2023 Investment Climate Statements: Ecuador

Petroleum and Gas:  Petroleum is Ecuador’s main export and a priority for the Lasso administration in attracting investment.  Per the 2008 Constitution, all subsurface resources belong to the State, and the petroleum sector is dominated by one state-owned enterprise (SOE), Petroecuador, that cannot be privatized.  The Hydrocarbons Law regulates the Ecuadorian oil and gas industry.  Executive Decree 95 published July 2021 opened private sector participation in oil exploration and production, with a goal to double oil production to 1 million barrels per day by 2028.  However, the Lasso administration rescinded Executive Decree 95 in June 2022 as a concession to Indigenous groups following violent nationwide protests.  The government also reduced the price of certain fuels by 15 cents per gallon and pledged to implement targeted fuel subsidies.  Importantly, the government promised to advance legislation to establish free, prior, and informed consultation with Indigenous communities before starting new extractive projects, as mandated by the Constitution.  Following a 90-day dialogue with Indigenous communities, the Ecuadorian government also conceded to a 12-month moratorium on granting new oil concessions, pending the passage of a community consultation law.  Separately, the government rescinded the 2021 Hydrocarbon Regulations after Ecuador’s Constitutional Court rendered unconstitutional the migration of fee-for-service contracts to production sharing agreements and the delegation of active oil fields to private companies.  Total oil production in 2022 was 176 million barrels, up 1.7 percent from 2021 production.

The Ecuadorian government launched the Intracampos II exploratory oil block tender in October 2022.  Intracampos II is expected to draw $2.1 billion in investment and produce an additional 18,000-24,000 barrels per day.  Given its declining and underdeveloped gas fields, the government also plans to launch a tender for its Amistad offshore gas field in 2023.  Additionally, the government announced potential tenders for a South-East concession, a private operator for the Esmeraldas refinery, and another to build and operate a new Euro 5 quality refinery.

Mining:  The Ecuadorian government plans to accelerate mining development to increase revenues and diversify its economy, with mining representing $12 billion of the Lasso administration’s $30 billion investment drive.  Ecuador’s mining exports generated $2.77 billion in 2022, a 34 percent increase over 2021 mining exports.  Analysts forecast that mining could become Ecuador’s third biggest export by 2025 generating over $4 billion in annual export revenues and comprising 15 percent of total exports.  Executive Decree 151, published August 2021, seeks to promote private sector participation in mining exploration and production.  The decree allowed for private sector investment and joint ventures with the state-owned mining enterprise.  It also seeks to combat illegal mining and establishes an Advisory Board to guide the government on best practices for responsible mining.  The Lasso administration amended Executive Decree 151 following the June 2022 protests by establishing that mining may not be carried out in the following areas:  protected areas and ancestral territories, areas declared intangible, archaeological sites, and water protected areas.

The June 2022 nationwide Indigenous-led protests targeted mining.  Protesters shut down several mining operations demanding that the government conduct constitutionally mandated community consultations prior to granting new concessions.  Following a 90-day dialogue with Indigenous communities, the Ecuadorian government also conceded to a 12-month moratorium on granting additional mining concessions pending passage of a community consultation law.  Ecuador’s Constitutional Court affirmed communities have the right to vote on whether to allow large-scale mining projects near their water sources in a September 2020 ruling on a plebiscite proposed by the Cuenca municipality.  Mining companies plan to begin exploitation operations in Loma Larga, La Plata, and Curipamba in 2024, representing $1 billion in near term investment for Ecuador.  Ministry of Energy and Mines officials plan to announce a phased reopening of the cadastre in 2023, beginning with opening new concessions in non-conflict territories, followed by processing the backlog of over 200 concession applications dating back to 2018.  Ecuador has two operating mines — a gold mine operated by a Canadian company and a copper mine operated by a PRC-affiliated company.  In 2022, the government did not issue any new mining concessions.

Illegal mining continues to be a principal threat to expanding legal mining operations and investment.  Illegal miners undertook violent attacks on legal mining concessions throughout Ecuador in 2022, and the Ecuadorian government lacks sufficient security resources and funding to protect legal mining concessions.  President Lasso declared illegal mining a national security threat in January 2023, as transnational criminal organizations increasingly exploited Ecuador’s gold resources.  The declaration paved a path for military and police interventions to protect mining sites.  Illegal mining hotspots are concentrated in six Ecuadorian provinces – Azuay, Morona Santiago, El Oro (Zaruma-Portovelo), Zamora Chinchipe, Imbabura, and Esmeraldas.

