Ecuador’s President, Daniel Noboa, called the electorate to the ballots on a National Referendum. The eleven questions established for this political process were in two main fields: security and labor market reforms. The Referendum took place on April 21, 2024.
The official results of the National Referendum are that in 9 out 11 yes-no-questions the Ecuador’s electorate gave the option of Yes a majoritarian support to the Administration’s plans. However, two questions the support leaned towards No; those questions main focus was on reforms to labor and foreign investment. The following graph show the results of the Referendum.
Graph 1 Results of the National Referendum
Source: CNE (National Electorate Council for it acronym in Spanish)
In the graphs, question D (3) stated that: Do you agree that the Ecuadorian State should recognize international arbitration as a method for resolving disputes in investment, contractual, or commercial matters? The final result is that the 65% of the population decided that No was the right answer.
Sadly, this electorate decision means less foreign investment in a country that desperately seeks to create more jobs for people whom are currently in unemployment. The reason behind this outcome is that people think that big companies are bad and that it is not in their best interest people’s well being and prosperity.
The truth can not be far from this reasoning. The real reason why people fear big enterprises lays on three main factors: 1) The socialist propaganda from syndicates, the academy and interest groups; 2) The lack of a strong Rule of Law; and 3) Ecuador’s past bad experiences in international courts. Hence, it is not about understanding the prosperity that foreign investment may bring to an economy.
Continuing with this analysis, question E (4) , stated that: Do you agree with amending the Constitution of the Republic and reforming the Labor Code to allow for fixed-term and hourly employment contracts, when entered into for the first time between the same employer and worker, without affecting the acquired rights of the workers? The final result is that the 66% of the population decided that No was the right answer.
Once again, the national electorate decided that No was te right answer; and how ironic this is for Ecuadorians who migrate to the United States o Europe, where they are paid in hourly rates. But worse than that, it is that people may have been hired and paid hourly. Thus, creating a positive domino effect in the economy. (Hired people: paid people; paid people: people buying goods and services and most of all saving)
Common wisdom states that saying no is hard. However, the results in the National Referendum are not just bad news for the Noboa’s Administration, as the opposition triumphantly declares, at the end it is a terrible results for society and the nation’s economy. The consequences of this decisions will impact the nation’s economic growth due to the lack of incentives to foreign investment and labor laws.
At the end one may wonder that: saying No is hard; but in this case at what cost?
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