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SAP 2.79/WP.138

Employment and working conditions
in the Ecuadorian flower industry

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2. Employment and working conditions

2.1. Employment practices

The rapid expansion of the flower industry and its positioning in rural areas has generated employment for male and female farmers and youngsters from surrounding urban areas -- moreover employment of a permanent nature with higher wages compared to the rest of the agricultural sector. A field survey was conducted among nine flower plantations, most of them in the Province of Pichincha, to shed more light on this.

2.1.1. Direct employment

As can be observed from table 6, the average annual rate of employment growth was 8 per cent for the period 1990-97. This growth is basically related to areal expansion. Aside from direct employment generated through the hiring of manpower for the production processes, it is important to denote the ever-increasing hiring of technical personnel, such as agronomists, business administrators, economists, and foreign trade specialists. Colombian consultancy services are also apparent in these areas. This is an indication that the industry is making efforts to improve its competitiveness in the world markets.

Table 6. Direct employment and area, 1990-96
Field 1990 1991 1992 1993 1994 1995 1996
Roses 1 685 1 925 2 297 3 545 6 070 8 340 11 616
Gypsophilia 562 767 904 1 167 1 908 2 431 3 280
Summer flowers 238 331 530 596 933 1 412 2 031
Rose bushes 0 133 133 133 133 133 200
Carnations 135 320 387 340 426 627 902
Mini-carnations 339 208 208 256 330 50 42
Chrysanthemum 130 231 240 86 144 170 205
Other 479 532 645 632 517 1 050 1 482
Total 3 569 4 447 5 344 6 755 10 461 14 213 19 758
Area (ha) 286 380 451 562 864 1 167 1 485
Person/ha 12.5 11.7 11.8 12.0 12.1 12.2 13.3
Source: National Finance Corporation, sectoral study, 1997.

Ecuadorian flower entrepreneurs agree that Colombian technicians who came to Ecuador have contributed to the improvement of sectoral technology, while Colombian plantations, being older, have difficulty adapting to cultural changes in the management of the fields. This was confirmed in the field survey of nine companies comprising 47.9 cultivated hectares, mainly roses. They employ 542 persons, or 11.3 jobs per hectare (see table 7), which when compared to the average production of the sector (13.3 per cent), represents 85 per cent of the total.

Table 7. Employment generated by surveyed companies
Employees %
Men 330 60.9
Women 212 39.1
Total 542 100.0
Source: Field survey, Nov. 1997.

2.1.2. Women workers

One of the peculiarities of the industry's employment pattern is the significant inclusion of women because of their manual skills and abilities. Single women or married women without children are preferred. According to evaluations made by PROEXANT, pregnant women are relocated to other work positions if their condition so requires, especially if they cannot participate in fumigation. The most recent evaluations performed indicated that there are between four and five pregnant women in each company each year.

Various studies conducted by the flower market coincide in fixing the percentage of women workers at about 70 per cent of the total and that they are engaged in tasks related to cultivation, harvest and after harvest, while men perform activities linked to pre-cultivation, irrigation and fumigation (table 8).

Table 8. Occupation distribution by sex
Occupation Total % Women % Men %
Administration 35 100 15 43 20 57
Production 420 100 310 74 110 26
Irrigation and maintenance 62 100 0 0 62 100
Transport and marketing 25 100 5 20 20 80
Total 542 100 330 61 212 39
Source: Field survey, Nov. 1997.

A preference for women labour in production work is confirmed (74 per cent), with the main argument being that flower care is similar to child care, where women assume the responsibility for the entire process of growth, up to harvesting and packaging. No women work in irrigation or maintenance (nurseries), as this implies hard work.

Businessmen believe that hiring women is beneficial for productivity, but they also think of it as a risk because women may become pregnant (considering their highly fertile age), resulting in the obligation of granting 90 days' leave after birth and two hours per day during nine months for nursing. A quarter of the 90-day leave cost is covered by the company, the rest by social security. Companies complain, since substitute workers are not as efficient. Some companies have measures to prevent continuous pregnancies, by way of advice or conferences on family planning.

2.1.3. Occupations

As can be seen from diagram 2, production activities are labour-intensive.