Electricity:  Hydroelectric electricity accounts for 90 percent of Ecuador’s electricity generation.  Domestic electricity production fell short of demand in 2022 due to long term droughts and ongoing construction issues at the PRC-built 1500 MW Coca Codo Sinclair (CCS) hydropower plant forcing Ecuador to import electricity and increase its fossil-fuel power plant production. CCS hydro power plant, designed to provide 30 percent of Ecuador’s electricity, has never generated its total installed power capacity and has been undergoing repairs since it began operating in 2016.  CCS is also at risk from regressive erosion from the adjacent Coca River.

The government plans to develop wind, solar, hydro, biomass, biogas, geothermal, biofuel, combined cycle, and gas-fired electrical generation plants to diversify Ecuador’s energy matrix.  It awarded a 200 MW solar tender (El Aromo) and a 110 MW wind tender (Villonaco II) to private operators in 2020.  The El Aromo project signed a concession agreement in March 2023, and is working on other required documents prior to securing financing and starting construction.  The Energy Ministry released tenders in 2021 for a 500 MW renewable energy block (hydro, solar, wind, biomass and biogas), a 400 MW Natural Gas Combined Cycle Power Plant (CCCP), and a Northeast Transmission System.  The Energy Ministry has not yet awarded the contracts and plans to do so in 2023.  The government imported its first liquefied natural gas (LNG) cargo January 2022.

Telecommunications:  The Ministry for Telecommunications and Information Society (MINTEL) launched in August 2022 a Digital Transformation Agenda to reduce the digital divide, strengthen public sector digitalization, and foster a digital culture.  The roadmap comprises seven main pillars: digital infrastructure; culture and digital inclusion; digital economy; emerging technologies for sustainable development; digital government; interoperability and data processing; and digital security and trust.  The administration’s priority remains promoting the deployment of broadband networks and rural connectivity.  In addition, the Lasso administration is open to implementing the necessary processes for the identification, valuation, and allocation of frequency bands to promote the development of new technologies and the use of frequencies free-of-cost for temporary experimental use, or in case of emergencies.

In 2021, MINTEL received the valuation report for the 2.5 GHz (gigahertz) and 700 MHz (megahertz) bands from the International Telecommunication Union (ITU).  The cost set is reserved.  Likewise, MINTEL asked the ITU for the valuation of the 3.5 GHz, 850 MHz, 900 AWS (Advance Wireless Service), and 1900 MHz band, which in turn will allow for new players in the market and the future deployment of the fifth generation of technologies (5G).  Three 5G technology connectivity tests have taken place in Ecuador, though there is no target date for the beginning of 5G commercial operations.

The government started the renegotiation of concession contracts with mobile network operators in 2022 for the provision of the Advanced Mobile System (AMS).  Per the law, the negotiation can extend for two years, though the operators’ concessions expire in 2023.  Telecoms regulator ARCOTEL and the private sector are currently analyzing new terms and conditions for concession rights and frequency.  The current negotiations do not include the frequency bands for the 5G network and are instead focused on the frequencies currently assigned to operators.

E-Commerce:  Since the COVID-19 pandemic, e-commerce in Ecuador has experienced exponential growth.  In 2022, according to Ecuador’s Chamber for Innovation and Technology (CITEC), e-commerce sales totaled approximately $3.84 billion.  CITEC projects online sales will reach $6.1 billion by 2025, with an average annual per-user revenue rising from $602 to $921.  According to CITEC’s latest report, 79 percent of Ecuadorians purchase goods or services online at least once a year and 79 percent of Ecuadorian businesses maintain some form of online presence.  This figure includes not only purchases made through a dedicated web platform (e.g., Amazon), but also sales made through social networks, for which payment may be made offline or through separate online services.  The sectors with the highest market penetration (number of users making online purchases) were electronics and fashion.  While many Ecuadorians are interested in purchasing online, they are limited in their ability to receive international shipments due to logistics and customs problems upon arrival in Ecuador.  The Ministry of Production launched the National E-Commerce Strategy in 2021, establishing a framework for facilitating the digital transformation in the country.  The strategy focuses on strengthening the current legal framework, capacity building for small and medium enterprises (SMEs), and improving logistics and payment gateway capabilities.  Since the issuance of the National E-Commerce Strategy, no new regulations have entered into force to facilitate its application and the objectives set forth therein.

