In 2000, the salary liquefied and stood at $ 26.65. Now it stands at $ 400 and there is an electoral promise to raise it to $ 500 in four years.
The salary in Ecuador has had a series of milestones related to the political and economic moments of the country to over the last few years, especially since dollarization was implemented. On 1999, before dollarization the salary was in 1′109.166.3 sugars. But already for the year 2000, with the validity of dollarization, this became scarce $ 26.65. However, there was an adjustment and that same year Ecuador closed with a minimum wage of $ 56.65.
By 2002 it had grown to $ 104.88 and rose gradually until in 2006 it was placed at $ 160. On the other hand, from 2007 to 2021 the salary grew 2.35 times (more than doubled its amount).
It is November 23, at 3:30 p.m., the National Council of Work and Wages must decide how much it could be established, considering that in 2020 there was a pandemic, that wages have been frozen in 2021, that there are technical rules to define wages and that the Government has offered that it would raise it to $ 500, in four years.
At the moment, neither workers nor employers have yet a formal proposal for the new salary and rather they hope that the Government will be the one to present the possible proposal. “This time we are going to go to the meeting on 23, with no proposals yet, we are going to go as they say colloquially Chirisiquis”, says Édgar Sarango, representative of the workers in the National Council of Salaries. He hopes that the Government will present a balanced proposal and above all that the mechanism he proposes to increase the salary to $ 500 in four years is finally known.
Rodrigo Gómez de la Torre, representative of the employers, for his part, explains that the formula created in the Lenín Moreno government has several problems for its applicability. Although the formula tries to be technical, there is no clear application system so it becomes discretionary, he says. However, for the businessman the current problem in Ecuador is how to generate more employment.
In this context, Jaime Carrera, executive secretary of the Fiscal Policy Observatory (OPF), considers that the behavior of wages has had stages. At the beginning of dollarization, they did register increases under inflation, since at that time inflation was still high, although lower than the previous indices during the sucre period. But starting in 2007, wages rose above inflation, he says.
Indeed, between 2007 and 2021 the increases were above inflation, but the largest occurred in the populist government of Rafael Correa. This indicator is important, as it measures the rise in prices of products. So for example, in In 2008 the salary increase was from $ 170 (2007) to $ 200 (2008), that is, 17.6% more, while inflation had risen that year also significantly, but only to 8.83%. Another example, in the 2010, salary it grew 10.1%, although inflation had been 3.33%.
In accordance with Fabián Jaramillo, labor lawyer, the theme of Defining the salary this year is a “very difficult” task. On the one hand, in the previous government, rules were approved so that the setting of wages is not so discretionary. And the logical thing would be that now they apply them.
However, the situation in Ecuador is delicate at the moment, as it is just trying to get out of the crisis, and people are still unemployed. In this sense, he agrees with entrepreneurs who say they could not pay more. However, we must not lose sight, he says, that salaries have not been raised in a long time and President Lasso’s campaign offer.
Meanwhile, Rodrigo Gómez de la Torre believes that applying the current formula is very complex. There are several indicators that are calculated on a discretionary basis. For Gómez de la Torre, at the moment there are at least three ways to define the salary: the first is with an agreement of the parties; the second, with the law that says it should increase over projected inflation. Third, the last formula established in the decree can be applied.
Inflation calculated for 2022 is 1.28%, according to the proforma that has just been discussed in the Assembly. If only this parameter were applied, it would represent an increase of $ 5.2 per month. Carrera believes that currently $ 500 in four years is out of technical reality.
Ecuador, with the third highest salary in the region
The Ecuadorian salary of $ 400, At the moment, it is the third highest in the region, surpassed by Chile, what is in $ 457, and that of Uruguay, that has been placed in $ 424. And it is above neighboring countries such as Colombia, which has a salary of $ 256 and that of Peru ($ 258).
IT’SDgar Sarango, leader of the workers, acknowledges that experts say that the Ecuadorian salary is the third highest in Latin America, but it ensures that these analyzes do not consider the speculative system that has been generated regarding prices.
Meanwhile, according to Jaime Carrera, Executive Secretary of the Fiscal Policy Observatory (OPF), the effect of this type of increase has been a luck of improvement in purchasing power, but also the loss of competitiveness in production with respect to other countries. Productivity is below average and only above Paraguay, Venezuela and Bolivia, says Carrera.
For the expert, the cost of high labor essentially affects micro-enterprises, because it is expensive for them to pay these salaries with their legal compensation. The high salary can generate destruction of jobs. He recalled, for example, that in the Correa government it was established that domestic workers had to earn the basic salary and in the face of this high cost, families preferred to fire them, in a large percentage.
Employment figures
According to the latest survey on Employment, Unemployment and Underemployment carried out by the National Institute of Statistics and Censuses (INEC), as of September 2021 the unemployment rate was 5.1%.
8′436.000
Ecuadorians are part of the Economically Active Population (EAP), according to data provided by INEC.
6′248.000
People from the economically active population are in underemployment, unpaid employment, other non-full employment, unclassified employment and unemployment.
2′760.000
Workers have a suitable job in Ecuador. That is, they receive a salary equivalent to a basic salary or more and work 40 hours.
Improve suitable employment
Adequate employment has improved from May 2021 to September 2021, going from 30.2% to 33.5%. The Government has reported that there was an increase of at least 275,000 new places in the period of its administration.
Unemployment is reduced
Unemployment has dropped, according to data from the National Institute of Statistics and Censuses (INEC). The figures reveal that in May 2021 that index was at 6.3% and now, in September 2021, it has been placed at 4.9%.
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