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Companies and workers propose five ways out of unemployment in Ecuador

Published on August 10, 2020

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The drastic fall in adequate employment to 16.7%, and the increase in unemployment and underemployment since last June, have pressured Ecuadorian authorities, employers and workers to seek ways to increase the level of hiring.

Although the goal is the same, the points of view and proposals differ. Businessmen are generally proposing to reform legislation, market access and financing facilities. The unions, for their part, suggest that public policies also contemplate additional benefits when the number of workers is expanded.

Since 2015, the adequate employment rate has plunged 29.2 percentage points to today; at the same time unemployment shot up 8.8 points.

According to the National Institute of Statistics and Censuses(INEC), since June 2020, the urban population was the most affected by the decline in employment. Unemployment caused by the pandemic has affected 17 out of every 100 people; in June of last year, the ratio was 6 unemployed people for every 100 potential workers.

The Government has sought to halt the loss of employment through the Humanitarian Law, and to extend to all sectors, the hiring for temporary work without incurring dismissal expenses. New training programs for workers are also being prepared and announcements will be made in the coming days to generate a national dialogue on labor matters, said Andrés Isch, Minister of Labor.

Access to credit with better rates

The application of a regulation that encourages State payments to companies and suppliers, and access to credit with more competitive interest rates, are the proposals of the Chamber of Small and Medium Enterprises of Pichincha (Capeipi). Fernando Palacios, member of the Capeipi Business Committee, points out that measures can be taken so that the national productive sector flourishes.

The Chamber said that some 300 member companies currently have financial problems due to a lack of liquidity. This is in addition to the elimination of public investment in infrastructure projects. The union also expressed its concern about the consequences generated by the delay in payment to suppliers by the Government, which amounts to $500 million.

Incentives to raise the payroll

Granting financial incentives to companies that hire more personnel—to recover lost jobs and create new ones—is one of the alternatives of the Federation of Public and Private Workers (FTPP).

The idea is that the State should approve mechanisms that grant lower interest rates on productive loans to employers who increase their payroll. “With this, the productive interest of entrepreneurs for the return on capital is linked to a labor policy that could generate positive effects,” said Cristóbal Buendía, attorney for the Federation.

The National Confederation of Public Servants proposes the implementation of a universal basic income, to sustain purchasing power and boost consumption.

A rescue between entrepreneurs

The Quito Chamber of Commerce proposes a rescue of companies among entrepreneurs, that is, that large companies help medium and small companies, explains its President, Patricio Alarcón.

With the advice of the National Association of Entrepreneurs of Colombia, the Chamber launched the online platform www.ligadelrescate.com, where entrepreneurs and small companies that require help, as well as entities or entrepreneurs that they can sponsor, can register.

There are different ways to help: purchase of invoices, guidance in electronic commerce, financing, purchase of products and services, support in entering new markets, among others.

Alarcón adds that a culturization campaign is necessary in terms of the biosafety protocols that must be complied with to work on during a yellow epidemiologic traffic light.

Agility in procedures and legal security

Promoting the dynamization of employment through labor regulation, through labor agreements and other more specific tools, is the first solution to get out of the current crisis proposed by the Federation of Chambers of Industries of Ecuador. “The rules are very rigid,” emphasizes its President, Pablo Zambrano.

It also raises the need to have a productive policy that encourages manufacturing and exports, through a competitiveness agenda with various axis: elimination of procedures, legal security for contracts and investments, respect for investment arbitrations.

Andrés Robalino, Executive Director of the Cuenca Chamber of Industries and Employment Production, agrees that it is necessary to streamline certain procedures. “Centralization and bureaucracy hinder processes and punish costs.”

Flexibility for hourly contracts

The tourism sector, with 25,000 unemployed, has been one of the most affected by the pandemic. For the unions of this industry, an update of the labor law is necessary. “It must be a technical and competitive standard in which we all win,” says Holbach Muñetón, President of the Federation of Chambers of Tourism of Ecuador. One of the reforms that the employer considers relevant is greater flexibility for hiring by hours.

Diego Vivero, President of the Chamber of Tourism of Pichincha, agrees: “It requires flexibility and freedom of agreements in terms of hours and the number of working hours,” he says. He adds that, in addition, facilities are needed for the separation of an employee.

Muñetón also proposes more training and incentives to workers, so that they feel motivated.

Extracted from Diario El Comercio

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