The Lasso administration’s tax reform legislation passed into law November 2021 with the aim of increasing tax collection by $1.9 billion over the next two years. Through progressive taxation, the tax reform increased collection in 2022 by more than $900 million and additional collections in 2023 are expected to reach some $1.1 billion. Key elements of the tax law include:

• Temporary contribution for individuals with equity exceeding $1 million with rates between 1.0 and 1.5 percent in 2022.
• Temporary contribution of 0.8 percent for corporations with equity exceeding $5 million in 2022 and 2023.
• The possibility for individuals and corporations to pay a single tax to regularize assets abroad not declared in Ecuador, paying tax rates between 3.5 and 5.5 percent.
• Permanent increase in the income tax rate for individuals according to a tax schedule, with the highest rate rising to 37 percent.
• Possibility to enter mediation with the tax authority on tax auditing process.
• Modifications to indirect taxes (VAT and Special Consumption Tax – ICE) on specific products.
• Progressive tax regime for micro-businesses with rates between 1.0 and 2.0 percent.
• Cloud and web hosting services face a 12 percent digital services VAT.

During the Correa administration, Ecuador’s National Assembly voted in 2017 to terminate the country’s 12 bilateral investment treaties, including its agreement with the United States. The Government of Ecuador notified the U.S. government of its withdrawal from the Bilateral Investment Treaty (BIT) on May 18, 2017, effective May 18, 2018. Investments made prior to withdrawal are covered for 10 years, but the abrogated BIT covers no new investments in Ecuador.

Ecuador has signed agreements to avoid double taxation with 24 countries including Argentina (1983), Germany (1987), Spain (1994), Canada (2002), Mexico (2002), the Andean Community (2005), China (2015), Belarus (2018), Russia (2019), and Japan (2020). Ecuador does not have an agreement to avoid double taxation with the United States.

Ecuador signed the Tax Information Exchange Agreement (TIEA) with the United States in April 2021 and it entered into force in September 2022. Ecuador does not have a bilateral taxation treaty with the United States. Ecuador is not a member of the OECD Inclusive Framework on Base Erosion and Profit Shifting.

Ecuador’s Coordinator of Public Companies (EMCO EP) coordinates and controls the policies and actions of all public companies, their subsidiaries, affiliates, agencies, and business units, as constituted by the Executive Function. EMCO EP also identifies those SOEs that may be created, merged, split, or liquidated.
Ecuador has a total of 12 SOEs. The major SOEs include those for petroleum (Petroecuador), electricity (Electricity Corporation of Ecuador – CELEC – and the National Corporation for Electricity – CNEL), and telecommunications (National Corporation of Telecommunications – CNT). In 2022, EMCO published online the total assets, liabilities, and equity of the eight SOEs in the process of liquidation. Some SOEs published online information on earnings, expenditures, and budget execution. Still, SOEs’ financial information is limited, and they lack independently audited balance sheets. SOEs generally do not have professionally audited financial statements. The Ministry of Economy and Finance approves SOEs’ annual budgets and often slows distribution of funds to SOEs to compensate for other government expenditures.

As of September 2021, the 12 SOEs combined have approximately 30,000 employees. As part of the government’s austerity measures to deal with the pandemic-related economic crisis, the Lasso administration continued with the SOE liquidation processes started in May 2020. As of February 2023, there were five liquidated SOEs, including Strategic Ecuador (a social development firm using profits from natural resource revenues), the Public Pharmaceutical Company, the Public Cement Company, Siembra (a science and technology research firm formerly called Yachay City of Knowledge), and High-Performance Training Centers for athletes. Six SOEs are in the process of liquidation, including the public airline (TAME), the Ecuadorian Railways Company, an agricultural storage company (National Storage Units), the public media company, a manufacturing company (Fabrec EP), and the Ecuadorian Post Office. In February 2021, the government announced that the Ecuadorian Post Office will be replaced by Ecuador Postal Services (SPE).