Diagram 2. Distribution of employment by occupation,
November 1997

Over three-quarters of workers are engaged on production-related activities, ranging from land preparation to sowing, cultivation, management, harvest, after-harvest and fumigation. Next in importance are irrigation and maintenance, with 11.4 per cent. Administration (6.5 per cent) and transport and marketing (4.6 per cent) are minor occupational activities.

2.1.4. Age

Another peculiarity of the flower industry is the employment of young workers, with most workers being in the 22-25 age group; in some companies the range is 18-25 (table 9). Women are younger than men (22.9 years versus 24.5). The oldest employees are in the administrative area, where women average 28.3 years and men 30.6. Young people who have completed basic education and bachelors are preferred. This is an activity requiring qualified workers, who, in the production and after-harvest process, attain a high level of specialization. Knowing how to write and keep accounts will help them to furnish data required by production supervisors and managers.

Employment of young workers is impacting on the development of the counties through their consumption patterns. The sale of electrical appliances has increased in the Cayambe county during the last three years. Large discount stores have appeared, their main market being the young plantation workers. A negative side-effect is that many companies have suspended social activities, as these were thought to be the cause of unplanned pregnancies.

Table 9. Distribution by age, sex and occupation
Occupation Number Average age Length of service (years)
Men Women Average Maximum
Workers 482.0 24.56 22.89 1.22 3.11
Administrative employees 60.0 30.57 28.29 1.86 3.86
Source: Field survey, Nov. 1997.

2.1.5. Hiring criteria

Hiring starts with a probation period of three months. Candidates with experience and acquaintance amongst existing workers are preferred. The latter contacts are thought to provide a recommendation for hiring as the candidates come with prior knowledge of the standard of behaviour expected at the companies. Table 10 shows that eight of the nine companies surveyed take into account recommendations of their own workers. This is followed by hiring of workers visiting the plantation. It is noteworthy that other hiring methods -- such as advertising and the use of intermediaries -- are limited. Monday is the usual hiring day.

Table 10. Personnel hiring methods
Hiring method No. of

companies

% of total companies
Recommendation of workers 8 88.9
Worker appears at plantations 5 55.6
Press 1 11.1
Intermediaries 1 11.1
Total companies surveyed 9 100.0
Source: Field survey, Nov. 1997.

In order to find out the main factors contributing to the hiring methods of companies, research was done in the field survey with respect to the relative importance of factors influencing the hiring of workers (diagram 3).

Diagram 3. Relative importance of factors contributing
to personnel selection

The most important factor was experience with other flower companies. Second ranked was education, requiring workers to know how to read and write, since production activities involve keeping daily control and planning records. Third ranked was age, followed by background and references of the worker.

Labour availability in the flower areas and from neighbouring Colombia offers companies wide selection possibilities. Colombian workers are preferred because of their experience and knowledge and they are often hired to train their Ecuadorian counterparts.

2.1.6. New hires versus terminations

The survey showed a positive balance resulting from new hires and terminations in a year -- namely that there was growth in employment at some of the companies, with 106 new hires for every 100 terminations. Around 12 per cent of workers leaving the plantations did so as a result of a company decision. This rate can be interpreted as the laid-off rate versus total worker terminations. Employees are laid off in accordance with the provisions of the Labour Code. However, in October 1997, there was a massive lay-off in Cayambe as a result of the liquidation of a flower company.

Employee turnover is defined by the number of employees who leave the company versus the total number of workers in the same company. The field survey showed that 30 per cent of the workers (excluding those working in administration and marketing) are replaced each year, which appears to be on the high side, as compared with urban industrial sectors. This rate of turnover is directly associated with the length of service in the company, which in the case of workers is 1.22 years (table 9). The principal cause is the young age of the workers, who naturally believe they will always find new employment. Another factor is the type of hiring. After the three-month probation only those who attain trustworthiness and achieve the established production levels are contracted for a whole year.

Given the fast growth being experienced in the world rose market and given its advantages in the production process, there is a tendency to specialize on this product at the expense of the displacement of chrysanthemum, carnations and others. This has a negative impact on employment, as roses are less labour-intensive. Chrysanthemum for example, require 20 workers per hectare, whereas roses require ten.

