Ecuador and its’ particular view of the employment world

17, May

Maybe as part of a formula that involves a particular view of the world, Ecuador shows a labour market with very ...

Maybe as part of a formula that involves a particular view of the world, Ecuador shows a labour market with very special characteristics. The regulatory framework has changed under President Correa’s administration.

According to what Fabian Corral reports in elcomercio.com, since the 2008 Constituent Assembly that led to reforms in the Code of Labour, the idea of jobs’ stability has been favoured and every contract that is not “permanent” has been characterized as scarce.

Apparently, those who make such classifications of employment are not familiar with the well-known phrase “the only thing that is permanent is change”. Paradoxically, they are the same people who cannot make their own economy stable or permanent.

According to Corral, the assumption that inspires the current labour regime in Ecuador states that “employment must be permanent, the relationship between the company and the employee must resemble a marriage and every contract that comes to an end must lead to the payment of compensations. The idea that prevails is that short term contracts (per hours, occasional, temporary, for a certain work or service, etc.) are inspired in the spirit of damaging the worker, in the excessive intention of profit, in a commercial conception of human work, etc. Under this perspective, there is a need to fight against these contracts, revoke them or at least create complications that limit their use and that create almost insuperable duties for employers”. A very different path to the one the ILO suggests.

With the Constituent Mandate Nº8, contracts per hour were eliminated, intermediation and outsourcing were forbidden and it was settled that every labour relationship must be direct and permanent, regardless the nature of the services provided and the complex set of needs that the economy creates, a basic thing to build a dynamic and functional labour market that operates according to the demand.

The 2008 Constitution consecrated the principle of direct relationship, forbade what they call “scarcity” and “any other contract that affects people’s rights”.  Actually, every atypical labour contract, as long as it is properly regulated and controlled, grants workers rights and is within the category of Decent Work.

In the Production Code (December 2009), a punishment was established for those who make temporary contracts, increasing wages of their employees by 35%. Years ago, says Corral, “a reform to the Labour Code, which was developed under a systematic and unjustified suspicion of business fraud, penalised every business liquidation by demanding payment of large compensations”.

The most recent labour reform has eliminated fixed term contracts, forcing employers to hire every workers who might have worked under such contract for them.

Many analysts in Ecuador state that “the idea that the labour relationship must be direct and permanent, surrounded by every sort of obligations for the employer, does not fit the reality of an unstable economy, nor the difficulties companies face as they have to adapt to competition, linked to natural risks and markets’ insecurities.

According to the article published by Fabian Corral, “excesses of the labour relation parties –employers and workers- in the use of contractual figures and the abuse of demands, should not be the rule to legislate. The needs of production head in another direction and the labour system should consider them to create employment and ensure decent wages”.

It seems that the curious perspective of Ecuador’s concept of work for the 21st century does not take into account conceptions such as productivity, competitiveness, globalization and employability, key concepts to achieve social and economic progress in every country.