The 2009 Organic Law of Public Enterprises regulates SOEs. SOEs are most active in areas designated by the 2008 Constitution as strategic sectors. SOEs follow a special procurement regime with greater flexibility and limited oversight. The Organic Law of Public Enterprises requires SOEs to follow generally accepted accounting principles. Still, SOEs are not required to follow the same accounting practices as the central government, nor do they have to participate in the electronic financial management system used in most of the public sector for budget and accounting management. In general, public companies operate under market considerations as provided in the Organic Law of Public Enterprises. However, SOEs are eligible for government guarantees and face lower tax burdens than private companies. The Public Procurement Law establishes that public companies should prefer suppliers of goods/services that incorporate the largest percentage of Ecuadorian components or promote the participation of the popular and solidarity economy, and/or small and medium businesses, through the application of proportional margins of preference compared to other suppliers, market reserve, and/or preferential subcontracting. Said provisions could hinder private sector competition. Ecuador SOEs do not compete internationally and do not invest in the United States.

Ecuador is not party to the Government Procurement Agreement (GPA) within the framework of the World Trade Organization.

Article 66 of the 2008 Constitution guarantees the right to pursue economic activities in a manner that is socially and environmentally responsible. Civil society groups such as the Institute of Corporate Social Responsibility and the Ecuadorian Consortium for Social Responsibility promote responsible business conduct. Many Ecuadorian companies have programs to further responsible business conduct within their organizations. Ecuador joined the Extractive Industries Transparency Initiative (EITI) in October 2020. The country must comply with additional requirements to become a full member. In December 2022, the Multi-Stakeholders Group – MSG (formed by government, civil society, and industry representatives) – requested an extension until June 2023 to submit its first country report citing extenuating circumstances such as the nationwide protests, leadership changes at Ministry of Energy and Mines (MEM), and difficulties with World Bank financing, as justifications for the extension request.

The Ecuadorian government has not instituted or proposed requirements for businesses to conduct due diligence or reporting regarding human rights or other responsible business conduct issues.

A number of local and Indigenous communities are active in opposing extractive industry projects in their territories, though some communities have welcomed responsible companies that are generating employment and bringing benefits to the local people. The Ecuadorian government is legally obligated to carry out free, prior, and informed consultations (consulta previa) with Indigenous groups and other communities per the Ecuadorian Constitution and its commitments under International Labor Organization Convention 169 and the United Nations Declaration on the Rights of Indigenous Peoples. Ecuador does not have a law that outlines how to perform this community consultation process. Ecuador’s Organic Law for Citizen Participation also mandates free, prior, and informed consultations on matters that may impact the environment, culture, and social wellbeing of local people. Ecuador’s 2018 Organic Law for the Integral Planning of the Amazon Region provides for the distribution of extractive industry income for the benefit of local communities affected by the sector’s operations. Still, few financial benefits have trickled down to local communities historically and instead royalties often serve to cover expenses from national and subnational government agencies.

Ecuador’s failure to establish protocols for consultations with Indigenous groups and other local communities have led to political tensions and protests particularly in areas with oil drilling and mining projects. Local and Indigenous opposition to mining projects has stalled numerous mining concessions in recent years, including the San Carlos-Panantza Copper Mine and the Rio Blanco Gold Mine. During the dialogue between the Ecuadorian government and Indigenous groups following June 2022 nationwide protests, the government committed to drafting community consultation legislation to establish clear protocols and seek National Assembly approval. Indigenous people and their organizations are seeking more equitable and transparent processes that empower Indigenous nations to attract extractives in their territories and negotiate fair royalties.

Ecuadorian law prohibits all forms of forced or compulsory labor, including all forms of labor exploitation and child labor. Article 42 of the labor code establishes that all companies engaged in global or domestic supply chains are required by law to pay minimum wage, ensure eight-hour workdays, and pay into social security. The Ministry of Labor’s (MoL) Directorate for Control and Inspections is responsible for enforcement of labor laws. The Department of Labor’s Bureau of International Labor Affairs added four new products in 2022 for a total of eight Ecuadorian products on its list of goods produced by child labor or forced labor in violation of international standards, as required under the Trafficking Victims Protection Reauthorization Act (TVPRA) of 2005. These new products are bovines, hogs, poultry, and rice, in addition to bananas, bricks, flowers, and gold included in the previous TVPRA reporting. MoL officials received reports of child labor and conducted inspections but did not furnish specific or aggregated data on the number of inspections or child labor incidences in the production of goods included on the TVPRA list.

