Correa sends package of labor reforms to the National Assembly as unemployment rises

With unemployment rates rising to levels not seen in almost 10 years, President Rafael Correa last week sent a package of labor reforms to the National Assembly.

Labor Minister Leonardo Berrezueta

The measures would for the first time establish an unemployment insurance fund to be administered by the country’s social security system. It also provides a relaxation of employment rules for employers.

“These changes are critically important in the current economy,” said Ecuador Labor Minister Leonardo Berrezueta. “We must provide workers with some measure of security in insecure times and we must also recognize the challenges faced by employers,” he said.

The government puts the unemployment rate at 4.7% but says it will probably top 5% by the end of March.

Among the proposed changes to employment rules is the allowance, in some cases, of fixed-term labor contracts that had previously been illegal. Other changes give businesses the option of reducing working hours for full-time employees from 40 hours to 30 in cases where layoffs would otherwise be made; and the elimination of the minimum wage requirement for young workers in apprentice positions.

Labor organizations oppose the changes and plan a national protest day later this month.

Correa has asked the Assembly to enact the proposals within 30 days or to send him alternatives. Debate began on the reform package on Monday.