Labor and indigenous groups threaten protests while the private sector praises budget cuts

May 20, 2020 | 41 comments

Reaction to President Lenin Moreno’s deep budget cuts range from high praise from business interests to threats of national strikes from labor and indigenous groups. The cuts, the deepest since the 2000 financial crisis, make dramatic reductions to the public payroll, abolish and consolidate government functions and liquidate seven publicly owned companies.

Ecuador’s national railroad system will be sold or liquidated.

At Tuesday afternoon press conferences, labor and indigenous groups announced court challenges to Moreno’s actions and warned the government to expect nationwide protests in the coming months. “Unless these unconstitutional decisions are reversed, there will be a return to October,” said Jaime Vargas of the Confederation of Indigenous Nationalities of Ecuador (Conaie), referring to the national strike that paralyzed the country for three weeks in 2019.

Business leaders supported Moreno’s actions, some even suggesting that the  reductions in public spending did not go far enough. “We applaud the president’s bold decision to restore Ecuador’s economy and only wish it had come sooner,” said Patricio Alarcón, president of the Quito Chamber of Commerce. “Emphasis must be on implementing a strong economic and productive model to restore the faith and trust of the Ecuadorian people.”

The cuts to the public payroll, achieved through reductions of work hours and pay, will amount to 16.6 percent in budget savings, according to the finance ministry. The police, military and health workers are exempt from the cuts and teachers will see an 8.33 percent pay reduction.

In addition to pay cuts for full-time government employees, the government plans to terminate several thousands contract positions by July.

The public companies that will be abolished are Tame airlines, the national railway, the postal service, the national athletic training center in Cuenca, the public media agency, the national transport service and strategic planning and forecasting. Details about the liquidation of Tame are yet to be released, but airport authorities in several cities, including Cuenca and Loja, said it could have a dramatic impact on air travel.

Two weeks ago, the government announced a 10 percent cut to public university budgets but that order was put on hold by the Constitutional Court pending further hearings.

José Villavicencio, president of the United Workers Front (FUT), claims the budget cuts are not only a blow to workers but to Ecuador’s infrastructure. “They cut to the heart of public service and facilities and will affect every working family in the country,” he said. “Considering the draconian actions against workers in the Humanitarian Law, these changes will bring Ecuadorian workers to their knees. This will not go unchallenged.”

Virus update

A Cuenca sanitation worker has his temperature checked. (El Tiempo)

Fuel prices to be revised monthly based on market price
In his Tuesday announcement of budget reductions, President Moreno said that gasoline and diesel costs will be readjusted monthly based on the international market, with a maximum change of five percent a month. As of May 19, the price for Extra and Eco-Pais gasoline is $1.75 per gallon while diesel will cost $1. Moreno said that the subsidy of LP gas will remain in place.

30 Cuenca sanitation workers test positive
In tests conducted Monday, 30 municipal sanitation workers tested positive for the Covid-19 virus. Dora Ordóñez, sanitation services manager, said it is believed that several workers contracted the virus from relatives and then spread it to fellow workers. All those infected have been ordered to a 14-day quarantine. “We are providing all the necessary protections to our workers, such as masks, gloves and sanitizers and have an establish regimen of disinfection of vehicles and work premises,” Ordóñez. She added that only two of the Covid victims are suffering severe symptoms.


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