2.1.7. Indirect employment

Around 30,000 workers are indirectly employed in the various related activities, such as plastic, paper, carton, lumber and agro-chemical industries, and transport and services (CFN study). For every direct job generated 1.5 are created in collateral industries, whether input supplier or services provider. Such indirect employment is significant for the country, given that the products do not lend themselves for further processing. Forest plantations, for example, being integrated into a wider production chain, generate four indirect jobs for every agricultural job.

2.1.8. Temporary work

Companies try to contract temporary work as little as possible, mostly during peak seasons in the international market -- Valentine's Day, Christmas, etc. During school vacations, students offer themselves at plantations for temporary jobs, which can be useful in their future work. Temporary workers are also hired for the maintenance of nurseries, or to lay beds in the initial planting stage. As an average, companies surveyed hire 7.4 temporary workers per year, or 10 per cent of the total permanent labour force. Average temporary contracts are 2.5 months.

2.1.9. Investment and employment

Investment requirements per job are high -- US$263,560 per hectare in 1997. Assuming 12 workers per hectare (a constant factor during the past ten years) investment per worker turns out to be US$22,000. As compared to this, an income of US$5,092 is required to maintain a job in the flower export sector, significantly less than in other countries of a similar size (table 11). The comparison shows that Ecuador's comparative advantage arises from its low-cost labour. Neighbouring Colombia's high labour cost has been the motivating factor for Colombian investment in the Provinces of Imbabura and Pichincha and now Cotopaxi.

Table 11. Export income per worker, Ecuador vs. others
Country Export income per

worker in US$

Ecuador 5 092
Dominican Republic 5 892
Costa Rica 16 670
Colombia 22 320
Source: "Exporting to success" study.

Comprehensive strategy to boost development in Ecuador, 1996.

Data calculated in the "Exporting to success" study provides some basis for estimating the potential of employment generation in the flower industry. Direct and indirect employment generated by non-traditional exports up to 2001 will be 120,000, i.e. 30,000 jobs per year. Assuming flower exports at 70 per cent of non-traditional exports, this puts their contribution at 21,000 jobs per annum. The figure is optimistic but not impossible, considering that companies surveyed plan a 20 per cent annual growth.

2.2. Wages

Ecuadorian labour legislation defines two types of wages: the minimum vital wage for every worker, which is fixed semi-annually by the National Wages Council; and sectoral wages which are fixed by sector minimum wage commissions for the various activities and which are approved by the Ministry of Labour. Presently, there are only 117 sector commissions which comprise a still reduced number of economical activities. There are also minimum wages established for collective bargaining contracts.

2.2.1. Sectoral wages

The average sectoral wage in the flower industry exceeds the minimum vital wage by 52 per cent (table 12): in June 1997 respective figures being 152,000 sucres (US$38), versus 100,000 sucres (US$25). It is worth noting that there are also sectoral wages for other occupational categories in the flower production sector, both for supervisors and support administrative staff (warehouse attendants, secretaries, accountants). However, no sectoral wages have been fixed for technicians, their experience being left to determine their hiring wage. To some extent, the two-year field survey helped pinpoint an average technician wage.

Compensation of production managers and general managers differs greatly from other occupational categories, not only internally within plantations, but also between plantations. Management compensation ranged from US$1,000 to US$3,000 per month.

Table 12. Sectoral wages by category
Category 1994 1997
Sucres US$ Sucres US$
Workers 100 000 44.5 152 000 38.0
Supervisor 1 125 000 55.6 160 000 40.0
Supervisor 2 137 000 60.9 170 000 42.5
Technicians 500 000 222.5 1 200 000 300.0
Administrative staff 250 000 111.1 500 000 125.0
Except for technicians, data were obtained from sectoral wage tables published in the Official Register by the Ministry of Labour.

As this is specialized work, sectoral wages are uniformly spread throughout the industry. New companies attract employees by offering small increases or better additional social benefits.

Sectoral wages are supplemented by social benefits mandatory by law and other compensation existing in various forms in the different companies, especially overtime. All employees work a certain number of overtime hours, six to 12 hours per week being normal, depending on the size of the company. Overtime is imperative since harvest and post-harvest activities have to continue non-stop. Sectoral wages compare very favourably with the remuneration received by farmers in nearby rural areas -- a 50 per cent differential -- not even counting the regularity of the job.

