Número 19 / ABRIL, 2023 (180-198)
LABOR CONTEXT IN ECUADOR IN THE 1930s: ACTIVE
ECONOMIC POPULATION, LEGAL CONTEXT AND
MINIMUM WAGES
CONTEXTO LABORAL EN ECUADOR EN LOS AÑOS
TREINTA: POBLACIÓN ECONOMICAMENTE ACTIVA,
CONTEXTO LEGAL Y SALARIO MÍNIMO
DOI:
Artículo de Revisión
Recibido: (28/03/2022)
Aceptado: (27/07/2022)
https://doi.org/10.37135/chk.002.19.11
Universidad Nacional de Chimborazo, Facultad de
Educación, Humanas y Tecnologías, Carrera de
Pedagogía de la Historia y las Ciencias Sociales,
Riobamba, Ecuador
cnaranjo@unach.edu.ec
Christian Paúl Naranjo Navas
Universidad Nacional de Chimborazo, Facultad de
Educación, Humanas y Tecnologías, Carrera de
Pedagogía de las Artes y Humanidades, Riobamba,
Ecuador
anavas@unach.edu.ec
Alegría Cumandá Navas Labanda
Christian Paúl Naranjo Navas - Alegría Cumandá Navas Labanda
CHAKIÑAN. Revista de Ciencias Sociales y Humanidades / ISSN 2550 - 6722 181
LABOR CONTEXT IN ECUADOR IN THE 1930s: ACTIVE
ECONOMIC POPULATION, LEGAL CONTEXT AND
MINIMUM WAGES
CONTEXTO LABORAL EN ECUADOR EN LOS AÑOS
TREINTA: POBLACIÓN ECONOMICAMENTE ACTIVA,
CONTEXTO LEGAL Y SALARIO MÍNIMO
The article carries out an analysis of the labor context in Ecuador during the 1930s
with the aim of contributing with new quantitative, legal and contextual information.
This information is important as they add three essential elements to understand the
work context: economically active population and purchasing power; legal context
on labor conditions; and, a brief review on the implementation of the minimum wage.
This analysis was carried out based on a historical-comparative and analytical method,
taking into account three groups of workers, namely: workers in the public and industrial
sector; workers in the interior and small industry; and, workers in rural sectors. Multiple
legal benets have been found for the rst group, such as compensation for eviction,
premature separation, maternity, disability, overtime worked, in addition to a minimum
wage dierentiated by zone and type of work. For the second group, the legal benets
are random, and the minimum wages paid are assumed to be daily wages and paid in
kind. For the third group, the legal benets are non-existent, as they live within their own
cultural conditions, which excludes them from the legalization of labor systems, their
salary compensations are in kind or in food exchange.
KEYWORDS: Ecuador, purchasing power, working conditions, minimum wage
El artículo realiza un análisis del contexto laboral en Ecuador durante la década 1930s
con el propósito de contribuir con nueva información cuantitativa, legal y contextual.
Esta información es importante en tanto añade tres elementos esenciales para entender
el contexto laboral: población económicamente activa y poder adquisitivo; contexto legal
sobre las condiciones laborales; y, una breve revisión sobre la implementación del salario
mínimo. Este análisis se realizó a partir del método histórico-comparativo y analítico,
tomando en cuenta tres grupos de trabajadores, a saber: trabajadores en el sector
público e industrial; trabajadores en el interior y pequeña industria; y, trabajadores
en sectores rurales. Se ha encontrado múltiples benecios legales para el primer grupo
como compensaciones por desalojo, por separación prematura, por maternidad, por
discapacidad, por horas extras laboradas, además de un salario mínimo diferenciado por
zonas y tipo de trabajo. Para el segundo grupo, los benecios legales son aleatorios, y los
salarios mínimos pagados se los asume como salarios diarios y pagos en especies. Para el
tercer grupo, los benecios legales son inexistentes en tanto viven dentro de condiciones
culturales propias, lo que les excluye de la legalización de sistemas laborales, sus
compensaciones salariales son en especie o en intercambio de alimentos.
PALABRAS CLAVE: Ecuador, poder adquisitivo, condiciones laborales, salario
mínimo
ABSTRACT
RESUMEN
LABOR CONTEXT IN ECUADOR IN THE 1930s: ACTIVE ECONOMIC POPULATION, LEGAL CONTEXT AND MINIMUM WAGES
Número 19 / ABRIL, 2023 (19-37) 182
INTRODUCTION
The 1930s was marked by the inuence of
political and economic events that transformed
the institutional structure of the country and
that, at the same time, behaved as the foundation
of a modernization that was not unique to the
Ecuadorian case, but that was introduced as part
of the institutional modernization models in Latin
America. On the other hand, the international
crisis had a signicant impact on the country’s
economic stability, especially the stability of the
export sectors. The Great Depression created
a context of deep political instability, in the
Ecuadorian case, within the 1930s, 12 people
were registered as head of the executive power
in less than 10 years.
The modernization of Ecuadorian institutions
came hand in hand with the visit of the Kemmerer
Mission, which advised the government on the
creation of the Central Bank of Ecuador, which
centralized the monetary issue and, together
with this institution, several control organisms
were created such as the Comptroller General
of the State and the Superintendency of Banks.
In addition, the gold standard was implemented
as the main monetary policy. A good part of the
countries of the Latin American region went
through similar processes, that is, the creation
of national banks, of control institutions, and the
restoration of the gold standard.
According to Eichengreen & Temin (2000), the
Great Depression produced two phenomena
on the prices of goods and products in those
countries that maintained the gold standard. First,
a deationary phenomenon due to the reduction
in the money supply (Drinot & Knight 2014).
Deation forced industries to reduce production
costs, be these from the reduction of wages or
from the reduction in the number of workers
(Arnaut 2010). This phenomenon stopped when
the countries eliminated the restrictions of the
gold standard, in the case of Ecuador it happened
in 1932. From then on, a second tendency was
visualized, this time inationary because the
countries found no legal restrictions for the
emission of new currency.
In this economic and political context, the
research proposes to analyze some of the most
important variables in relation to the working
conditions of workers in Ecuador during
the 1930s. On the one hand, the context of
purchasing power and the wages received by
workers will be analyzed, taking into account
three groups, namely: rst, a group of workers
who lived from barter and community survival
systems; second, a group of salaried farmers and
small business workers who received a daily
wage plus certain compensation in kind; third,
the group of workers found in the centralized
public sector and in the industrial sector.
