Spanish Government in Urgent Talks Over ERTE Extension

Spain proposes to extend its furlough scheme into 2021, says Labour Minister.

THE ERTE scheme introduced by the Spanish government in March this year has so far cost the country a staggering €24 billion. In the last six months, the amount spent on ERTE pay-outs amounts to 18 per cent of the annual spend on state pensions.

This week is key for the future of the Exceptional Temporary Employment Regulation Files (ERTE). Although unions and employers want the scheme to be expanded without any change in its conditions, the government wants to reduce the significant impact that ERTE is having on the public purse.

In fact, the figure of €24 billion paid out so far could be even higher. Although Social Security shows the monthly cost of ERTEs at €4 billion, the Minister of Finance and government spokesperson, María Jesús Montero, indicated in the press conference to the Council of Ministers that the figure could be between €4.5 billion and €5 billion extra, after a request from Antonio Garamendi, CEOE president for more accurate data.

The vast majority (about €19 billion) have been for the payment of benefits of workers and the rest (€6 billion) correspond to exemptions from social contributions to companies. It was pointed out at the meeting that €21.3 billion from the unemployment aid fund (SURE) that the European Commission has proposed for Spain would not cover spending on ERTE. In addition, it should be remembered that this amount corresponds to loans from the European Union that must eventually be paid back.

Hence this is why the government wants to reduce the benefits of ERTE for workers and companies. Negotiations are being held on a daily basis, between the Ministry of Labour and the unions. Although there is no solution yet to what will happen, with the exemptions of social contributions to companies, the government wanted to stop or freeze all ERTE payments for people working while on the scheme.

While still under negotiation, the base rate of 70 per cent looks likely to be dropped to 50 per cent if this matter cannot be resolved. The ministry of labour also wants to limit the number of companies claiming ERTE for its employees, saying that only the very worst affected should be able to claim in future.

It now looks highly likely that the ERTE scheme will be extended to January 31, 2021, a Royal Decree will, of course, have to be issued then an official document will be posted on the government’s website. In fact, as negotiations are ongoing it is possible the motion has been passed to the Spanish president for approval whilst this article is being written. Please check back later for an update in that case.