Ecuador needs to make its labour market more modern and dynamic. The measures implemented are necessary, but totally insufficient. Designing active employment policies and ratifying ILO Convention 181 are key steps to promote training and formal employment, particularly among young people.

On January 3rd, Raul Ledesma, Minister of Labour of Ecuador, officially launched the National Employment Policy. The initiative has the goal of promoting labour opportunities and reducing the unemployment, under-employment, informality rates in the country. It also seeks to “promote extraordinary activities within companies, which shall enable over 236,000 workers to access a formal contract with every legal benefit”.

The Ministry of Labour has proposed seven new contractual modes that enable the regularization of the tourism, agriculture, fishing, aquiculture, floriculture, livestock, construction and artistic sector. Over 250,000 employers will reduce their operation costs and enhance formalization.

The Youth Contract was created, which aims at placing 60,000 young persons (18 to 26 years old) by 2021. In this contract, the State will deliver a tax incentive to over 250,000 employers so that they may hire apprentices.

The youth contract prioritizes the Agriculture (24%), Trade (20%), Manufacture (13%), and Construction (9%) sectors, which shall account for 66% of youth employment. The selection will be made according to the nomination of Priority Attention Groups, Rural Sector, Family Income, and Level of Instruction. Those who have not completed high school will need to certify their knowledge through the institutions registered in the Ministry of Labour.

The authorities have stated that this measures will “reduce youth unemployment 3.45%, so that by 2021 the unemployment rate among young people will be close to 6.98%”.

The current administration has also decided to strengthen the Project “My First Job” that includes young graduates or advanced university students, with the goal of placing 23,507 young persons per year (22,087 in the Private Sector and 1,420 in the Public Sector).

The Minister stated that the local working population includes almost eight million people. Around 3.2 million have proper employment, and 4.1 million are in under-employment.

In addition, 303,000 people are in unemployment, out of whom nearly 200,000 are young people. Therefore, youth stands for 60% of unemployment in Ecuador.

Clearly, these measures are better than doing nothing, but they seem to be completely insufficient if the goal is to build a more modern, dynamic and inclusive labour market. The need to complement these measures with really active employment policies seems urgent. Such policies must focus on the person and strengthen youth employability by training skills based on the demand, and using different modes of labour contracts.

Strengthening public employment services and ratifying ILO Convention 181 on private employment services to establish a cooperation framework that enables creating pertinent talent, reduce labour informality and cut down youth unemployment.