Pre-agreement between Spanish Government, unions and employers to extend ERTE until May 31st

In December, 8,000 more workers were put on the temporary redundancies scheme and many more lay-offs are expected in the weeks to come due to the anticipated closures associated with a third wave of coronavirus.

The Spanish government, unions and business organisations have pre-agreed in a meeting held this Friday to extend the temporary employment regulation files scheme (ERTE) until May 31st, co-inciding with the end of the State of Alarm.(Click for more info about what an ERTE is)

Unions and employers have asked for a further extension of the date, and this is one of the points which will continue to be negotiated, but, at least, the coverage that expires on January 31st will continue for four more months.

The ERTE mechanism was used to protect 3.4 million workers at the peak of the first nationwide lockdown during the spring and once it had concluded in June, businesses were gradually able to re-employ many of those temporarily made redundant.

The scheme enabled businesses forced to close due to coronavirus to temporarily lay-off staff without being forced to pay out full redundancy entitlements in the expectation that the staff would be re-employed once the lockdowns ceased, and at the same time provided financial cover for the staff, who receive a furlough payment from the Government.

Making staff permanently redundant is very expensive for business owners and many would have been forced into bankruptcy were they obliged to make their workers permanently redundant.

But with the second wave and subsequently, the new restrictions imposed as a result, 755,000 workers have not been able to return to their previous position, and have now been suspended from employment for 9 months.

The latest January data from Social Security shows that not only is the number of employees put under an ERTE not falling, but that the figure is increasing again and during December a further 8,000 workers were temporarily made redundant under the scheme.

The agreement reached today is a guarantee that the scheme will be extended, but there are still significant details to be negotiated about the conditions of this extension, with unions and employers both making different demands.

The UGT and CCOO unions propose putting the "counter back to zero" to allow the coverage of certain aid to be extended until 2022. On the employers' side, the employers propose limiting the obligation to return the aid received if there are layoffs within the 6 months after an ERTE. The CEOE asks to limit these exemptions only to dismissed workers so as not to have to return all the aid received. In addition, the employers have asked to change the bonus system to compensate businesses that cannot open instead of rewarding those that do open. These issues should be resolved before January 15th, but at least the central issue which was a broad agreement to extend the ERTE scheme until at least, until May 31st has been agreed.
Image: Foodbank collections in Cartagena