Jorge Benavides: Between 500,000 and 600,000 jobs could be created in 2022, with the approval of the labor law

The Deputy Minister of Public Service of the Ministry of Labor, Jorge Benavides, explains the main ideas that make up the Labor Opportunities Law, and that the Government would send to the Assembly at the end of March or beginning of April. He states that this will be before a dialogue in which the National Labor and Wages Council, as well as other actors, will be key. This year, between 500,000 and 600,000 jobs could be created, he says, always with the approval of the law.

¿What are the 2022 goals on employment, can we expect a better result than in 2021?

The general goal is to create 2 million jobs in the entire government period. The updated figure is that in these months of government, 288,000 have been created, generated mainly in agriculture, livestock, fishing and manufacturing. Faced with this, this overall, systematic proposal has been generated for the delivery of 1% credits for 30 years that are destined to small undertakings of tasks related to agriculture, livestock, manufacturing, trade. These first results show an important economic reactivation, and without taking into account the effect of the Labor Opportunities Law, which is expected to be approved in the Assembly to generate more employment. The labor issue must be addressed through structural reforms: tax reform has already been carried out, labor is coming and a Social Security reform is also being sought.

But does the Government have a goal of jobs in 2022?

If 288,000 have been created in seven months, in a full year it could be between 500,000 and 600,000 jobs; waiting for the approval of the labor reform. We aspire to create these new jobs in the commerce sectors, SMEs and MSMEs, which generate value-added manufacturing.

What are the main ideas of the law that can give that long-awaited boost to employment?

What is sought is, while respecting the rights of workers, to create incentives so that employers can invest more and create jobs. These types of issues can generate social tension, since it is thought that rights could be restricted. This is not like this. It is a complementary regulation and people could take one option or another when hiring. Among the topics to encourage are, for example, eliminating surcharges that are 35% in the matter of replacement of a male or female worker. It also seeks to simplify the issue of contracts. Now there are 13 modalities. It is important to clarify that hourly work is not possible, as the Constitution does not allow it.

Are people going to be able to choose, or do all the new ones go to the new law and those who are in the current one stay there?

The idea is that it is optional and that the worker and the employer agree on the scheme. It can be under the Code or the new law. In the event that an employer terminates a worker who is now under the Code, there are additional severance pay, which discourages this change. There are 12 extra months of remuneration for the compensation that by law they must pay.

How was the issue of the fixed-term contract, it seems to me that this is the heart of the law?

Indeed, one of the figures to be introduced is the fixed-term contract, which already existed, but was eliminated in past years. The proposal is that this can last from six months to four years. In other words, a contract for a year and a half or three years can be agreed between the employer and the worker, but if it ends earlier, it is untimely dismissal. That is, the total period must be met. It’s not like they say it’s a four-year probationary period. It is important to highlight that the people who do not have a job, who are seven out of every ten Ecuadorians of the economically active population, may have the opportunity to access work. There is no precariousness because there is Social Security, contributions, tickets, vacations …

How will the issue of employer retirement remain, is the idea that it is a fund contributed only by the worker remains?

This is quite a complicated subject. Before there was social security, this employer’s retirement was created. Unfortunately, in practice, this has led to the disengagement of workers who are about to access the benefit, there is a real problem there. An alternative is to create a fund with contributions from the worker himself.

What is the schedule and actors that will participate in the dialogue on the labor issue?

An interesting space for dialogue is the one that has emerged through the Labor and Salaries Council. The workers who represent their sector there have shown openness to dialogue. The rest of the discussions that take place as the Ministry and the Presidency will also be carried out with different actors and social groups. The idea is to socialize in the first quarter of 2022, to go to the presentation of the bill in late March or early April. These dialogues will serve to refine criteria. Also from the Assembly improvements can be made. I think that, deep down, we all agree on creating incentives for employment. As President Lasso says: “the most precarious thing is not having a job.”

There were aspects in the project that generated stress, among them the grounds for dismissal and the issue of paying compensation to the employer. At the moment these are already out of the project?

This compensation would be removed. But it must be made clear that the current Code already establishes that in case of abandonment the worker must pay the employer compensation, it was not an invented figure, there was a precedent. In addition, the current regulations on delays and unjustified absences are maintained.

Have you considered that the increase to $ 425 in salary could end up affecting employability? What can the Ministry do so that, for example, there are no layoffs, arguing that there is not enough money for the payroll and then more work is burdened to the employees who remain?

There is no empirical evidence that increasing wages is a disincentive. There was recently a rise and the Bank of Spain carried out a study that concludes that there is no direct relationship between salary increases and hiring disincentives.

During the Correismo that was precisely the complaint of the businessmen, that these antitechnical increases were a disincentive. Were they exaggerating?

There has always been that discussion. There are those who say that this creates pressure. However, large companies do not have as much problem in assuming these costs. Possibly there is a complication for small companies, but on the other hand we have established the elimination of 2% of the IR for small ones, which helps. However, there are also those who believe that an increase in wages generates a virtuous circle, since there is more money for consumption and economic reactivation. It was not just a campaign promise, but there was a technical analysis, based on ILO policies. (I)