2.2.2. Compensation packages

In 1997 the average total compensation package was US$182.68 per month. This includes the basic sectoral wage, overtime and all social benefits mandated by law, additional wages, supplemental cost-of-living bonuses, insurance, vacation, transport, and reserve fund. As soon as workers complete their trial period they can enjoy social security. Work-related risks are covered on becoming a member of the social security system.

Supervisors' wages are 1.2 times the workers' remuneration (table 13), while the remuneration of technicians is at 3.5 times the average worker's wage, an indication of the importance given to technological knowledge. These data confirm the tendency of the sector to hire professionals as plantation heads or technicians on the basis of financial benefits. On the other hand, companies offer other social benefits, either on their own initiative or requests from the workers. Table 14 shows the most important of these.

Table 13. Average wages and compensation by category
Category Average

monthly wage

% Average total

compensation

%
Workers 147 111 20.1 730 740.06 100.0
Supervisors 173 750 21.5 809 250.00 100.0
Technicians 1 325 000 57.6 2 300 000.00 100.0
Administrative and support staff 507 500 45.9 1 105 000.00 100.0
Source: Field survey, Nov. 1997.

Table 14. Additional benefits received by workers
Benefit Number of

companies

%
Uniform 9 100.0
Transport 7 77.78
Meals 7 77.78
Medical service 4 44.44
Emergency loan 3 33.33
Life insurance 3 33.33
Nursery 2 22.22
Dental service 2 22.22
Private medical insurance 2 22.22
Housing 1 11.11
Christmas bonus 1 11.11
Commissary 1 11.11
Source: Field survey, Nov. 1997.

Among the "novelties" for a rural sector are life insurance and private medical services, which could imply that there may be a cost additional to that of the Ecuadorian Institute of Social Security for the protection of workers. This is because of the use of chemicals and other hazards in the companies. Emergency loans should not be surprising given the resort to conspicuous consumption by the young workers.

While companies do try to respond to the need to improve working conditions, all individual solutions are costly, leading to collective solutions in the form of area-based flower-growers' associations. For example, common nursery schools could accept local children obviating the need for a nursery in each company. The same idea could work for private medical insurance and life insurance.

2.2.3. Form of payment

Most workers are paid every two weeks, which implies the possibility of more annual income, as four additional weeks are paid in a year. No productivity incentives exist in the workers' category and only in one company was a manager paid a basic salary (plus mandatory social benefits) topped up by a percentage for each box sold. Overtime is paid according to law -- i.e. 100 per cent of the cost of normal hours.

2.2.4. Work-hours

The unique characteristics of flower production and marketing have determined a type of schedule which is different from those of other agricultural activities (table 15).

Table 15. Working hours and overtime
Activity Workdays per week Work-hours

per day

Total week

hours

Week

overtime

hours

Production 6.11 6.56 44.32 4.22
After-harvest 6.33 6.35 46.77 6.56
Source: Field survey, Nov. 1997.

Normal schedule

Monday-Friday: 7 work-hours plus 1 hour for lunch

Saturday: 5 work-hours

Six days: 40 hours

Overtime

Sunday: 4-8 hours, depending on the company's requirements.

During the week: 3 hours per day, depending on need, overtime being preferred to creating new positions.

It was observed that all companies work on Saturdays until noon. This means that workers have to dedicate one more day (more than the normal) to their job. Companies do it so as to continue with their work, but it is a sacrifice for their workers, as they have only one rest day on Sunday. On the other hand, looking on the bright side young workers have one day less for entertainment, where high consumption of alcohol is customary. Normally, workers put in four to six hours of overtime; during the peak seasons this may go to ten hours. Compensation received is an important incentive, adding 10-15 per cent to the monthly wage compensation.

2.3. Work risks

Production levels required by the international market obligates companies to use pest control agents in floriculture, since most countries have strict regulations to prevent the entry of flowers with larva.

