President of Ecuador proposes labor code reforms that promote “dignified work”

At a rally commemorating those who died in a 1922 massacre of Ecuadorian trade unionists, Ecuador’s President Rafael Correa made public the details of a proposal to reform the nation’s labor code. The President plans to submit the proposals to the National Assembly for its consideration.

The rally took place in Guayquil the site of a 1922 general strike. The strike leaders were arrested and their supporters organized a demonstration to demand their release. Soldiers and police attacked the peaceful demonstration, and hundreds of demonstrators were killed. .

About 100,000 people attended the November 15 rally commemorating the victims of the massacre.

At the rally, President Correa laid out a five-point proposal for reforming the labor code. The reforms, he said, would promote dignified work, redistribute wealth, promote fair labor practices, and improve productivity.

Established trade unions for the most part are opposing the reforms and held protests against the proposals on November 19.

A newly formed labor federation, the Confederation of United Workers (CUT, the Spanish acronym), announced that it is backing the proposed changes.

Among its most important provisions, the proposed labor reforms would expand social security coverage by making it universal.

If the reforms are adopted, 1.5 million homemakers whose labor is unpaid would be covered by social security. They would be able to receive a pension when they reach retirement age and collect disability payments if they become unable to work.

Workers in the informal economy would also be covered.

The reforms would also narrow income inequality. The highest paid employees of a firm, usually the CEO, would be able to make no more than 20 times the amount of the pay of the firms’ lowest paid workers.

Those whose pay is more than 20 times higher that the lowest paid worker will pay more into the nation’s social security system.

(In the US, CEOs are paid more than 350 times the wages of the average worker–Washington Post, September 25, 2014.)

The proposed reforms would also eliminate fixed-term labor contracts and make all labor contracts enforceable for an indefinite period.

The intent of this proposal is to prohibit the use of short-term contracts that essentially make many workers temporary workers. Under the new proposals, all workers who are laid off or fired would be entitled to severance pay.

Employers would also be prohibited from firing women who are pregnant and workers who engage in union activities. Firing people because of race, sexual orientation, or ethnicity would also be prohibited.

The proposed changes also seek to democratize business by giving workers the right to elect corporate board members.

Finally, workers in both the private and public sector would be allowed to have their year-end bonus included in their regular pay rather than having to wait until the end of the year to receive it.

The Chamber of Industry and Production, which is similar to the Chamber of Commerce in the US, opposes the reforms.

The Chamber says that the proposal to make employment more stable by eliminating fixed-term contracts will hurt younger workers seeking to find jobs because firms will be reluctant to provide them the job security required by the proposed reforms.

The Chamber is also critical of the requirement limiting executive pay to no more than 20 times that of low-paid employees. According to the Chamber, such a requirement will stifle incentives created by wide pay differentials.

Joining the Chamber in its opposition to the proposed reforms are most of the established trade unions.

In September, 20,000 union members and their supporters held demonstrations across the county where they voiced their opposition to the reforms.

“We are protesting against anti-worker politics that the government is implementing,” said Jose Villavicencio, president of the Workers Union of Ecuador in a media conference held to announce the demonstrations. “(We are) against various laws that have been putting the Ecuadorian people at risk, in this way we are today mobilizing to demand that the government put forward a work code that benefits the weakest, which in this case are the workers.”

Solidarity Center, the international arm of the US’ AFL-CIO, reports that the demonstrations drew support from a broad civil society coalition including indigenous people’s organizations, teachers, students, medical professionals, students, and unemployed workers.

The United Workers Fronts(FUT, its Spanish acronym) and the Inter-Union Committee spearheaded the demonstrations.

A spokesperson for the FUT said that the proposed labor reforms could limit the right to strike and take away some benefits. There was also concern that it could limit regular pay raises.

FUT, which like other labor organizations had been in talks with the government about the labor code reforms since May, wanted the new code to include a reduction in the work week to 36 hours without a loss of pay.

Unlike the FUT and other unions, the Confederation of Workers is supporting the new labor code proposals.

CUT was formed with the support of the government.

According to Andes, the CUT seeks to redefine the trade union movement in Ecuador by including people at the margins of the labor market, including domestic workers, craftsmen, sex workers, truckers, and housewives. Some merchants have also joined the CUT.


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