On the other hand, the dierent legal bodies that
were approved in relation to the labor situation
will be described and analyzed. The analysis
will focus on the benets received by workers,
including compensation for eviction, premature
separation, maternity, disability, overtime
worked, in addition to prohibitions of hours and
days of work and prohibition of work for minors.
The analysis will also include a special section
on the implementation of minimum wages in
Ecuador as in some Latin American countries.
The implementation of changes in wages as
changes in the labor legal systems came along
with some populism governments, after the Great
Depression, many politicians saw the opportunity
to use it as a platform for their agendas: on the
one hand, this agenda involved some adaptation
of socialism; on the other hand, it involved some
adaptation of Keynesian economic models. In
all cases, populism was the main characteristic,
so there were the cases of Lázaro Cárdenas in
Mexico (1934-1940), Getulio Vargas in Brazil
(1930-1943), Juan Domingo Perón in Argentina
(1943-1955) (Zapata 2002). In Ecuador, the rst
populist government of Velasco Ibarra (1934-
1935).
In following decades, there is a clear change in
the highland hacienda: the elimination of the
Christian Paúl Naranjo Navas - Alegría Cumandá Navas Labanda
CHAKIÑAN. Revista de Ciencias Sociales y Humanidades / ISSN 2550 - 6722 183
Huasipungo system and the establishment
of salary relationships. Moving to the center
and north of Ecuador, there was an increasing
coexistence of haciendas and smallholdings
combining the business economy with the peasant
economy this due to agrarian transformations
that have converted the peasant from possessor
to owner, the landowner initiative: the patron-
peasant was replaced by the employer-worker
relation (Salamea 1980).
The transformation of farms and the expansion
of production in the sector of large farms in
several countries forces us to take into account
a path dierent in which the large farm is the
one that expands production. What makes this
requirement even stronger is the fact that the
expansive presence of large-scale exploitation
occurs even in countries that had carried out
reforms agrarian and even in cases of profound
transformations such as the Mexican and the
Bolivian (Murmis 1980).
METHODOLOGY
This revision article made usage of the historical-
comparative method and the historical-analytical
method. With the rst, certain similarities,
dierences and trends have been found in the
implementation of minimum wages in the Latin
American region. The most important trend was
the dierentiated implementation of minimum
wages based on geographical areas and types
of work. In relation to the historical-analytical
method, it was useful in the construction of legal,
economic and social contexts that shelter labor
relations in Ecuador during the studied decade.
In this way, quantitative and qualitative new data
has been presented and analyzed.
Although the methodology can be circumscribed
as part of Social History or Economic History,
the article was written within the guide of the
historical objectivity that can be found and
narrated in research, taking into account their
obvious limitations, and in line with the school
of thought of the well-recognized Leopold Von
Ranke as he saw History as the presentation of
facts, “to history has been given the function
of judging the past, of instructing men for the
prot of future years. The present attempt
does nor aspire to such a lofty undertaking. It
merely wants to show how it essentially was”
(Iggers 2011:86). Thus, the article will develop
rst within the economic context; then, within
the legal system; and, nally, in relation to the
minimum wage.
RESULTS AND DISCUSSION
During the decade studied the region experienced
the worst crisis of the XX Century, the Great
Depression. Although a variety of symptoms of
the crisis can be seen in the Ecuadorian economic
system, on the other hand, the GDP continued
to grow moderately between 1929 and 1934, at
an average of 1.5% (Morillo 1996:687), without
registering decrease in none of the years that the
crisis lasted.
This is one of the great dierences that we nd
with the Latin American region, whose GDP
will fall -16% in the same period (Mitchell
1993:762-764). Nonetheless, the impact in the
Ecuadorian economy was mainly registered in
the international commerce, which diminished
in 55% by 1932 (Naranjo 2021). Within this
context, the article develops three themes:
economically active population and purchasing
power; legal context on working conditions;
and, a brief review on the implementation of
the minimum wage in Ecuador and some Latin
American countries.
ECONOMICALLY ACTIVE
POPULATION AND PURCHASING
POWER
LABOR CONTEXT IN ECUADOR IN THE 1930s: ACTIVE ECONOMIC POPULATION, LEGAL CONTEXT AND MINIMUM WAGES
Número 19 / ABRIL, 2023 (19-37) 184
The data on the economic active population in
Ecuador during the 1930s are somewhat obscure
because there are no exact references to processes
and organized by the central government in
the form of national censuses. Thus, the data
presented are approximations based on local
projections. The National Economic Planning
and Coordination Board calculated that by 1962
32% of the population could be considered
economically active.
Given the total absence of ocial data, we have
chosen to take this rst estimate and extrapolate
it for the 1930s. By 1930, approximately 14%
of the population lived in urban centers, that is,
more than 20,000 inhabitants (Bethell 1998: 31).
Extrapolating these numbers, around 116,480
people worked in the urban economy, and
around 715,520 in the rural economy. De la Torre
(1993) estimates that in 1936, 55% of the Quito
population was marginally employed: 10.4%
were day laborers, 23.5% were independent
workers, and 21.1% domestic workers. Public
sector workers represented 16.6% in 1936
(Naranjo, 2017).
According to Linda Alexander Rodríguez
(1992), it is known that half of the population
was indigenous, who led a sedentary life, with
feeding processes based on grains and tubers,
they exchanged their tissues for cow’s milk,
goats or cows, for meat, poultry or sheep wool
(Banco Central del Ecuador 1940).
This part of the population lived in a labor context
that arose from the Huasipungo, a space of land
that was rented for its production that served as
a livelihood for families and communities. The
concertaje system worked in a common way
in rural sectors, especially in the Ecuadorian
highlands, generating the isolation of rural sectors
from the local and international market. This
part of the economically active population was
outside domestic consumption and commercial
exchange because they interchanged products
and were clients of the same products that they
cultivated or traded.
In the northern central Sierra, which includes
the provinces of Chimborazo, Tungurahua,
Cotopaxi, Pichincha and Imbabura, the hacienda
system was the base on textile and agricultural
production becoming the main source of income
for workers, and the main source of industrial
development. Creamer (2018) argues that in the
1920s, a textile boom developed which founded
the bases for the type of industry that was going
to grow in the region, the main representative
cases are the Haciendas in Otavalo and the
Valley of Los Chillos (Saint-Geours 1994).