Ecuador’s flower production consortium, in coordination with the International Labor Organization and the MoL, undertook a series of efforts to eliminate child labor from flower farms in 2020. The MoL reported that labor inspections of large flower farms in 2020 in Pichincha province did not find instances of child labor. This positive outcome is largely because these farms are part of the Business Network for a Child-Labor-Free Ecuador and are committed to the elimination of child labor. Despite their progress, flower exporting consortiums continue to resist a diagnostic survey to demonstrate the elimination of child labor.

According to international organizations, adolescents below age 15 engage in dangerous working conditions in the artisanal gold mining near the borders with Colombia and Peru. Most gold mining is in southern Ecuador near Peru. Adolescents engaged in hazardous unregulated mining operations faced exposure to mercury and other hazardous chemicals. Government officials admitted difficulty in monitoring for child labor in the unregulated artisanal gold mining sector, particularly in relatively inaccessible border areas. Government and civil society sources did not report child labor in mining for export-oriented firms.

Nationally the government does not mandate local employment in any industry. However, the Organic Law of the Amazon, approved by the National Assembly in May 2018, mandates that any company, national or foreign, operating within the area covered by the law (the Amazon Basin) must hire at least 70 percent of their staff locally, unless they cannot find qualified labor from that area. The 2015 Organic Law for the Special Regime of the Galapagos (LOREG) and its regulations enacted in April 2017 include the mandatory hiring of local residents. The law stipulates non-residents can be hired only if companies demonstrate there are no local candidates with the required skill set.

Department of State

• Country Reports on Human Rights Practices;
• Trafficking in Persons Report;
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities;
• U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises; and;
• Xinjiang Supply Chain Business Advisory 

Department of the Treasury

• OFAC Recent Actions

Department of Labor

• Findings on the Worst Forms of Child Labor Report;
• List of Goods Produced by Child Labor or Forced Labor;
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World and;
• Comply Chain.

Corruption is a serious problem in Ecuador. Ecuadorian courts have recently tried numerous cases of corruption, resulting in convictions of high-level officials, including former President Rafael Correa, former Vice President Jorge Glas (although the judiciary recently granted him early release), and former Vice President Maria Alejandra Vicuña, among others. U.S. companies have cited corruption as an obstacle to investment, with concerns related specifically to non-transparent public tenders, dispute resolution, and payment of arbitration awards.

Ecuadorian law provides criminal penalties for corruption by public officials, but the government has not implemented the law effectively, and officials have engaged in corrupt practices. Ecuador ranked 101 out of 180 countries surveyed for Transparency International’s 2022 Perceptions of Corruption Index and received a score of 36 out of 100. High-profile cases of alleged official corruption involving state-owned petroleum company PetroEcuador and Brazilian construction firm Odebrecht illustrate the significant challenges that confront Ecuador with regards to corruption. The Ecuadorian National Assembly approved anti-corruption legislation in December 2020. The legislation, which reforms the Comprehensive Organic Penal Code, creates new criminal acts, including circumvention of public procurement procedures, acts of corruption in the private sector, and obstruction of justice. It also includes 11 provisions reforming the laws governing the public procurement system and the Comptroller General’s Office. Moreover, the reforms included compliance as a compulsory mechanism for preventing private corruption. In December 2022, Ecuador named 14 specialized judges against corruption and organized crime to a new court design to prosecute the country’s most significant corruption and money laundering cases. In May 2021 Ecuador approved the Asset Forfeiture Law – a critical piece of legislation to seize the illicitly gained assets of organized crime and corruption. The final step for implementing the law was the creation of the specialized court. The National Assembly passed additional legislation in December 2022 that enables the government to sell seized assets more rapidly.

Illicit payments for official favors and theft of public funds reportedly take place frequently in addition to attacks and threats against judges, prosecutors, and other officials. Drug gangs killed at least three prosecutors and one judge in 2022. Dispute settlement procedures are complicated by the lack of transparency and inefficiency in the judicial system. Offering or accepting a bribe is illegal and punishable by imprisonment for up to five years. The Comptroller General is responsible for the oversight of public funds, and there are frequent investigations and occasional prosecutions for irregularities.

