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### Viewing cable 04QUITO3262, MOL UNDERSTANDS NEED FOR LABOR CODE REFORM

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
04QUITO3262 | 2004-12-20 22:10 | 2011-05-02 00:12 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Quito

`

    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 003262

    SIPDIS

    SENSITIVE

    SECSTATE PLEASE PASS TO US TRADE REPRESENTATIVE

    E.O. 12958: N/A
    TAGS: ELAB PGOV ETRD EC
    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

`