The indigenous were the essential mass of the
peasantry, as an active part at the hacienda.
After the indigenous were the day laborers,
small owners and artisans. Then, the mestizos:
merchants, carriers, employees, urban artisans.
And nally, there are the whites of the city. In
1930, Indians were no longer considered the
same way than in 1875. With a certain level
of democratization of society, “a State more
coherent national, international ideological
movements and the birth of indigenism, the
Ecuadorian Indian ceases to be a simple illiterate
labor force” (Saint-Geours 1994: 168).
The other twenty-ve percent of the population
was made up of wage workers and farmers,
who were immersed in internal trade. The
remaining percentage of the economically
active population was made up of public sector
workers, merchants, industry owners, renters,
who actively participated in the local market.
This percentage of the population was also
related to the external sector, that is, they were
those who consumed imported goods and those
who produced export goods.
The purchasing power of the economically
active population also varied according to the
labor group. From the rst group, there is no
more information because the population was
involved in the exchange and commercialization
system under the barter system. Due to the
absence of primary data and the complexity
of making calculations based on commercial
exchange and not on the monetary value of a
job, it is impossible to calculate exact amounts.
In this sector, there is only a qualitative
assessment of the social and labor conditions
Christian Paúl Naranjo Navas - Alegría Cumandá Navas Labanda
CHAKIÑAN. Revista de Ciencias Sociales y Humanidades / ISSN 2550 - 6722 185
in which they lived during the decades studied.
This group is characterized by the production
and consumption of agricultural products such
as sugar, cotton, corn, rice, bananas, pineapples,
oranges, lemons, etc (Stevens 1940).
In the second group, the percentage of the
population that was made up of salaried workers
and farmers, we have little information, which
comes from primary sources from the center
of the country. According to salary data paid
in 1936 to baker’s assistants, they received
between 2-5 sucres daily (gure 1), which could
represent a sum of between 40 and 100 sucres
per month, which could include between 4
and 10 sucres more if weekends are taken into
account. The work in the large cattle ranches was
better paid, with a salary of around 75 sucres per
month in 1936. In addition, as the account book
shows (gure 2), the workers also received extra
payments in goods, be they in cattle, beef, sheep,
potatoes, corn, etc.
In this second group, primary information
from pensions can be added. Presidential
decrees from 1928 mentioned pensions from
66 to 143 sucres monthly for a primary teacher,
equivalent to the average received in the last
ve years. Furthermore, wages paid in Hacienda
Tungurahua in 1928, in the amount of 60 sucres
for doormen and stamp sellers (Ocial Gazette
N.604 1928), can give a clearer panorama of
the income situation of salaried workers and
farmers.
Primary source: Panadería la Vienesa 1936
Figure 1: Bakery Vienesa, Accounting books
LABOR CONTEXT IN ECUADOR IN THE 1930s: ACTIVE ECONOMIC POPULATION, LEGAL CONTEXT AND MINIMUM WAGES
Número 19 / ABRIL, 2023 (19-37) 186
In the third group, constructed from the
economically active population found in
the public sector, workers in industries and
merchants, the data from Naranjo (2017) showed
that the lowest-paid employees and workers had,
on average, an income of 91 sucres per month
within 1920s. However, these wages had fallen
sharply during the international crisis: the Great
Depression reduced unskilled wages by about
25 sucres from 1929 to 1935. As expected, this
group, which is directly involved with the local
market and with national transactions and trade,
they received a higher remuneration than the
other groups.
Based on the data, it can be seen that wages
uctuated in direct relation to the price index.
That is, until 1932, taking into account the
deationary phenomenon, real wages increased
because nominally they remained stable since
1929. After 1932, when policies related to the
gold standard are set aside, ination has a direct
impact on wages: real wages decreased while
employment increased due to the growth of the
money supply, conrming the Phillips curve
(Naranjo 2021). As can be seen in gure 3, the
growth of ination stops in 1937, with which
it can also be said that wages begin to stabilize
from the same year.
Primary Source: Hacienda Guachalá y Anexas 1936
Figure 2: Plantation Guachalá y Anexos, Accounting books
Christian Paúl Naranjo Navas - Alegría Cumandá Navas Labanda
CHAKIÑAN. Revista de Ciencias Sociales y Humanidades / ISSN 2550 - 6722 187
The purchasing power of the economically
active population of Ecuador can also be seen
from the dierentiation of groups. In the rst
group, the one that lived from the fruits of its
agricultural and livestock production, and from
the community exchange system, its purchasing
power remained stable despite the international
crisis because its commercial movement was
internal and did not depend on uctuations in
prices that occurred in the domestic market. This
sector of the population behaved as a cushion of
resistance during the international crisis because
their way of subsistence did not depend on
national or international trade.
In this way, it can be understood that, from 1929
to 1932, Ecuador grew an annual average of
0.6%. However, during the recovery period, this
part of the population became a heavy burden
because it did not generate more production:
after the impact of the international crisis, the
recovery process was very slow compared to the
rest of the Latin American region. From 1932 to
1939, Ecuador grew an annual average of 3.5%
while Latin America grew an average of 5%
(Naranjo 2017).
On the other hand, the second group, made
up of salaried workers and farmers, as well as
the third group, made up of public workers,
merchants, exporters and agricultural owners,
did see their purchasing power aected during
the Great Depression in both trends previously
described: a rise in purchasing power until 1932,
and then a steady decline until 1939. Wages
in 1937 are only comparable to 1928 wages,
meaning purchasing power did not grow for a
decade. According to Feiker (1931), Ecuador,
with a population of around two million people,
had a low purchasing power, similar to that of a
Nordic country of two hundred thousand people.
LEGAL CONTEXT ON LABOR
CONDITIONS
The Ecuadorian labor context is studied from
three perspectives: rst, the current legal system
for the decade; second, the implementation
of social security; third, the analysis of the
minimum wage. The labor system allows the
construction of a clear vision of the environment
in which these activities were carried out; on the
other hand, the study of social security show the
rst legal benets that workers obtained; nally,
the analysis of the minimum wage allow to
visualize how this element was the product of an
international wave towards the approval of legal
minimums for subsistence.
