Spain’s ERTE furlough scheme is extended to September 30

The Spanish government has approved a new extension to its “ERTE” job retention scheme, which was implemented last year to offset the economic effects of the coronavirus pandemic. Nearly 600,000 workers stand to benefit for a further four months from a program that would otherwise have expired on Monday, May 31. The fifth extension was made possible thanks to last-minute negotiations between the government, the UGT and CC OO unions, and the employer groups CEOE and CEPYME.

The Cabinet on Thursday met at an extraordinary session to approve a decree regulating the extended furlough program, which will now run to September 30. Measures for self-employed workers whose businesses have been affected by the pandemic are also being maintained throughout the period, and will benefit around 460,000 individuals.

The new measures will cost the public purse around €3.4 billion, including benefits and Social Security contribution reductions. The government is hoping to reactivate the approximately 558,000 workers who remain on the temporary workforce reduction scheme, which included as many as 3.5 million workers at the height of the pandemic. To do so, the plan broadly maintains current Social Security reduction rates, but increases them for employees who return to their posts.

“We are working toward a complete normalization by the fall,” said Social Security Minister José Luis Escrivá in statements on the radio station Onda Cero. “And for that, we need to incentivize businesses to bring back as many workers as possible in order to reach pre-pandemic figures.”

An agreement on the ERTE program was delayed because it was being negotiated as part of a wider package that also includes the future of pensions. The center-left government, made up of a coalition of the Socialist Party (PSOE) and junior partner Unidas Podemos, said on Friday it had reached a preliminary deal with employers and unions on pension reform, although the final text has yet to be drafted. Spain has pledged to enact reforms in exchange for €140 billion in recovery funds from Brussels.

EL PAÍS has also confirmed that Social Security Minister José Luis Escrivá has pulled a proposal to revamp the way self-employed workers pay into the social security system through a new scheme involving 13 income brackets. This matter will be discussed at a later date in order to help the wider talks move forward.

The ERTE scheme is widely credited with keeping down the unemployment rate in a country that still shed the most jobs in Europe as a result of the Covid-19 pandemic, as furloughed workers do not count as unemployed. Once the state-funded program ends, a clearer picture will emerge of the true impact of the coronavirus on employment in a country with a traditionally high jobless rate, currently 15.98% according to the National Statistics Institute (INE).

The scheme has saved thousands of businesses from going under during the pandemic, particularly in the hard-hit tourism industry, but some companies are already transitioning to collective layoffs (EREs) that could affect as many as 35,000 workers in the banking, retail and auto sectors.

English version by Susana Urra.