2.3.1. Main illnesses

A study conducted by the Occupational Health, Safety and Industrial Hygiene (CESSHI)(2) (case study) shows epidemiological conditions affecting workers of the various production process areas (table 16). Research is conducted directly with the workers of the companies. Most illnesses occur during cultivation.(3)

Table 16. Main epidemiologies of flower workers (percentages)
Headaches Tremors Colic Blurred vision Fascicles
Cultivation 65.9 18.1 32.9 29.5 45.4
After-harvest 67.7 22.5 35.4 58.0 56.6
Fumigation 22.2 11.1 11.1 11.1 22.2
Irrigation 20.0 40.0 29.5 40.0
Maintenance 50.0 25.0 58.0 8.3 33.3
Source: CESSHI, Sep. 1996.

2.3.2. Preventive measures

Companies fight risk by providing adequate tools and training programmes for the workers. The most common items of equipment furnished are:

For general use: Aprons, pants, shirts, overalls, caps, rubber boots.

Cultivation: Rubber or leather gloves.

Post-harvest: Masks, rubber aprons, gloves.

Fumigation: Totally impermeable suits, masks with carbon filter covering entire face or goggles, rubber gloves.

Irrigation: Rubber or leather gloves.

Prevention measures consist not only of the furnishing of equipment, but also include training, education, medical attention for prevention and cure, etc. (table 17). Information gathered in the survey reveals that attention given by the companies to work risks is still limited. However, this is a difficult area to evaluate, unless a detailed study is performed, with a proper follow-up of the workers. PROEXANT is conducting such studies.

Table 17. Protective measures used by companies surveyed
Protective measures Number of

companies

Percentage
Uniforms (including boots, gloves and masks) 9 100.00
Complete special fumigation suit 7 77.78
Cholinesterase examination, at least twice per year 3 33.33
Medical examination, at least twice per year 3 33.33
Rotation of personnel to other jobs 3 33.33
Training in the use of chemicals 2 22.22
Source: Field survey, Nov. 1997.

Workers worry constantly about falling ill. Women are more prone to come in contact with illnesses and the risk is greater for pregnant women. Most of the large companies provide a medical service consisting of a physician for certain hours and a nurse full time and, in some cases, dental services periodically. Most companies (44.4 per cent) contract professionals from nearby urban areas to provide these services.

Faced with work-related risks, the CESSHI study recommends training aimed at improving the use of chemicals and preventing intoxication. It also suggests changes in workers' attitudes with respect to personal and group hygiene and safety.

2.3.3. Limitations on risk control

The control of work-related risks depends on three fundamental factors: the company, the worker and the State, each with their own degree of responsibility. From information collected from the companies surveyed, the following conclusions emerge with respect to the division of responsibility:

Companies

Workers

State

2.3.4. Accidents

In this type of activity work-related risks have a direct relationship on the health of the worker, as the work is basically manual, and will remain so, since no technology will ever completely replace man's labour in cultivation, harvesting and post-harvest. The majority of accidents take place during maintenance tasks (falls and cuts) and harvest and after-harvest operations (cuts). However, the companies do not keep record of these occurrences to provide reliable information on this issue. They asserted to not having any work accidents. The percentage of accidents in one year is less that 1 per cent of all workers.

2.4. Environmental risks

2.4.1. Inputs used

Pressures of the international market demand constant improvement in the quality of the flowers. This has resulted in a series of research efforts aimed at finding solutions for the use and handling of pest-control agents and fertilizers for the cultivation of flowers. According to information gathered during the survey, even the weight of chemicals used in production is extremely important. All companies report using inputs. Most combine chemical with organic products and 44 per cent report combining chemical and biological products. The suppliers reported were as in table 18.

Table 18. Suppliers of inputs
Supplier Number of

companies served

Percentage
Agrofertisa 7 77.8
Ecuaquimica 2 22.2
Q Rossbrug 2 22.2
Agroquimica 1 11.1
AFC 1 11.1
India 1 11.1
Agripac 1 11.1
Holanda Ecuador 1 11.1
Source: Field survey, Nov. 1997.

For flower growers, the relationship with suppliers is one of vulnerability, as the cost of inputs has become a strong element in the price. This is so since, on the one hand, the quality of the flowers depends on the quality of the inputs, and on the other, since substitution of inputs, especially the substitution of chemicals by biological elements is still complex and does not provide evident financial benefits in the short term.