In relation to the legal system in the labor issue,
Source: Rodríguez 1992:207
Figure 3: Price index, 1921-1939
LABOR CONTEXT IN ECUADOR IN THE 1930s: ACTIVE ECONOMIC POPULATION, LEGAL CONTEXT AND MINIMUM WAGES
Número 19 / ABRIL, 2023 (19-37) 188
in the thirties several provisions can be found
to the conditions of the worker, the rst was
congured in the Penal Code of 1906. This code
was in force throughout the decade of the thirties,
with prison for those who decreased the wages
(art. 298). A few years later, on September 11,
1916, the hours and days of work were legally
established, “by which the hours and days of
work are set, in eight the rst and six the second,
per week” (Albornoz 1931:52). In 1921, the Law
on pecuniary compensation for the worker or day
laborer due to work accidents was published,
on July 13, 1925; the Social Welfare and Labor
Section was created on July 13, 1926.
At the end of the twenties, several legal bodies
were created on the labor:
Table 1: Legal bodies on work
Source: Adapted from Albornoz 1931:58-65
• Individual Employment Contract Law:
this legal body did not have a clear
concept of the meaning of employee
and employer; the legal events for the
eviction were established; and, if the
forms of compensation for an untimely
or premature dismissal are published.
• Law of Maximum Duration of the
Weekly Day of Work and Rest: in this
legal body, work eight hours a day
and six days a week was established
as mandatory for private or public
employees; public workers have rest
days that are established by decree in the
norm, Christmas, or Civic Day; payment
for overtime worked was established;
and the working day is divided into two,
with a break in between.
• Law on the Work of Women and
Children, and Protection of Maternity:
it strictly prohibited the work of minors
under 14 years of age; employers
are obliged to formalize the primary
education of those workers under 18
years of age; for workers under 18
years of age, the maximum time for
their working day was eight hours per
week; In relation to women, work on
night shifts was prohibited, in addition,
an employer subsidy was required for
six weeks, three weeks before and three
weeks after childbirth.
• Eviction Law: it legalized the penalties
for untimely or premature dismissals, in
addition to establishing the requirements
for evictions and compensation.
• Law of Civil Responsibility for Labor
Compensation: in addition to the eviction
law, which, once the requirements for
compensation and evictions have been
regularized, the law of civil responsibility
for labor compensation was enacted. In
this legal body, compensation was tied to
the seriousness of the case due to a work
accident (Albornoz 1931).
• Law of Responsibility for Work
Accidents and Procedures: the legal body
was published in 1928, it is made up of
two parts: rst, the responsibilities of the
worker in accidents and work-related
illnesses; second, the responsibilities
of employers in relation to the partial
disability of their employees due to labor
problems, “the victim has the right to be
compensated with an amount equivalent
to two years’ salary” (Guerrero 1937:22)
Although this legal context can give a clear idea
of how the centralized public sector worked, it
cannot say the same about the private sector,
the informal sector, and even the public sector
in provinces other than Pichincha and Guayas,
the most important provinces politically and
economically.
We have not found reports that clearly show
the application of this body of labor laws in
the sectors described, this is logical or, at least,
predictable, due to the high rate of informality in
the private sector and because the functionality
of the public sector, apart from Guayaquil and
Christian Paúl Naranjo Navas - Alegría Cumandá Navas Labanda
CHAKIÑAN. Revista de Ciencias Sociales y Humanidades / ISSN 2550 - 6722 189
Quito, it was extremely weak. Despite this, it is
highly likely that this legal body on labor has
been applied in the centralized public sector and
even in a certain part of the industrial sector;
however, it is very probably that it was not
applied in most of the informal sector.
In the case of the peasants and part of the
indigenous sector who lived inside a huasipungo
system, the context of the labor system did not
correspond to the reality that was lived. In many
cases, this group of workers were “landless,
homeless, without belongings of any kind, they
commit, sometimes for life, for a minimum
amount whose debt is never extinguished”
(Albornoz 1931:47).
The adaptation to this labor system came
gradually in later decades as the nation’s
economy improved and the companies grew over
time and multiplied in number. Social security
was founded in Ecuador as a state order regime
in 1928, from the “Pension Fund, which mainly
established the benets of the retirement, civil
and mortuary fund in favor of civil and military
ocials” (Instituto Nacional de Previsión
1939:5).
This Pension Fund included several benets for
workers such as reimbursement for contributions,
income for disability and work accidents, work-
related illnesses, medical assistance, retirement
systems starting at age 75 or with a total of
20 years of contributions, “if the worker is
unemployed or withdraws from the Fund for
any other legal reason, their contributions are
returned intact” (Instituto Nacional de Previsión
1939:7).
On July 31, 1936, the strike law was published,
which contemplated the right to stoppage by
workers after all means of institutional conict
resolution had been exhausted,
… they must comply with the requests of
the employer, to which 51% of the factory
workers have to adhere... and they can
only declare a strike if, three days after
receiving the aforementioned declaration,
the employer remains silent or responds
negatively. (Pan American Union 1937:25)
A BRIEF REVIEW OF THE
MINIMUM WAGE
Within the analysis of labor conditions, it is
essential to refer to the establishment of the
minimum wage in Ecuador and in the Latin
American region because it arised as part of a
regional change towards the protection of certain
labor rights and the establishment of minimum
wages necessary for subsistence. In the case of
Ecuador, the minimum wage was established as
a legal norm in 1936,
… another important achievement is
the relative minimum wage. The lack of
legal xation of the same, was a vacuum
that had to be lled urgently... after long
investigations it was possible to indicate
the minimum wage in one sucre per day
in the mountains, and two, on the coast.