Ecuador ratified the UN Anticorruption Convention in September 2005. Ecuador is not a signatory to the OECD Convention on Combating Bribery. The 2008 Constitution created the Citizen Participation and Social Control Council (CPCCS), tasked with preventing and combating corruption, among other responsibilities. The 2018 national referendum converted the CPCCS from an appointed to a popularly elected body. In December 2008, President Correa issued a decree that created the National Secretariat for Transparency (SNTG) to investigate and denounce acts of corruption in the public sector. The SNTG became an undersecretariat and was merged with the National Secretariat of Public Administration in June 2013. President Moreno established the Anticorruption Secretariat within the Presidency in February 2019 but disbanded it in May 2020 for allegedly intervening in corruption investigations conducted by the Office of the Attorney General. In 2022, the Lasso administration reestablished the Anticorruption Secretariat, whose main role is to design public policy for increased transparency inside the executive branch. The CPCCS can receive complaints and conduct investigations into alleged acts of corruption. Responsibility for prosecution remains with the Office of the Attorney General.

Social and Indigenous groups initiated widespread, violent street protests in June 2022 for 18 days over their opposition to government economic policies. The protests resulted in eight deaths (including a soldier) and caused more than $1 billion in damages and losses. The protests centered on increasing fuel subsidies in response to the government’s gradual fuel subsidy reductions. The Catholic Church mediated a dialogue with the government, leading to the freezing of fuel subsidies, a promise to implement targeted fuel subsidies, and other concessions. Despite more than 200 agreements reached in a 90-day dialogue between the government and Indigenous groups, the Confederation of Indigenous Nationalities of Ecuador (CONAIE) withdrew from negotiations with the government in February 2023, claiming the government had not complied with agreements and threatening renewed protests. CONAIE’s withdrawal coincided with opposition legislators’ attempt to remove President Lasso through an impeachment trial, which remains ongoing in the National Assembly and will likely conclude in mid-May.

Large-scale protests pose a regular challenge to Ecuador’s political stability. Opposition to the government’s decision to remove fuel subsidies led to nationwide violent protests in October 2019. The protests paralyzed the country for 11 days, causing significant property damage, including to petroleum and telecommunications infrastructure. A dialogue between the government and indigenous protest leaders, mediated by the United Nations and the Catholic Church, led to the government’s decision to restore the fuel subsidies. Widespread public protests in 1997, 2000, and 2005 contributed to the removal of three elected presidents before the end of their terms. Large-scale but peaceful demonstrations against the Correa government occurred in June 2015.

Violence related to drug-trafficking organizations broke records in 2022, particularly in Ecuador’s port cities. Deadly prison riots have left more than 500 prisoners dead since 2020. The Executive has submitted to the National Assembly updated regulations aimed at ensuring public safety and control of prison systems. The National Assembly continues to debate and analyze security sector reforms.

As of December 2022, Ecuador’s Statistics Institute (INEC) registered a 64.6 percent workforce participation rate and an unemployment rate of 3.2 percent. However, the official underemployment rate is 19.4 percent and an estimated 54.3 percent of workers labor in the informal sector, illustrating significant labor vulnerabilities. Semi-skilled and unskilled workers are relatively abundant at low wages. The supply of available workers is high due to layoffs in sectors affected by Ecuador’s flat economic growth since 2014. The COVID-19-related economic crisis is estimated to have resulted in the loss of 230,000 jobs in the formal sector in 2020. As of December 2022, INEC reported a gain of some 92,000 formal jobs since the pandemic. In addition, first Colombian and then Venezuelan migrants added to the informal labor pool in recent years. The National Wages Council and Ministry of Labor Relations set minimum compensation levels for private sector employees annually. The minimum basic monthly salary for 2023 is $450 per month – one of the highest minimum wages in South America.

Ecuador’s Production Code requires workers be paid a dignified wage, defined as an amount that would enable a family of four with 1.6 wage earners to be able to afford basic necessities. INEC determines the cost and the products that are considered basic necessities. In December 2022 the monthly cost of basic necessities was $763.44 while the official family wage level is at $793.33. As December 2022, INEC estimated 36 percent of workers had adequate employment, which is defined as working a 40-hour work week and earning at least minimum wage. INEC defines adequate employment as earning at least the minimum basic salary working 40 hours per week.

