Spanish government may maintain ERTE furlough scheme until end of year

Labor Minister Yolanda Díaz raised the possibility on Wednesday of extending Spain’s government furlough scheme, known as ERTE, until the end of the year in sectors where it is most needed. An ERTE allows companies to temporarily send workers home or reduce their working hours, and readmit them on their previous conditions after a certain amount of time. Around three million people in Spain are currently on an ERTE due to the coronavirus crisis, but this measure is set to expire on June 30.

“Once the work of the [ERTE] intersectional commission is completed, we will have a road map to know what sectors need this measure beyond June 30,” said Díaz in an interview with Spain’s state radio broadcaster, RNE. “I hope to have this provision to extend ERTEs to sectors that need it as soon as possible.”

We are working not only for social protection but also to guarantee employment, which is the main problem Spain will have after the health crisis

Labor Minister Yolanda Díaz

Social Security Minister José Luis Escrivá also said that he was “open” to extending the scheme. “It seems clear that everything related to the hospitality industry, especially hotels, is going to take longer to recover [from the coronavirus crisis],” he said during an interview on Spanish television channel Antena 3 on Wednesday. “But we have to go into detail, focus it as much as possible so that it makes a much more efficient use of public resources.” Half of all workers currently on an ERTE are from the tourism sector.

According to Díaz, the furloughing scheme has protected Spain from “massive” job losses during the coronavirus crisis. Indeed, new figures released this week showed that the initiative has shored up the labor market, with employment growing in May.

Díaz described the ERTE program as a “social shock absorber” that has saved the jobs of more than three million workers in Spain and more than 10 million and eight million workers in Germany and Italy, respectively. Neither of these two countries, she said, were even posing the question of how many of these ERTEs will end in permanent layoffs. “These types of questions sadden me [...] The company has a commitment to maintain employment for six months,” she said, adding that 400,000 furloughed workers in Spain have already gone back to their jobs.

“We are working not only for social protection but also to guarantee employment, which is the main problem Spain will have after the health crisis,” said Díaz. Asked about the sustainability of the unemployment aid, which cost the government €5.1 billion in April, Díaz replied that “what would not be sustainable” would be leaving the unemployed without support.

“Workers [pay into the Social Security system] to have unemployment protection and of course it is sustainable to deploy intense protection measures. [...] No one in Europe questions whether it is sustainable or not. We have no doubt that this is what has to be done when workers need it,” said Díaz.

Labor reform

Díaz also spoke of the “imperative” need to change labor laws in Spain, which “have made the labor market more precarious” and led to more temporary contracts, she said. In 2012, when it was in power, the conservative Popular Party (PP) introduced a labor reform that, among other things, gave companies in Spain more flexibility to sack employees.

According to the minister, the economic fallout from the coronavirus crisis will hit Spain especially hard because of these weaknesses. Last month, the Spanish government signed a deal with the Basque radical left party EH Bildu to completely overturn the legislation, a decision that angered Spain’s largest employers association, the CEOE, and sparked widespread condemnation among the political opposition.

Díaz said on Wednesday that once the coronavirus health crisis has eased, the government will resume talks with business associations and unions about how to change the 2012 labor reform. The minister also said that the government is working on new laws to regularize homeworking and protect workers on digital platforms, including delivery service apps such as Uber Eats.

English version by Melissa Kitson.