Analysis of Law on Economic Ef iciency and Job Creation in the Employment of Young People aged 18 yo 29 years

Abstract

The Organic Law of Economic Efficiency and Employment Generation in Ecuador aims to boost youth employment by offering fiscal incentives to companies hiring individuals under 29 years old. According to the Ministry of Labor, the law has increased youth hiring, yet it faces several limitations. While facilitating youth entry into the labor market, it has been criticized for encouraging the dismissal of older, more experienced workers who do not benefit from these incentives, thus creating job insecurity for long-term employees.

The law’s positive effects are mainly seen in urban areas like Guayas and Pichincha, where most new contracts have been registered. However, youth unemployment and labor informality persist in rural and less developed regions. Although the law contributes to reducing youth unemployment, its focus on fiscal incentives alone does not adequately address job stability or the inclusion of vulnerable groups. To enhance its impact, complementary policies such as professional training and entrepreneurship promotion programs, particularly in rural areas, are necessary. Additionally, mechanisms should be established to prevent the replacement of older workers with younger ones solely due to fiscal incentives.