QUITO, ECUADOR — Paula had been in quarantine with her husband and two kids for 15 days by the end of March 2020 under Ecuador’s strict lockdown, which included a nationwide 2 p.m. curfew. Then, Paula’s boss called. Business was suffering; he would have to let some people go and cut salaries. He asked Paula if she would agree to a 40% reduction in her monthly pay.
Paula, who is using a pseudonym for fear of reprisal from her employer, knew she would be fired if she said no, so she said yes. She is her family’s main breadwinner and, at age 58, she didn’t know how easily she would find another job. By April 2020, Paula’s salary dropped to $320 a month, about $80 below the legal minimum wage and well below Ecuador’s $721 average monthly cost of living for a family of four. Paula quickly fell behind on her $200 monthly rent.
“What one thinks at this moment is, ‘Do I go or do I accept?’ ” Paula says. “But seeing how the conditions are, one has to accept because being out of work at this point is too hard.”
Paula says her boss claimed the change would be temporary and she would only work six hours a day. Eight months and no discussions about reinstating her salary later, Paula has been working eight or nine hours daily.
As companies struggle to navigate the economic fallout of Covid-19, thousands of workers across Ecuador have been laid off without severance or have had their contracts changed overnight. Labor groups say the situation was made worse after President Lenín Moreno’s government used the pandemic to pass new laws that they claim violate the country’s constitutional labor protections. These changes include the Organic Law of Humanitarian Support (LOAH) passed in June 2020, created on the pretext of boosting the economy and protecting jobs by lifting employment restrictions and offering special lines of credit and interest rates to businesses.
Despite (or because of) these laws, Ecuador’s unemployment and underemployment rate was still 30% by September 2020. Though those numbers do not include Ecuador’s thriving informal economy (such as street vendors), only 32% of people report having adequate employment. Streets have become tense as workers, unions and students consistently protest. The demonstrations often end in conflict with the police, who have been reinforced and on guard since the 11-day anti-austerity protests in 2019.
Hernán Acevedo, a labor lawyer with the Quito-based firm LexArtis, says the firm has seen a 200% increase in labor rights claims and lawsuits during the pandemic. The cases have been backed up in the courts for months. As part of cost-cutting measures, almost 500 judicial staff have been fired or forced into retirement since 2019.
“The government had an opportunity to regulate this in a better way,” Acevedo says of mass layoffs and illegal contract negotiations like Paula’s, “but with the LOAH, they legally legitimated these actions.”
The LOAH allows employers to renegotiate contracts, including reducing salaries up to 55% and working hours up to 50%, without a mediator present and for an unspecified duration.
The LOAH also allows employers to use fixed-term contracts (up to one-year terms), which can be renewed once. Short-term contracts had been prohibited in Ecuador’s 2015 labor reforms as employers frequently overused them to deprive workers of job security, the ability to organize and access to pension funds (which require 25 years of uninterrupted employment), says Richard Gómez, president of the Central Workers Federation (CUT), one of Ecuador’s largest unions, which represents electricians, teachers, firefighters and others.