Ecuador’s National Assembly approved in June 2020 limited labor reforms in an emergency law (Humanitarian Law) valid for two years to address the economic impacts of COVID-19. These reforms allowed for the reduction of working hours up to 50 percent and salary up to 45 percent; ability to modify a labor contract with mutual agreement between employer and employee; new temporary contracts for new investments that can be changed to permanent contracts at the end of the temporary period; and layoffs without severance payments only when the company closes entirely.

Ecuador’s National Assembly passed a labor reform law in March 2016 intended to promote youth employment, support unemployed workers, and introduce greater labor flexibility for companies suffering from reduced revenue. The law established a new unemployment insurance program, a subsidized youth employment scheme, temporary reductions in workers’ hours for financially strapped companies, and nine months of unpaid parental leave.

The Law for Labor Justice and Recognition of Work in the Home, which included several changes related to labor and social security, took effect in April 2015. The law limits the yearly bonus paid to employees, which is equal to 15 percent of companies’ profits and is required by law, to 24 times the minimum wage. Any surplus profits are to be handed over to Ecuadorian Social Security Institute (IESS). The law also mandates that employees’ 13th and 14th-month bonuses be paid in installments throughout the year instead of in lump sums. Employees have the option to opt out of this change and continue to receive the payments in lump sums. The law eliminated fixed-term employee contracts and replaced them with indefinite contracts, which shortens the allowable trial period for employees to 90 days. The law also allows participation in social security pensions for non-paid work at home.

The Labor Code provides for a 40-hour work week, 15 calendar days of annual paid vacation, restrictions and penalties for those who employ child labor, general protection of worker health and safety, minimum wages and bonuses, maternity leave, and employer-provided benefits. The 2008 Constitution bans child labor, requires hiring workers with disabilities, and prohibits strikes in most of the public sector. Unpaid internships are not permitted in Ecuador.

Most workers in the private sector and at SOEs have the constitutional right to form trade unions, and local law allows for unionization of any company with more than 30 employees. Private employers are required to engage in collective bargaining with recognized unions. The Labor Code provides for resolution of conflicts through a tripartite arbitration and conciliation board process. The Code also prohibits discrimination against union members and requires that employers provide space for union activities.

Workers fired for organizing a labor union are entitled to limited financial indemnification, but the law does not mandate reinstatement. The Public Service Law enacted in October 2010 prohibits public sector workers in strategic sectors from joining unions, exercising collective bargaining rights, or paralyzing public services in general. The Constitution lists health; environmental sanitation; education; justice; fire brigade; social security; electrical energy; drinking water and sewerage; hydrocarbon production; processing, transport, and distribution of fuel; public transport; and post and telecommunications as strategic sectors. Public workers who are not under the Public Service Law may join a union and bargain collectively since they are governed by the provisions under the Labor Code. Approximately 3 percent of the total workforce was unionized, with the number of public and private unions registered by the Ministry of Labor decreasing by half since 2017. Labor unions and associations reported difficulties in registering unions in the Ministry of Labor due to excessive requirements and ministry staff shortages.

DFC operates in Ecuador under a pre-existing Overseas Private Investment Corporation (OPIC) agreement and has not negotiated an amendment to or replacement of the existing agreement. DFC has signed several loan agreements aimed at increasing local bank lending to SMEs and female entrepreneurs. Since 2019, DFC has mobilized nearly $900 million in financing to support Ecuadorian SMEs, mainly those led by women. In 2022, DFC signed an agreement with Ecuadorian bank Banco Pichincha for $200 million in SME financing. DFC projects in Ecuador include SME financing, housing, health care, and telecommunications sectors. DFC plans to expand its Ecuador portfolio to include financing for renewable energy projects and climate change initiatives. The existing agreement does not require prior host government approval of U.S. government investment support for a proposed project.

Ecuador is a signatory to the Multilateral Investment Guarantee Agreement.

* Source for Host Country Data: Source for Host Country Data: Central Bank of Ecuador (BCE). BCE publishes FDI calculated as net flows only.  Outward Direct Investment statistics are not published by the Central Bank of Ecuador.

*Source: Central Bank of Ecuador – September 2022 data. The Central Bank publishes FDI calculated as net flows only.  The Central Bank does not publish Outward Direct Investment statistics

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