(Guerrero 1937:22-23)
This regulation, like the previous ones described,
did not guarantee a minimum payment for the
entire working population. As was logical, the
minimum wage was in force in the centralized
public sector and in a certain part of the industrial
sectors; however, its application was dispersed
among the other two sectors of the economically
active society, that is, the salaried agricultural
sectors and the indigenous and peasant sectors
that lived within their local market. The case of
the peasants,
… many of them do not receive any salary
in cash, rewarding their services with the
land they occupy; others, according to the
relationships and agreements of the rustic
farms, in the mountains, receive salaries
that uctuate from twenty to fty cents,
and in warm regions, from eighty cents to
two and three sucres. (Moreno 1992:73)
As part of the labor situation of workers in the
thirties, it is relevant to analyze the establishment
of the minimum wage as the state and legal
recognition of minimum lower barriers necessary
for the support of a person. In the specic case
LABOR CONTEXT IN ECUADOR IN THE 1930s: ACTIVE ECONOMIC POPULATION, LEGAL CONTEXT AND MINIMUM WAGES
Número 19 / ABRIL, 2023 (19-37) 190
of Ecuador, the minimum wage was legalized
taking into account the dierence between
regions and labor groups, thus, for example,
25 sucres was imposed for jobs in the interior,
50 sucres for jobs on the coast, 37.5 sucres for
jobs in the capital. Next, the implementation
of regulations regarding the minimum wage in
Latin America will be reviewed.
MINIMUM WAGE IN LATIN
AMERICA
The countries that are reviewed and analyzed
below went through their own local and national
political contexts, however, all point to the
creation of minimum wage barriers that allow
workers to have an income as a minimum
necessary sustenance. For this, the situation
of workers in the public sector, geographical
dierences and transportation problems in
specic localities, labor demand in private
sectors, and the possibility of employers making
these payments were taken into account. Thus,
it can be understood how several countries
legalized dierent types of minimum wages
depending on the geographical position, the
exchange rate and the type of work.
The Latin American region was witnessing, in the
1930s, a wave of implementation of minimum
wages, either through legal bodies or through
constitutional changes. In the constitutions of
Brazil, Mexico, Uruguay and Peru were clear
the need to establish constant minimum wages
(Owen 1938). The rest of the countries in the
region welcomed them over time and within
their own political context.
The legal changes around the implementation of
minimum wages came along with some populism
governments which encountered the economic
crisis of 1929 as the opportunity to claim the guilt
on the northern hegemon. As many governments
of that period sought the electoral support of the
popular masses, the political leaders oered to
establish benets for the workers and employees
such as Lázaro Cárdenas in Mexico (1934-
1940), Getulio Vargas in Brazil (1930-1943),
Juan Domingo Perón in Argentina (1943-1955)
(Zapata 2002). In the case of Ecuador, the
changes where produced within the context of
the Julian Revolution (1925-1932), and the
entrance of the rst populist government of
Velasco Ibarra (1934-1935).
Table 2: Local currencies into USD
Source: Dirección Nacional de Estadística 1944:30
Christian Paúl Naranjo Navas - Alegría Cumandá Navas Labanda
CHAKIÑAN. Revista de Ciencias Sociales y Humanidades / ISSN 2550 - 6722 191
In the cases of Ecuador, Cuba, Costa Rica, Chile,
Brazil and Argentina, multiple commissions
were created to study the dierent possible
minimums that could be established. With this
purpose, table 2 has been used to present the
minimum wages in USD. According to Owen’s
report (1938), the legal processes that occurred
in Argentina, Bolivia, Brazil, Chile and Ecuador
will be analyzed at the Table 2.
ARGENTINA
In the case of Argentina, in 1929, Law 11.544
was passed, which regulated the length of the
working day, it was established 8 hours per
day or 48 hours per week. In 1933, Law 11.723
was passed, compensation and paid vacations
were some of the most important amendments
for workers in the sector commercial. In 1934
Law 11.933 was passed through of which the
compulsory maternity leave was established
from the 30 days prior to the birth, and up to
45 days after (Cámara Argentina de Comercio y
Servicios 2018).
The rst sector in which the minimum wage was
imposed and legalized was in the public sector.
Public sector workers, through a legal decree
on September 28, 1934, were divided into two
geographical zones, each of these zones were
accompanied by a letter, zone A and zone E:
zone A: 160 pesos monthly or 6,40 pesos daily;
zone E: 90 pesos monthly or 3,60 pesos daily.
Minimum wages for the private sector were
implemented on April 15, 1935 for the textile
industry and on June 9, 1937 for footwear
companies.
Within the textile industry, wages are also
dierentiated between those who work in
wool raincoats and those who work in shorts.
The former with a minimum of 11 pesos, and
the latter with a minimum of 12 pesos. The
masons’ strike of 1936 (Owen 1938) caused the
authorities to publish the resolution of March
24, which formalized the minimum wage for
foremen (6.40 pesos), foreman assistants (5.2
pesos), and pawns (4.5 pesos).
The minimum wages in Argentina have been
converted to their corresponding value in US
dollars in order to have a common measurement
for comparison with Latin American countries.
As can be seen in tables 2 and 3, the minimum
wages in US dollars vary depending on the
industrial sector, with the best paid being those
Table 3: Minimum wages in Argentina in USD, 1935-1937
Source: Autor´s creation from Owen 1938:325.
LABOR CONTEXT IN ECUADOR IN THE 1930s: ACTIVE ECONOMIC POPULATION, LEGAL CONTEXT AND MINIMUM WAGES
Número 19 / ABRIL, 2023 (19-37) 192
workers who were in the trench coat textile
industry, while the workers with the lowest
wages were those who the public sector of zone
E.
Although the jobs that paid the least were those
of short underpants, the workers were not only
dedicated to the manufacture of underpants
but also to other elements of the textile sector.
For this reason, they were not identied as the
sector with the lowest income. Finally, although
working days were ocially considered based
on 25 days, the days worked per month varied
according to the productive sector. In 1945, and
through the Decree 1740, the Secretary of Labor
and Forecast Juan Domingo Perón generalized
the right to enjoy paid vacations workers from
all sectors.
BOLIVIA
In the case of Bolivia, on June 27, 1933, the
decree was published by means of which the
increase in wages was legalized in both the public
and private sectors. These salaries increased
percentage-wise, depending on the productive
sectors and monthly income: those workers
with a salary higher than 1,201 bolivianos per
month, the salary increased by 780 bolivianos;
those workers with less than 100 bolivianos
per month, the salary increased by 120%; those
workers with a daily salary of one boliviano, the
increase was 120%; and, those domestic workers
who received up to ve bolivianos per day, the
increase was 80% (Owen 1938).
Four years later, in 1937, the minimum wage
for the commercial and industrial sectors was
legalized. The workers received a minimum wage
of 140 bolivianos, without gender identication;
for those workers considered older adults,
their minimum wage were ve bolivianos a
day; while, for minor workers, between 14-18
years old, their salary were three bolivianos per
day. This regulation excluded workers in the
agricultural sector with a total of assets that did
not exceed 50,000 bolivianos.
