Again...from the pages of El Comercio, a topic that may be of interest to anyone considering a business venture in Ecuador. I, again, translate the gist below the article, as it is in Spanish.
El Gobierno pide cárcel para quien no afilie a sus empleados
21-08-2009
El Comercio
Las personas que no afilien a sus empleados o trabajadores al Instituto Ecuatoriano de Seguridad Social (IESS) serán sancionados con penas de prisión que van desde los seis meses hasta los cinco años.
Las personas que no afilien a sus empleados o trabajadores al Instituto Ecuatoriano de Seguridad Social (IESS) serán sancionados con penas de prisión que van desde los seis meses hasta los cinco años.
Así propone el presidente de la República, Rafael Correa, en un proyecto de reformas al Código de Procedimiento Penal, que fue remitido a la Asamblea Nacional en la mañana de ayer.
La iniciativa indica que “el empleador que intencionalmente no afiliare al trabajador o servidor al Seguro Social Obligatorio del IESS, será sancionado con pena que va desde seis meses a cinco años de prisión”.
Para establecer esta sanción, el proyecto propone que el informe elaborado por el Inspector del Trabajo se remita a la Fiscalía para que inicie la acción penal pública en contra del empleador.
El dirigente sindical Eduardo Bedoya no coincide con la propuesta del Régimen. “El problema es que se va a estimular un mercado informal de contratación de personal, especialmente en las empresas pequeñas”, sostiene el dirigente.
También critica que el Régimen, con este tipo de medidas, más bien propicie la confrontación antes que el diálogo. “Estos temas deben ser discutidos en el Consejo Nacional del Trabajo, donde están presentes empleadores, trabajadores y el Estado”.
Roberto Aspiazu, del Comité Empresarial Ecuatoriano, considera que esta iniciativa del Régimen no afectará al sector empresarial
formal, que sí cumple con las obligaciones laborales.
Sin embargo, recordó que alrededor del 60% de la población está desempleada o subempleada y allí es en donde se presentan los incumplimientos laborales.
Attribution: http://www.elcomercio.com/noticiaEC.asp?id_noticia=299093&id_seccion=3
To me, the key phrase from the entire article which is most prominent and serves as the entire gist is: "The people who do not register their employees or workers with the Ecuadorian Institute of Seguridad Social (IESS) will be sanctioned with prison sentences which range from six months to five years."
Comments: I recognize that the assumption has always been that Ecuadorian authorities are lax, due to manpower issues, about enforcing labor law requirements, especially as applicable to tax legislation. However, with the Correa administration now introducing penal code language that, if adopted, would make such "lax behavior" criminally punishable, this raises the stakes. On the one hand, I see this as a responsible act by the Correa administration to ensure that tax dollars are legally allocated to the government. The lax enforcement and general disregard has...let us be honest...probably denied the Ecuadorian government of substantial tax revenue over the years. A President looking to "close the loophole" can't be faulted for upping the "penalty ante". Having said that, and fully admitting my "anti-tax" bias, I can't help but think that this action is excessively "heavy-handed". Let me give an example. I have been in an international business and an international traveler for 26+ years. I am as familiar with the "lay of the land" as anyone can be from afar. Yet, I do not fully understand the procedure for proper filing in Ecuador. I may not currently be a resident of Ecuador, but have a worst-case 18-month time line to do just that. So, I get to Ecuador, ask all the right questions...get all the forms that "Agent X" at the local office says I must fill out...and because I was erroneously advised to fill out "Form A", rather than "Form B", all of a sudden I am looking at 6 months to 5 years in an Ecuadorian prison? Seems "unnecessarily harsh" and is the kind of "noise" coming from the Correa administration that is opening them up to criticism and "broad-based labeling". The move...no matter how well-intended and logical in its premise, just has an air of being "anti-business", at precisely the time Ecuador's people need more business creation to generate jobs. Ironically, it is the working poor, precisely President Correa's core constituency, that will feel the brunt of this penal code revision, if adopted. Truthfully, I am going to think twice before hiring a housekeeper, nanny or gardener...cleaning and pruning just seems so much more appealing than prison. I hope the penal code revision will address where Independent Contractors, especially those who work for commissions/fees, instead of salaries, fall into the new order of things. From me, Correa gets an A+ for intent here, but a D- for practical implementation. You don't use a bazooka to swat a fly.
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