Construction and oil industries lay off tens of thousands of workers in 2015 with 2016 expected to see more of the same

Dec 15, 2015 | 12 comments

An employment survey shows that Ecuador’s construction and oil industries have cut their work forces by more than a quarter in 2015, with more cuts predicted for 2016. Financial consulting firm Deloitte also reports that workers who remain in those industries should not expect a pay increase in 2016.chl unemploy

The Deloitte survey says that 27.5% of the country’s construction work force was laid off in 2015 while 26.9% of those employed by the oil industry lost their jobs. The survey gathered its information from 166 multinational companies operating in Ecuador as well as 205 domestic companies.

Other industries showing an employment reduction of more than 10% include automotive, insurance, banking, pharmaceutical and transportation.

“We hear that 2016 will be a bad year economically, but for many workers and business owners, the bad times arrived in 2015,” says Enrique Gonzalez, a Quito economist and corporate advisor. “The employment cutbacks have affected almost all sectors of the economy and more layoffs are expected in early 2016.”

Gonzalez predicts employment will stabilize by mid-2016 and additional jobs could be created by the end of next year.

The loss of construction jobs is the result of fewer government-financed projects as well as a steep decline in real estate sales. “The sector is stagnant right now,” says Gonzalez. “The good news is that the stall in new private construction will eventually create a shortage that will spur new projects, probably in less than two years.”

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Most of the layoffs in the automotive industry are in the sales area, according to Deloitte, although auto assembly plants in Quito and Guayaquil report a reduction in work hours and layoffs. On Monday, a Mazda assembly plant in Quito announced that it was shutting down entirely.

Almost all domestic appliance manufacturers report layoffs as demand for products has declined. Cuenca’s Indurama dismissed more than 400 workers in November, citing low demand for new electric cooktops. The company blamed the government for miscalculations of sales and the importation of thousands of Chinese stoves that undercut the prices of locally manufactured models.

Although Deloitte didn’t provide employment numbers for the tourism sector, it too has seen large numbers of layoffs. Tourism is down throughout the country, mostly due to activity at the Cotopaxi volcano and the predicted El Niño. In Cuenca, hotels report significantly fewer booking and restaurant owners say their business is down.

Gonzalez dismisses predictions of an economic collapse but says the belt-tightening will be the order of the day until the price of oil increases. “The most dire forecasts are politically motivated,” he says. “If the government sticks to its new budget, which is almost 20% below last year’s, restructures its debt and sells off some assets, the country should be able to weather the storm even without a rebound in oil. The key is discipline,” he adds.

 

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