As can be seen in tables 4 and 5, the minimum
wage adapted to US dollars is divided into three
sectors: the rst, the industrial commercial
sector, with a minimum wage of 72.53; second,
workers considered as older adults, with a
monthly minimum wage of 64.76; and, the third
group, minor workers between 14-18 years old,
with a minimum wage of 38.85.
Table 4: Minimum wages in Bolivia in USD,
1937
Source: Autor´s creation from Owen 1938:326
BRAZIL
The minimum wage was established in a process
of negotiations between 1934 and 1937, during
the presidency of Getúlio Vargas (1930-1945).
The Federative Republic of Brazil (1934), in the
Constitution, sanctioned the minimum wage as
remuneration “capable of satisfying, according
to the conditions of each region, the normal
needs of the worker” (art. 121).
On January 13, 1936, a decree was published by
means of which there was a special treatment
for the salary of federal civil personnel, which
was included in the law published on January
13, 1936. Those workers with a salary of less
than 150 milreis, increased to 200 milreis;
workers with an income between 150 and 1,500
milreis, their salaries increased by 40% up to
500 milreis, 20% per penny up to 1,000 milreis,
and 10% per penny up to 1,500 milreis. For that
group of workers with an income between 1,500
and 2,500 milreis, the increase was 300 milreis.
Workers with an income between 2,500 and
Christian Paúl Naranjo Navas - Alegría Cumandá Navas Labanda
CHAKIÑAN. Revista de Ciencias Sociales y Humanidades / ISSN 2550 - 6722 193
3,000 received an increase of 250 milreis. And,
workers with income between 3,000 and 4,000
received an increase of 200 milreis.
From the Constitution, approved on November
10th, 1937, Brazil accepted the prevailing need
for a “minimum wage capable of satisfying,
according to each region, the normal needs of
work” (Owen 1938:326). For this purpose,
various commissions were organized to raise
minimum wages based on geographic division.
These dierentiated salaries were later approved
through an executive decree.
In all cases, it was accepted that underage
workers received a salary corresponding to half
the income of an adult; those jobs that were
carried out in insane conditions were entitled to a
salary and a half. In addition, all work performed
with an income below the minimum wage was
canceled and the employer was required to pay
the dierence for the time worked.
As can be seen in tables 6 and 7, in 1936 the
minimum wage was established according to
previous earnings. The lowest minimum wage
was $17.50, and the highest minimum wage was
$278.40.
Table 5: Minimum Wages in Brazil in USD,
1936
Source: Autor´s creation from Owen 1938:326
CHILE
In the case of Chile, the labor code was approved
on May 13, 1931, through which minimum
wages were regulated based on negotiations
carried out between commissions. A commission
made up of three representatives of the group
of workers; and, another commission made
up of three representatives of the business and
industrial sectors. These commissions would
regulate the condition of the minimum wage
and stipulate the resolution of conicts with the
General Labor Inspector (Vergara 2014).
One of the industries that received dierential
treatment was the nitrate industry. The wages
for this productive sector were published on
January 8, 1934: those workers who remained in
single marital status received a minimum wage
of 10 pesos per day; for those workers who were
married or were heads of family, they received
15 pesos per day; and, those workers who were
older adults, had a disability or were minors,
their salary was calculated at the rate of 50% of
the salary of a single worker.
The Superior Labor Council began to discuss a
proposal for a bill on the minimum wage, which
was approved in March 1935 to be presented to
the national congress. The bill contemplated a
minimum daily income that should not be less
than two-thirds nor more than three-fourths of
the normal or currently paid salary in each area
of the country.
The government of President Arturo Alessandri
(1932-1938), “by decree no. 1009 of October
11, 1935, appointed a commission to study
the conditions of application of the minimum
wage and propose legal measures that would
substantially improve the income of workers
through the family wage” (Yáñez 2019:12). This
commission proposed a living and family wage
for dierent areas of the country, which should
meet the basic needs of an entire year, especially
an intake of 3,000 calories per day for each
worker. The result was a salary of 10.50 pesos in
Zone I, and 8.03 in Zone V.
A few years later, in 1937, the salary was
legalized for the entire private sector. This time
the salary was divided according to geographical
areas: 300, 350, and 400 pesos per month. In
the case of the municipality of Santiago, the
minimums were established at 12 pesos per day
for temporary workers and 13 pesos for the group
of permanent workers. As can be seen in tables 8
and 9, the salary in US dollars uctuated between
LABOR CONTEXT IN ECUADOR IN THE 1930s: ACTIVE ECONOMIC POPULATION, LEGAL CONTEXT AND MINIMUM WAGES
Número 19 / ABRIL, 2023 (19-37) 194
4.24 and 15.72, while the lower limit was 8 for
the group of workers made up of minors, older
adults and workers with disabilities.
ECUADOR
In the case of Ecuador, conversations on
the establishment of a legal minimum wage
happened during the Constitution of 1929.
Nonetheless, the wording did not entail an exact
quantity, article 151 only mentioned that the
minimum wage must be based on costs of living
and the regional climate conditions,
The law will set the maximum working
day and the way to determine the minimum
wages, in relation, especially, to the cost of
subsistence and to the conditions and needs
of the various regions of the country. It will
also set the mandatory weekly rest and
establish social security. (art. 151.18)
The minimum salary was legalized in 1936,
after a series of labor problems and political
agreements. It should be taken into account that
as of 1932 the stability of Ecuadorian politics
was very weak, with around 12 people as
representatives of the executive power until 1940.
In 1934 occurred one of the most important labor
conicts of the decade, the paralysis of the La
Internacional factory, one of the most important
textile industries in the country. According to
the Ministry of Government and Social Security,
in its Report to the Nation, it mentions that one
of the main requests of the leaders of the strike
was “that the minimum wage of 1.50 sucres be
established in eight hours of work” (Baquerizo
1934:74).
In the report, the Minister of Government and
Social Security, Mr. Rodolfo Baquerizo Moreno,
recommended that in order to put into practice
the desire to set salaries, “it was convenient for
the Honorable Congress to issue a Special Law
on the individual, prior to the in-depth study of
the various zones and customs of the country”
(Baquerizo 1934:74).
