Employers and workers will meet this Wednesday, December 19, 2018 for the second and last time in the National Labor and Salaries Council (CNTS) to define the increase in the unified basic salary. The employer sector will come to this appointment with the proposal to maintain the salary in USD 386 for the following 2018.
The Ecuadorian Business Committee (CEE) presented on Tuesday December 18, 2018 two reasons that support its decision. The first is the impact on the costs of contracting labor, which has not allowed for an improvement in the figures for adequate employment.
Patricio Alarcón, president of the CEE, pointed out that adequate employment went from 47.8% in September 2014 to 39.6% in September of this 2018. “In the face of the economic deterioration of recent years, the adjustment in the labor market has manifested itself mainly in underemployment, “he said. In addition, he said that in order to guarantee adequate employment, it is necessary to work on the sustainability of companies. The second reason is the high weight that labor represents within the production processes.
For example, within the shrimp industry, labor accounts for 20% of production costs. To give added value in this industry, more personnel is required, but contracting costs cannot be reflected in the final value of the product, since it reduces competitiveness compared to the supply of other countries, explained José Antonio Camposano, president of the National Chamber of Aquaculture. For this reason, it is important for Camposano that the Government consider the proposed moratorium on the increase of the basic salary for 2019. On the workers’ side there is a diametrically opposite view.
At the recent meeting of the CNTS they asked for an increase of at least 12%. Oswaldo Chica, president of the Central Unitaria de Trabajadores (CUT), regretted that the business sector has a position of not supporting the salary increase. “The Government has ceded to entrepreneurs with the Law of Productive Development, the elimination of the Law of Goodwill, the elimination of tariffs and other benefits. And it is not possible for companies to say they are still at a loss, “said Chica.
For José Villavicencio, president of the Workers Unity Front (FUT), the increase is necessary to narrow the gap between the income received by employees and the cost of the basic basket. The head of Labor, Raúl Ledesma, said yesterday that he will arrive at the meeting at the CNTS with a technical proposal for both sectors. If there is no agreement, the Ministry will define the increase.
The Minister had already hinted last week that he was participating in an increase by pointing out the importance of increasing the purchasing power of workers for the reactivation of the economy. He noted that employers could have compensation so that a wage increase does not affect their competitiveness. Among them, reduce the value of electricity rates. This initiative does not convince sectors like banana.
The guild of producers and exporters of bananas from Ecuador pointed out that the salaries of their workers represent 56% of production costs. While the input to diesel or its replacement by electricity is 3%. They added that agricultural inputs, which are 25% of costs, already have incentives such as exemption from tariffs.
For Richard Salazar, administrator of the Banana Marketing and Export Association, the salary increase in recent years has been carried out in a “less technical and more political manner, which has inflated the cost of production,” he said. The proposal of this union is that the rise of the SBU is based on the percentage of annual inflation, which until last November was 0.35%. (I)