 
subcontracting bill, to supplant an existing decree issued by 
the Gutierrez government.  Paez had organized a meeting with 
labor and business leaders in mid-July to discuss what should 
be included in the proposal.  The proposal will be submitted 
to the National Labor Council for discussion, before it 
returns to Congress for the second debate.  Paez said 
business and unions were discussing a compromise of allowing 
up to a maximum 50% of a company's workers to be 
subcontracted (rather than the 75% specified in the decree). 
Press report only 40 of the approximately 4,000 
subcontracting companies in Ecuador are registered as 
required by the decree. 
 
Social Security Reserve Funds To Be Returned 
-------------------------------------------- 
 
¶7.  Congress voted on July 28 to accept the President's July 
21 partial veto of the bill (Ref C) to return social security 
reserve funds to workers.  The partial veto merely extended 
the time period for the refunds.  The original bill passed in 
Congress called for the return of all reserve funds to 
affiliates within 90 days.  The 74 votes in favor came from 
the PSC, ID, PRIAN, Pachakutik, DP, PRE, and PSP parties; the 
MPD and Socialists voted against the President's amendments 
to the bill. 
 
¶8.  The reserve funds will be returned in three stages:  95% 
of affiliates will be able to withdraw their funds within 
five months; the remaining five percent would wait until as 
late as 2008.  Individuals who have been retired over six 
months will receive their reserve funds immediately.  The 
IESS plans to divest $423 million of its funds, currently 
invested in various government bonds, in order to pay out the 
reserve funds. 
 
ICFTU Issues Report on Ecuador 
------------------------------ 
 
¶9.  Labor union international ICFTU submitted a report on 
Ecuador to coincide with the WTO's review of Ecuador's trade 
policy in early June.  The report, available on ICFTU's 
website (http://www.icftu.org), highlights weaknesses in the 
application and enforcement of core labor standards.  It 
found particular shortcomings in freedom of association, 
discrimination, and child labor. 
 
Petroecuador Workers Reinstated 
------------------------------- 
 
¶10.  Of the 33 workers dismissed in 2003 by Petroecuador, the 
state oil company, 27 have recently returned to their posts. 
The workers went on strike in 2003 and were subsequently 
charged by Petroecuador with sabotage and terrorism and 
fired.  The Ecuadorian Supreme Court has found them innocent 
of these charges.  The workers will also receive $19,990 each 
in compensation. 
 
Flower Workers Fired For Unionizing 
----------------------------------- 
 
¶11.  According to a flower worker representative, 31 workers 
attempted to form a union at the Flores de la Montana flower 
company on June 23.  The MOL was informed of the formation of 
the union on July 24.  The workers were subsequently fired on 
June 27; 16 of the workers fired are protesting outside the 
farm, and have filed a complaint with the Ministry of Labor. 
 
Government Will Regularize Colombian Workers 
-------------------------------------------- 
 
¶12.  Minister of Labor Galo Chiriboga told press on July 5 
that he would begin a campaign to regularize Colombian 
workers in Ecuador to guarantee the same pay and work 
conditions as their Ecuadorian counterparts.  Chiriboga asked 
Ecuadorians to understand that Colombians and Peruvians in 
Ecuador suffered similar problems as Ecuadorians abroad.  "If 
Ecuador asks for its migrants to be regularized abroad, how 
can we deny this to foreigners in Ecuador," he asked 
rhetorically. 
MEMMOTT