In the Senate, on November 26, 1934, the
denitive draft of the Minimum Wage Law was
achieved. These results indicate that the process
of elaborating the legislation on the minimum
wage was truncated. No progress was made in
the 1934-1935 juncture towards the nal phase
of enactment of the law, “the fact that wage xes
responded to agreements between the parties
until 1936 reected a legal vacuum linked to
the weak capacity to elaborate wage legislation
for the industrial sector during the politically
unstable period from 1931 to 1935” (Creamer
2018: 36).
Table 6: Minimum wage in Chile in USD, 1934-1937
Source: autor´s creation from Owen 1938:327
Christian Paúl Naranjo Navas - Alegría Cumandá Navas Labanda
CHAKIÑAN. Revista de Ciencias Sociales y Humanidades / ISSN 2550 - 6722 195
Thus, after several months of political instability,
labor pressures, and legislative agreements, in
1936 the Organic Labor Law was published,
establishing the minimum wages in the country
(Registro Ocial No. 205, 1936). In this it
responded to the agreements that are reached
between the interested sectors, to say: the sector
of the workers, the industrialists, and the central
government.
The legal body divided the minimum wage into
two parts, one wage for the manual worker,
and another wage for the agricultural worker.
In 1937, on February 4, in an executive decree
ordered by President Federico Páez, minimum
wages for agricultural workers and private
employees were established.
In the case of the manual worker, the minimum
wage was 2 sucres per day on the Coast and 1
sucre per day in the Sierra. The capital, Quito,
received dierentiated treatment, the worker
received a salary of 1.5 sucres. In the case of the
agricultural worker, the minimum payment was
also dierentiated.
Workers on the Coast earned 1.2 sucres, while
workers in the Sierra received 0.60 sucres. In
the case of workers under 18 years of age, and
women, whether in the manual sector or in the
agricultural sector, the minimum wage was
calculated at a rate of 2/3 of the established one.
The legal body did not describe the salary of
domestic workers (Pan American Union 1937).
As can be seen in table 7, the minimum wages
were divided into sectors and geographical
areas, namely: manual workers and agricultural
workers; in the Sierra, on the Coast or in the
capital (Quito). Thus, the salary could uctuate
from USD 1.17, in the case of agricultural
workers in the Sierra, to USD 4.77, in the case
of manual workers on the Coast.
Thus, in the case of Ecuador, the labor sectors
could receive from 25 sucres per month in the
Sierra to 50 sucres on the coast, and 37.5 sucres
in Quito. In the agricultural sector, the worker
with the lowest salary received 15 sucres a
month in the Sierra and 30 sucres in the Coast.
CONCLUSIONS
The decade of 1930 involved a two-period
process: rst, the one that receives the impact
of the Great Depression; second, the one that
presents a slow recovery. The rst is characterized
by the implementation of monetary instruments
such as the gold standard and the centralization
of monetary emission through the Central Bank
of Ecuador.
The second is characterized by the growth of
monetary emission, the growth of ination
and the growth in political instability. This
instability opened the doors for the entrance
of populists’ governments, such is the case of
Velasco Ibarra, not being the only one in the
Table 7: Minimum wage in Ecuador in USD, 1936-1937
Source: Autor´s from Pan American Union 1937: 416
LABOR CONTEXT IN ECUADOR IN THE 1930s: ACTIVE ECONOMIC POPULATION, LEGAL CONTEXT AND MINIMUM WAGES
Número 19 / ABRIL, 2023 (19-37) 196
region, but incorporated with the governments
of Gertulio Vargas in Brazil, Perón in Argentina
and Cárdenas in México.
Within this context, the article reviews three
important aspects: the economic active
population, the legal system on labor; and the
minimum wages. In relations to the economic
active population, it can be divided into three
groups: those who live in a barter system; those
who work in Haciendas, are wage workers or
farmers; and, those who are part of the worker in
industries, merchants or part of the public sector.
The rst group has little information on
labor, nonetheless, the article shows that it is
characterized by the production and consumption
of agricultural products such as sugar, cotton,
corn, rice, bananas, pineapples, oranges, lemons,
etc. In the second group, the salary data paid in
Haciendas or Bakeries is 2-5 sucres daily. In the
third group, the salaries varied from unskilled to
skilled workers.
In relation to the legal system, among the benets
that were implemented within the decade are
the compensation for eviction, for premature
separation, for maternity, for disability, for
overtime worked, in addition to prohibitions of
hours and days of work and prohibition of work
for minors.
As has been argued in the article, the applicability
of these legal bodies can be presumed in the
labor sectors of the centralized public sector.
In other words, a complete or almost complete
application of labor legal systems can be
presumed in those workers who belonged to the
public sector and those workers in the largest
industrial sectors of the country. No reports
or reports have been found that analyzed the
labor situation from the application of the
approved legal systems in the other sectors of
the population. This is understandable due to
the informal labor context and because a high
portion of the economically active population
lived in barter systems or in labor contexts
whose salaries included payment in kind.
In relation to the minimum wage, in the case
of Ecuador, while in the Central Sierra of the
country the wage was one sucres per day, the
minimum wage for the Sierra was 25 sucres
and for the Coast 50 sucres. These data cannot
be generalized to all regions of the country;
however, they give us a brief and contextual
appreciation of the employment situation.
In relation to the Latin American region, two
clear trends can be observed. First, a trend of
approval of minimum wages in the 1920s and
1930s. Second, there is a tendency to dierentiate
minimum wages according to geographical
areas, the age of the workers, and their family or
physical situation, that is, dierentiated wages
for people with disabilities, and dierentiated
wages for married women.
DECLARACIÓN DE CONFLICTOS DE
INTERESES: Los autores declaran no tener
conictos de interés
DECLARACIÓN DE CONTRIBUCIÓN DE
LOS AUTORES: Christian Paúl Naranjo Navas
(50%) y Alegría Cumandá Navas Labanda
(50%).
REFERENCIAS BIBLIOGRÁFICAS
Albornoz, M. (1931). Informe del Ministro de
Gobierno y Previsión Social. Quito,
Ecuador: Ministerio de Gobierno y
Previsión Social.
Arnaut, J. (2010). Understanding the Latin
American Gap during the era of Import
Substitution. Montevideo, Uruguay:
Southern Hemisphere Economic History
Summer School.