In order to gear companies towards a constantly improved use of chemicals, which affect the environment and people's health the most, PROEXANT, in agreement with EXPOFLORES, has undertaken a series of activities, especially with respect to technical assistance related to the purchase, transport and storage of pest-control agents. The two organizations also carry out research on the contamination of residuals of pest-control agents in water, soil and vegetables, contamination to workers and contamination to agricultural products. Additionally, they have an ongoing programme for the evaluation of workers' health.

In 1994 the Ministry of Agriculture published the Manual for the Use of Pest Control Agents in Floriculture. This document, which was prepared by EXPOFLORES, PROEXANT and FUNDACION NATURA, is a guide, not a set of regulations. While compliance is not mandatory, it has helped in the evaluation of workers' health. The manual should be supplemented by a series of regulations for the sector, designed to ensure compliance with minimum industrial safety and occupational health standards.

2.5. Green Seal and implications

The Green Seal is a certification issued by Flower Label Programme (FLP), a German institution comprised of flower importers and buyers looking to minimize the impact on environment and on workers' health. A programme for the certification of Ecuadorian flower companies has existed since 1997, thanks to the presence of PROMERCADOS, a joint programme of German GTZ and FEDEXPORT which supports small and medium-sized export entrepreneurs. A trial phase (in 1995) reassured the companies that this was not an inspection programme with penalties but a support tool to improve the penetration of flowers in the European markets.

Given the requirements of the FLP to issue its certification, only five out of 179 Ecuadorian companies are FLP certified. Nevertheless, as of September 1997, according to information supplied by PROMERCADOS, at least 20 companies are on the waiting list for Green Seal evaluation.

The certification process follows a strict procedure carried out by independent German specialists who evaluate the plantations according to a checklist (exhibit 1) prepared by the FLP, which basically incorporates the following aspects:

(1) labour law, safety and sanitation;

(2) application and use of chemicals;

(3) preservation of the environment;

(4) respect for human rights.

Each of these subjects is subdivided into other items and then are graded A, B, C, D or E (exhibit 1) according to the following meaning:

A = Being met, Green Seal issued;

B = Green Seal issued but problem must be solved by next visit;

C = Mandatory proposal. Green Seal may be issued but may be withdrawn;

D = Suggestion; positive if taken into account;

E = Suggestion; depending on inspector's report.

FLP inspectors issue a report after visits are completed (there may be several visits if the company is not issued the Green Seal). The report is forwarded to a specialist commission in Germany. The commission approves the report and recommends to the FLP office in Ecuador to issue the seals (provided all mandatory (level A) regulations have been met). The seal is a trademark and is issued to the flower companies in two sizes (one for the box and one for the bunches). It is possible for the seal to be issued on the condition that level B and C recommendations have been corrected before the next visit (normally in one year's time).

Undoubtedly, the issuing of the Green Seal contributes to the improvement of working conditions which, if extended to more companies, would make intersectoral work competitive. Once the Green Seal is issued, the FLP makes a presentation to the producer being incorporated into the institution and informs importers, buyers and consumers. The contribution to the programme is US$0.50 per box, paid by producers as well as importers. This contribution is insignificant when compared to the price premium obtained, up to 30 per cent on average.

2.6. Unions

The unions or syndicated associations exist to represent the workers of companies surveyed. There is an absolute resistance to the incorporation of unions on the part of the companies which block any attempt by firing workers involved. The Cayambe case mentioned earlier was an isolated case resulting from the imminent bankruptcy of the company. It was quickly solved and did not have repercussions on other companies.

2.7. Training

Worker training is inadequate (table 19). Most companies report that they train the workers through their technicians and supervisors. Given the proportion of women, it is logical for them to be the most knowledgeable. Nevertheless, it is notable that five out of nine companies trained their workers through six events in the entire year, which each worker could only attend once.

Table 19. Worker training
Sample Birth control Use of chemicals Administrative and management
Men 330 10 (3.0) 70 (21.2) 3 (0.9)
Women 212 40 (18.9) 84 (39.6) 3 (1.4)
Total 542 50 (9.2) 154 (28.4) 6 (1.1)
Source: Field survey, Nov. 1997.

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Updated by BR. Approved by OdVR. Last update: 28 September 2000.