Banco Central del Ecuador. (1940). Medio
Circulante, No. 150-151. Quito, Ecuador:
Banco Central del Ecuador.
Baquerizo, R. (1934). Informe a la Nación.
Quito, Ecuador: Ministerio de Gobierno
Christian Paúl Naranjo Navas - Alegría Cumandá Navas Labanda
CHAKIÑAN. Revista de Ciencias Sociales y Humanidades / ISSN 2550 - 6722 197
y Previsión Social.
Bethell, L. (1998). Latin America: Economy
and Society Since 1930. Cambridge:
Cambridge University Press.
Cámara Argentina de Comercio y Servicios.
(2018). Historia del derecho laboral
argentino. Argentina: Unidad de Estudios
y Proyectos Especiales.
Constitución Política del Ecuador. (1929).
Quito, Ecuador.
Creamer, C. (2018). El salario mínimo en
la industria ecuatoriana. Debates
precursores entre 1934-1935. Quito,
Ecuador: Universidad Andina Simón
Bolívar.
De la Torre, C. (1993). La Seducción Velasquista.
Quito, Ecuador: Libri Mundi.
Dirección Nacional de Estadística. (1944).
Ecuador en Cifras 1938-1942. Quito,
Ecuador: Imprenta del Ministerio de
Hacienda.
Drinot, P. & Knight, A. (2014). The Great
Depression in Latin America. Durham,
United States of America: Duke
University Press.
Eichengreen, B. & Temin, P. (2000). The Gold
Standard and the Great Depression.
Contemporary European History,
9(2), 183-207. https://www.jstor.org/
stable/20081742
Feiker, F. (1931). Economic and Financial
Conditions in Ecuador. Washington,
United States: U.S. department of
Commerce, Bureau of Foreign and
Domestic Commerce.
Guerrero, V. (1937). Informe que el Sr. Teniente
Coronel S. Virgilio Guerrero presenta a la
H. Asamblea Nacional. Quito, Ecuador:
Ministerio de Previsión Social, Trabajo,
Agricultura, Colonización e Industrias.
Hacienda Guachalá y Anexas. (1936). Cuenta de
Caja. Cayambe.
Iggers, G. (2011). The Theory and Practice
of History. New York, United States:
Routledge Taylor & Francis Group.
https://www.routledge.com/The-Theory-
and-Practice-of-History-Edited-with-an-
introduction-by-Georg/Ranke-Iggers/p/
book/9780415780339
Instituto Nacional de Previsión. (1939).
Antecedentes del Seguro Social- Boletín
de informaciones y de estudios sociales
y económicos. Quito, Ecuador: Instituto
Nacional de Previsión.
Mitchell, B. (1993). International Historical
Statistics. The Americas. New York,
United States: Stockton Press.
Moreno, M. (1992). Economías y sociedades de
plantaciones en el Caribe español, 1860-
1930. En L. Bethell, América Latina:
economía y sociedad, 1870-1930.
Barcelona, España: Editorial Crítica,
163-199.
Morillo, J. (1996). Economía monetaria del
Ecuador. Quito, Ecuador: Imprenta
Mariscal.
Murmis, M. (1980). El agro serrano y la vía
prusiana de desarrollo capitalista. En
L. Carrión & G. Abadortiz, Ecuador:
cambios en el agro serrano. Quito,
Ecuador: CEPLAES.
Naranjo, C. P. (2017). Evolución de salarios
reales en Ecuador durante la Gran
Depresión, 1927-1937. Revista de
Historia Económica/ Journal of
Iberian and Latin American Economic
History, 36(2), 1-37. DOI:10.1017/
S0212610917000131
Naranjo, C. P. (2021). Considering
unemployment in Ecuador during the
Great Depression, 1928-1935. Revista
Historia Autónoma, (18), 109-127. http://
dx.doi.org/10.15366/rha2021.18.006
Ocial Gazette N. 604. (1928). Quito, Ecuador:
29th March.
Owen, E. (1938). Minimum Wage Legislation in
LABOR CONTEXT IN ECUADOR IN THE 1930s: ACTIVE ECONOMIC POPULATION, LEGAL CONTEXT AND MINIMUM WAGES
Número 19 / ABRIL, 2023 (19-37) 198
Latin America. Washington D.C., United
States: Bureu of Labor Statistics, Bulletin
of the Pan American Union.
Pan American Union. (1937). Minimum Wage
Legislation in Ecuador, Bulletin of the
Pan American Union, LXXI. Washington
D. C., United States: International Bureau
of the American Republics.
Panadería la Vienesa. (1936). Caja. Riobamba.
Registro Ocial N.205. (30 de junio de 1936).
Decreto Ejecutivo. Quito, Ecuador:
Imprenta Nacional.
Rodríguez, L. A. (1992). Las Finanzas Públicas
en el Ecuador (1830-1940). Quito,
Ecuador: Banco Central del Ecuador.
Saint-Geours, Y. (1994). La Sierra centro y norte
(1830-1925). En J. Maigushca, Historia
y región en el Ecuador (1839-1930).
Quito, Ecuador: Corporación Editora
Nacional.
Salamea, L. (1980). La transformación de la
hacienda y los cambios en la condición
campesina. En L. Carrión & G. Abadortiz,
Ecuador: cambios en el agro serrano.
Quito, Ecuador: FLACSO Ecuador.
Stevens, R. B. (1940): Commercial Policies
and Trade Relations of Individual Latin
American Countries. En R. B. Stevens,
The Foreign Trade of Latin America
(Vols. Section 6.- Ecuador, 2-40).
Washington D.C., The United States:
United States Tari Commission.
The Federative Republic of Brazil/República
Federativa de Brasil. (1934). Constitución
Política.
Vergara, A. (2014). Chilean Workers and the
Great Depression, 1930-1938. En P.
Drinot & A. Knight (Eds.), The Great
Depression in Latin America (pp. 51-
80). Durhan, United States of America:
Duke University Press. https://www.
dukeupress.edu/the-great-depression-in-
latin-america
Yáñez, J. (2019). Cuando los médicos hablaron de
economía: familia, salario y alimentación
en Chile (1930-1950). América Latina
en la historia económica, 26(2).
Zapata, F. (2002). Salarios mínimos y empleo en
Argentina, Chile y México. Papeles de
población, 8(32), 121-138.
